Payment instructions for project bank accounts
When a building contract requires a project bank account (PBA), all subcontractors must be paid only from the PBA.
A head contractor must make all payments and withdrawals from a PBA trust account using a payment instruction. They can't pay subcontractors in cash, or by BPAY or standard electronic funds transfer.
A payment instruction is a payment file that tells the bank to pay specific amounts due to be paid, on a certain date, to beneficiaries of the PBA trust account (i.e. subcontractors and the head contractor).
This information is a summary of the process for using payment instructions. For more details, read the Head contractors guidelines (PDF, 981KB).
Using a payment instruction
The head contractor must use a payment instruction to:
- pay amounts owing to subcontractor beneficiaries from the general, retention or disputed funds trust accounts
- withdraw funds from the PBA trust accounts for amounts owing to the head contractor
- pay (transfer) amounts from the general trust account to the retention or disputed funds trust account; and return amounts from those accounts back into the general trust account
- withdraw an amount equal to the interest earned by the trust accounts (only once every 12 months or when the PBA accounts are closed).
Payment instructions can be used to make payments to multiple beneficiaries at the same time (i.e. batch payments). They can use 1 payment instruction to:
- pay all subcontractors
- transfer amounts into the retention trust account
- pay themselves when amounts are due to be paid on the same day.
Most accounting software packages can generate payment instructions, including MYOB and QuickBooks.
Most financial institutions enable you to create a payment instruction manually on their online banking platforms. Depending on the financial institution, payment instructions may be called ABA files, Cemtext files, BECS files, payment files, direct entry (DE) files or pay anyone files.
Notifying subcontractors and principal
After uploading a payment instruction to the financial institution, the head contractor must give the principal and relevant subcontractor a copy of the payment instruction information within 3 business days.
If the head contractor deposits an amount into the disputed funds account, they must notify the relevant subcontractor immediately and in writing.
This is required for every payment, withdrawal or transfer.
The payment instruction information is only an excerpt of the payment instruction, with relevant information for the principal and subcontractor. They don't need the payment instruction itself.
Therefore, a head contractor shouldn't be concerned about using a payment instruction to make multiple payments.
For the principal, the payment instruction information contains the:
- name of payee (subcontractor, head contractor)
- name of payee's account
- name of payee's bank
- payee's bank account details – BSB and account number
- amount to be paid to the person or an account (including amounts paid to retention or disputed funds accounts)
- date paid or to be paid.
For the subcontractor, the payment instruction information contains the:
- name of subcontractor's account
- name of subcontractor's bank
- subcontractor's bank account details – BSB and account number
- amount to be paid (including amounts paid to retention or disputed funds accounts)
- date paid or to be paid.
The head contractor can provide the payment instruction information in any written format that best suits their accounting practices and business systems. For example, a remittance advice may be enough for the subcontractor if it includes all the required information.
Checking for errors
The subcontractor should check their copy of the payment instruction information for errors, including:
- the bank account details and account name
- the amount paid to ensure it matches the payment schedule (or, if no payment schedule is provided, confirm it equals the amount claimed)
- your bank account records to confirm the amount stated has been paid to your account
- any retention amounts to ensure they've been paid into the PBA's retention account in line with the subcontract.
If they find any errors, they should contact the head contractor to ask for an explanation. If they can't explain the error, report the matter to the Queensland Building and Construction Commission (QBCC).
The head contractor should notify the subcontractor immediately and in writing if any amounts relevant to the subcontract are transferred to the disputed funds account. The subcontractor should discuss the disputed amount with the head contractor.
Subcontractors should keep a record of the payment instruction information the same way they keep a record of the payment schedules they receive.
Read more about subcontractor obligations in the Subcontractors guidelines (PDF, 973KB).
The principal needs to review the copy of the payment instruction information against the actual transactions in the PBA accounts and subcontractor's account details for discrepancies.
They must report any discrepancies to the QBCC, which may investigate further.
Read more about the principal's obligations in the Principals guidelines (PDF, 1.1MB).