10097800Solving cashflow shortfalls in the construction industry using digital payments with embedded financeClosedCollaborative R&DInnovate UKThe UK construction sector is undercapitalised and underbanked due to the payment risks the sector is infamous for, with timely payments not passed down supply chains to SMEs that have completed the work, and when main contractors collapse, payments owed to subcontractors for these works evaporate. The sector **must** change its payments culture: it cannot afford another Carillion and constant loss of skilled workers with every collapse. Our project hypothesises a new form of embedded finance, part of an end-to-end digital payments process, with the debt embedded into PBA-use, filling the working capital gap of contractors often required to pay for works, their subcontractors and suppliers, before they've been paid. This will utilise our digital payments platform which already removes the counterparty payment and insolvency risks, becoming an attractive solution for lenders to re-enter the sector to deliver its working capital needs. We created a digital payment ecosystem seamlessly connecting all stakeholders, from project owners, contractors to subcontractors and lenders to PBAs, enabling immediate payment settlement once funded. ProjectPay connects each participant's works contract to the PBA, and the payment request and approval process, unique to the construction industry, is digitised, connecting the whole supply chain in a quick, easy-to-use standardised workflow. The embedded finance piece is the next crucial step for industry adoption of this new payment mechanism. ProjectPay and debt finance embedded into the payments process should enable SMEs to automate cashflow functions linked to approved payment applications on works contracts they already have legal entitlement to be paid. This project represents reshaping of the UK construction sector's financial landscape, ensuring SMEs can access fair, fast and guaranteed payments when work has been completed and statutory debt created. It will address and eradicate persistent payment issues plaguing the sector for years, specifically targeting late payments and unethical practices, long an industry norm. We aim to prove that contractors will no longer need to continue unsustainable practices of robbing Peter to pay Paul, no longer worried if they will be paid, eradicating the widespread industry payment issues with payments not being passed onto subcontractors having done the work, transforming sector productivity. Breaking down barriers to PBA adoption, recommended across the UK, fostering a culture of fast and guaranteed payments. By tackling the core issue of late payments "cashflow' with embedded finance, we aim to foster transformative change not only benefiting SMEs but also contributing positively to the UK economy.