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Washington State-GC's rights to enforce penalties for late invoices

We are a GC licensed to do work in Washington State, Oregon,Idaho, Texas, Arizona & California. This situation applies mostly to our Washington State & Oregon jobs and subcontractors we have had perform work on jobs in those states. As of the last week or 2 we have received a considerable amount of invoices from Subcontractors for work performed as far back as July of last year through December 2019. We have closed our 2019 financials and will have to go back and amend our tax reporting, re-open closed projects to cost these expenses; not to mention the time spent researching closed projects, budgets, making sure the Sub was authorized to be working during the time frame invoiced, etc... I want to know what rights we have legally to enforce a percentage or Flat Rate Fee for invoices submitted over 90 days and that cross over financial years and require further overhead cost on our part.

1 reply

Mar 10, 2020

Subcontractors, suppliers, etc. will be able to pursue payment well beyond 90 days, which can create plenty of headaches for their contractors. As you mentioned above, there are all sorts of accounting and tax considerations that come into play when a vendor or sub comes looking for payment well after the fact.

Late fees for late billing

Still, the fact remains that these parties will typically have legal, equitable, and other remedies they can use to get paid for periods extending far beyond 90 days. Honestly, they'll be able to pursue the debt for years if they need to. So, there's little doubt that they're entitled to payment, even if they've failed to uphold their end of the bargain when it comes to billing. One way contractors discourage late billing as you described above is to charge a sort-of "inconvenience fee." As you mention above, there are considerable costs that a contractor will incur when they have to reopen the books and make payment. And, it's absolutely fair to pass those costs along to a sub or supplier who's billed the job very late. So, "charging" a convenience fee (generally by discounting payment) is a way to (1) discourage late billing and (2) compensate the work you'll need to do to update the books. Of course, to do that, it's important to put late billing provisions into the contract. As for charging a fee for late billing when the contract doesn't allow for it, it may still be possible. After all, if the sub or vendor agrees to it (preferably in writing), then there isn't much more to it. But, if push comes to shove and a legal dispute is on the horizon, then it might not be worth the headache of battling it out.

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