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Fair payment charter welcomed

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Suppliers and sub-contractors can look forward to faster payment under a new scheme launched by Network Rail.

The Fair Payment Charter has been signed by thirty of the biggest construction and engineering companies operating in Britain today. The idea is to speed up payment and increase liquidity throughout the supply chain as Network Rail delivers £7bn of renewals and enhancements over the next two years. The Fair Payment Charter ratifies Network Rail’s recent decision to shorten the time it takes to pay suppliers from 56 days to 21 days.

Happily it commits Network Rail’s suppliers to make payment to their first-tier subcontractors within seven days of receiving payment. This means the time from submission of a main contractor’s application to receipt of payment by the first-tier supplier is now 28 days – a move which will dramatically increase liquidity in the supply chain and provide greater certainty for suppliers’ in terms of business planning.

Says Simon Kirby, managing director, Network Rail infrastructure projects, ‘The Fair Payment Charter is a statement of how the rail industry wishes to do business. Applying these principles will be a significant catalyst in improving cash flow across the industry, benefitting suppliers and contractors of all sizes throughout the supply chain.

‘Network Rail is committed to meeting tough efficiency targets on it £7bn programme of renewals and enhancement during the remainder of the current control period. The Fair Payment Charter is a significant step in our repositioning as a client and reflects the aspiration for a new approach to payment in the railway industry which is not only fair but also helps to cut costs and drive out inefficiencies.’

The news has been welcomed by rail chiefs. Says Jeremy Cand field, director general of the Railway Industry Association, ‘This is another key step in the transformation of supply chain relationships that we and Network Rail have been working hard to achieve, essential for delivering the efficiencies demanded by tomorrow’s railway.’

Douglas McCormick, managing director of Atkins’ rail business, said, ‘This is a strong example of Network Rail’s collaborative approach to working with its key suppliers and an important step in setting the correct tone for the industry. We welcome the direct benefit it will bring to Atkins and our own supply chain, and it will strengthen our drive for greater cost efficiency in all the work we undertake for Network Rail.’


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