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When can I charge interest?

North CarolinaPrompt Payment

Late/slow paying companies

1 reply

Jan 7, 2019
That's a fair question. For one, if interest is set out between the parties under the contract for work, that provision will also probably provide the timeframe after which a nonpaying party will become responsible for interest payments. So, looking to the contract for clarity could be of use. Where a contract does not provide for interest penalties, it's important to be careful when contemplating throwing interest into the equation. If the penalties are not set out by contract, potentially, charging interest could ruffle some feathers. Depending on the unpaid party's role on the project, the North Carolina prompt payment laws could come into play. These laws don't appear to allow interest penalties where an owner owes funds to their prime contractor, but for subcontractors or other parties down the chain, payment must be made from the paying party to the unpaid party within 7 days of the paying party receiving payment themselves. i.e. If a contractor receives payment, they must pay their sub within 7 days of receipt of payment - and the same applies down the payment chain. Failure to pay will result in the outstanding debt growing at 1% per month. For more on North Carolina's prompt payment laws, this resource should be helpful: North Carolina Lien & Notice FAQs. Finally, it's worth noting that another tool can be even more effective to combat slow paying companies: a Notice of Intent to Lien.
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