PBAs are ring-fenced accounts from which payments can be made directly and simultaneously by a client to contractors and sub-contractors, improving cash flow through the supply chain.

The Scottish Government has been co-ordinating trials for a couple of years and contractors received the first PBA payment from NHS Lanarkshire on two work packages worth £1.4 million at Monklands Hospital in April 2014.

Cabinet secretary for finance, Derek Mackay, revealed that the use of PBAs will be commonplace from October 31.

The Specialist Engineering Contractors’ Group Scotland, which represents the largest sector (by value) in Scottish construction, said it was delighted by the move.

Chairman Eddie Myles said: “SEC Group Scotland has been the leading exponent of PBAs since they are the most effective method for ensuring regular and secure payments to construction supply chains, especially SMEs.”

Representing the electro-technical industry in Scotland, Newell Mc Guinness, MD of SELECT, said: “Poor payment practices are the biggest killer of productivity and growth in Scottish construction. PBAs will help curb abuse and thus enable small firms to deliver to their full potential.”

These comments were echoed by Fiona Hodgson, MD of the Scottish and Northern Ireland Plumbing Employers’ Federation, who added: “The Scottish Government is to be congratulated. Dealing with poor payment practices has to be the number one priority for construction. I look forward to the time when we can half the threshold for using PBAs.”

SEC Group Scotland said it intends to work with the Scottish Government in helping to train the industry and public sector bodies in the use of PBAs.

The Group has already published guidance for clients, 12 Easy Steps in Setting up a Project Bank Account.