What percentage amount can I add to invoices over 60 days in Alabama? We are a HVAC company that provides services and are well over 60 days of nonpayment.
2 replies
Nov 20, 2019
If the contract for work specifies that certain interest penalties will be available, then those penalties will generally apply. So, looking to the contract, itself, should be a sound first step. But, if the contract is silent as to interest penalties, Alabama's prompt payment laws could come into play - creating a statutory interest penalty for late payments.
Of course, keep in mind that Alabama contractors, subs, and suppliers are able to alter their payment timeframes in the contract though - so, prompt payment timeframes aren't set in stone.
Alabama's prompt payment laws
Before diving in - note that recovery under prompt payment laws must generally be made via lawsuit. So, while a claimant may be entitled to the interest penalty, they might have to pursue a lawsuit to actually receive them. However, that same claimant could certainly leverage their ability to file suit into faster payment.
Anyway, in Alabama, contractors hired directly by the property owner must be paid within 30 days of the owner receiving their request for payment. That is, unless some other payment terms were agreed to in the contract. If the contract specified a particular payment period, then the contract must be followed. But, in either event, a 1% per month interest penalty may be in play if payment is made late.
For subcontractors, that same 1% monthly interest penalty may be in play as well. Payments must follow the contract's payment terms - but, if the contract doesn't specify a particular payment period, then their customer must release payment within 7 days from when the customer receives payment, themselves.
For more on Alabama's prompt payment laws: Alabama Prompt Payment Guide and FAQs.
0 people found this helpful
Helpful
Dec 3, 2019
The 1% interest added past 30 days is customary however your contact T&C should specify the agreed interest, collection cost and attorney fees. If you would like me to review your contract and make recommendations at no cost to you, just email me at srauch@rauchmilliken.com