East Sussex County Council is one of the first local highway authorities in the country to use a Project Bank Account to pay companies which carry out highways work.
The scheme sees money for construction projects paid into a ring-fenced bank account from which contractors and sub-contractors receive payment directly at the same time.
It means sub-contractors now get paid at the same time as East Sussex Highways, the council’s primary highways contractor, ensuring prompt payment and transparency of cashflow between all parties.
Cllr Nick Bennett, East Sussex County Council lead member for transport and environment, said: “Project Bank Account is a system which has already been successfully used by national organisations, but is still rare among local highways authorities.
“The introduction of our new highways contract last year offered the ideal opportunity to introduce the concept for use with our highways services providers.
“The fact that subcontractors are paid directly means they no longer have to worry about waiting for payment to come down to them through the supply chain.
“They are assured of prompt payment, avoiding the need for unnecessary borrowing, which can threaten their often very fine margins.
“We believe delivering contracts in this way will offer peace of mind to contractor and subcontractor alike, allowing them to get on with the job in hand, and will create a more balanced trading environment, supporting business growth.”
One of the sub-contractors to receive payment using the new system is Hailsham Roadways, which recently carried out work on the Hailsham Town Centre Improvement Scheme.
Lisa Edwards, the company’s finance manager, said: “We moved to the Project Bank Account a few months ago because it offers the potential for faster payment times. The system also reduces the risks of prime-contractor delays or financial problems.”
East Sussex Highways, which launched in May 2016, is a joint venture between Costain and CH2M, providing highways services on behalf of East Sussex County Council.