Arkansas Prompt Payment Guide & FAQs

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Arkansas Prompt Payment Overview

Arkansas Prompt Payment Requirements


  • Private Jobs
  • Public Jobs
  • Top Links
NO
DAYS
Prime Contractors

Not specified in state statutes


NO
DAYS
Subcontractors

Not specified in state statutes


NO
DAYS
Suppliers

Not specified in state statutes


NO
FEES
Interest & Fees

Not specified in state statutes

5/90
DAYS
Prime Contractors

For Prime (General) Contractors, progress payments due within up to 15 days of a properly prepared request for payment. Final Payment due within 90 days of completion and acceptance of the project.


NO
DAYS
Subcontractors

Not specified in state statutes


NO
DAYS
Suppliers

Not specified in state statutes


10%
/ YEAR
Interest & Fees

Interest at 10% year, no fees provision

Prompt payment laws are a set of rules that regulate the acceptable amount of time in which payments must be made to contractors and subs. This is to ensure that everyone on a construction project is paid in a timely fashion. These statutes provide a framework for the timing of payments to ensure cash flow and working capital.

Projects Covered by Prompt Payment in Arkansas

In Arkansas, the prompt payment laws apply to all public works projects, except those contracted by the State Highway Commission. These statutes are found in Ark. Code §19-4-1411 & §22-9-205. The laws don’t apply to private projects. The state of Arkansas doesn’t regulate prompt payment too strictly, as it only sets payment deadlines and interest penalties for payments from the public entity to the prime contractor.

Payment Deadlines

Once the prime contractor has performed in accordance with the contract, they can submit a progress payment request. Upon receipt of the payment request, the entities in charge of processing payments (design professional, contracting entity, and/or the state Department of Finance and Administration) each will have 5 working days to process the payment. This 5-day period does not include the “time required for transmittal from one party to another.” So at most, 15 days for processing, not including the “transmission” to the other parties. In regards to final payments, the public entity has 90 days from when the request was received.

Penalties For Late Payment

Starting the day after payment is due to the prime contractor, interest will begin accruing at 10% per year (0.833%/month) until payment is made. As for all other payments down the chain, the timing and late payment penalties will be determined by the terms of the contract.

Arkansas Prompt Payment Frequently Asked Questions

Arkansas’s prompt payment statutes set forth specific timeframes for when general contractors, subcontractors, suppliers, and others involved with a public construction project must be paid. This page provides an overview of these regulations and addresses frequently asked questions related to the Arkansas prompt payment laws.

Arkansas Prompt Payment Private Projects FAQs

Does Arkansas have statute that explicitly addresses Prompt Payment for Private Projects?

Arkansas Prompt Payment requirements only apply to certain public projects. Prompt Payment laws do not apply to private projects in the state.

This doesn’t mean that owners on private projects in Arkansas can delay payment indefinitely. Project payments should still follow the requirements of the original construction contract.

To learn more about contractor rights and remedies for non-payment, visit Arkansas Payment Resources.

What options do I have if the owner or GC is delaying payment on a private project?

The contract should spell out the application and payment requirements. If the GC fails to meet the terms of the contract, contractors still have remedies to get paid.

  1. Send invoice reminders.
  2. Send a payment demand letter.
  3. Send a Notice of Intent to Lien.
  4. As long as they have protected their lien rights, unpaid contractors can file a mechanics lien to recover payment.

Learn more: How to file a mechanics lien in Arkansas.

Arkansas Prompt Payment Public Projects FAQs

What types of public projects are subject to Arkansas’ prompt payment laws?

The Arkansas prompt payment provisions apply to all state, county, municipal, school district, or other local tax unit commissioned construction projects exceeding $35K.

When does payment become due under Arkansas’ prompt payment laws?

Payment becomes due when a properly prepared request for payment of work completed is submitted and conforms with the provisions of the contract award and laws of the state of Arkansas.

What is the deadline for payments under Arkansas’ prompt payment laws?

Arkansas’ prompt payment provisions on public projects only apply to payments from the government entity to the prime contractor.

Progress payments from the public entity to the prime contractor depend on the number of parties involved. At most, once a pay request has been submitted each party (design professional, state agency/institution, & the AR Dept. of Finance & Administration) has 5 days to process the payment requests; not including the time required to transmit the payment request from one party to another.

Final payments from the entity to the prime contractor must be made within 90 days of completion and approval of the project.

All other payments down the contracting chain will be governed by the terms of the contract between the parties.

Are there reasons for which payment may be withheld past the general deadline?

There are no specific reasons listed in Arkansas’ prompt payment statutes for which payment may be withheld. However, under Ark. Code §19-4-1411(2):

Should payment be contested by any of the parties listed in this subsection, it shall be the responsibility of the parties contesting the payment, within the time specified for the processing payment, to notify the contractor involved that payment has been contested and the reasons therefor.”

If I am paid late according to Arkansas’ prompt payment laws, can I obtain interest or other penalty payments?

Yes, if payments are wrongfully withheld past the deadline for payment, the unpaid amount will accrue interest at a rate of 10% per year, until the amounts have been paid in full.

Also, according to Ark. Code §19-4-1411, if the Chief Fiscal Officer determines that the payment processing by any of the 3 parties has exceeded the time limits established, they will investigate the delays and may assess a penalty of 8% per year which will be paid to the contractor by the party responsible for the delay.

Can I include prompt pay fees in an Arkansas payment bond claim?

State law does not allow for the recovery of miscellaneous amounts in a bond claim in Arkansas. In order to recover interest penalties from the property owner, a GC must file a prompt payment claim in civil court.

What is the best practice for making a demand to a non-paying party to get prompt payment fees?

Sending a Notice of Intent to Make a Bond Claim along with a Prompt Payment Demand Letter is generally the best method for encouraging parties to make payment. If payment still isn’t forthcoming, a lawsuit may be necessary.

• For more on this, see: How to Make a Claim under Prompt Payment Laws

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Arkansas Prompt Payment Statutes

Getting informed about prompt payment laws is important. An examination of Arkansas’ prompt payment laws, the rules and regulations related to payment timing, is important to know your rights and responsibilities as a party on a construction project. Arkansas’ specific laws can be found in Ark. Code §§ 19-4-1411 and 22-9-205, which are reproduced below. Updated as of June 2021.

Prompt Payment Statutes on Private Projects

Does Arkansas have prompt payment statute on private projects?

Arkansas does not a provide prompt payment statute for private projects.

Prompt Payment Statutes on Public Projects

§ 19-4-1411. Processing of payments

(a)

(1) When a contractor submits a properly prepared request for payment of work completed on state construction projects and the request for payment conforms with the provisions of the contract award and laws of the State of Arkansas, the following maximum time is allowed for the processing of the payment requests by the various parties involved, excluding time required for transmittal from one (1) party to another:

(A) A design professional – five (5) working days;

(B) A state agency or institution of higher education exempt from review and approval by the Building Authority Division – five (5) working days, including preparation of a voucher and submission for payment; and

(C) The Department of Finance and Administration – five (5) working days.

(2) Should payment be contested by any of the parties listed in this subsection, it shall be the responsibility of the parties contesting the payment, within the time specified for processing payment, to notify the contractor involved that payment has been contested and reasons therefor.

(3) Should any of the parties listed in this subsection fail to properly process uncontested requests for payments within the time limits specified following date of receipt, a penalty of eight percent (8%) per annum of the amount of the request for payment shall be assessed against the parties responsible for the delay.

(b)

(1) The Chief Fiscal Officer of the State shall establish procedures for monitoring payments to contractors. When it has been determined that payment processing has exceeded the time limits established in this section, the Chief Fiscal Officer of the State shall cause an investigation to be made for the purpose of determining the responsible parties and the amount of penalty to be paid.

(2) Penalties assessed for failure to comply with the provisions in this section shall be paid to the contractor by the parties responsible in accordance with procedures established by the Chief Fiscal Officer of the State.

§ 22-9-205. Public improvements generally - Interest on delinquent payments

Whenever any agency of this state or of any county, municipality, or school district, or other local taxing unit or improvement district enters into a contract covered by the provisions of §§ 22-9-202 – 22-9-204 for the making of repairs or alterations or the erection of buildings or for the making of any other improvements, or for the construction or improvement of highways, roads, streets, sidewalks, curbs, gutters, drainage or sewer projects, or for any other construction project, and the contract provides that payment therefor shall be made upon completion and acceptance of the project, and the contractor, upon completion and approval of the project, presents a claim for payment of the amount due thereon in accordance with the terms of the contract, and the claim is not paid by the public authority within ninety (90) days from the date of presentation of the claim, then the public authority shall pay to the contractor interest at the rate of ten percent (10%) per annum on the unpaid amount due for all periods of time that the payment under the contract is not made subsequent to ninety (90) days after presentation of the claim.

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