Rhode Island Prompt Payment Guide and FAQs

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Rhode Island Prompt Payment Overview

Rhode Island Prompt Payment Requirements


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
Interest & Fees

Not specified in state statutes

30
DAYS
Prime Contractors

For Prime (General) Contractors, payment due within 30 days of invoice


10
DAYS
Subcontractors

For Subcontractors, payment due within 10 days of payment recieved from above. Material supliers must be paid within 90 days of furnishing materials.


10
DAYS
Suppliers

For Suppliers, payment due within 10 days of payment recieved from above. Material supliers must be paid within 90 days of furnishing materials.


YES
Interest & Fees

Interest at prime rate for GC must file notice of claim in order for interest to accrue.

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 Rhode Island

The prompt payment laws in Rhode Island only regulate public works projects within the state. These can be found in R.I. Gen. Laws §42-11.1-1 et seq. There are no provisions covering payments on private projects, those will be regulated by the terms of the contract.

Payment Deadlines for Public Projects

Payments to the prime contractor from the public entity are due within 30 days of receipt of a proper request for payment. The request is deemed received on the date the request is actually received, or when the goods or services are delivered; whichever is later. Upon receipt of payment from the public entity, the prime is required to pay their subcontractors within 10 days. As for material suppliers, they must be paid within 90 days of furnishing the materials. All other payments are regulated by the contract terms.

Penalties for Late Payment on Public Projects

The Rhode Island prompt payment laws provide certain reasons in which payments can be properly withheld. However, if none of these circumstances exist and payment is either late or wrongfully withheld, the unpaid balance will be subject to interest penalties. Interest will accrue at a rate equal to the prime rate published in the Wall Street Journal, which is compounded monthly until the payment is made. Meaning at the end of each delinquent month the interest accrued will be added to the principal and begin accruing interest on the increased amount the following month.

Rhode Island Prompt Payment Frequently Asked Questions

Rhode Island’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 Rhode Island prompt payment laws. You can also read the Rhode Island Prompt Payment Statutes at the bottom of this page.

Rhode Island Prompt Payment Private Projects FAQs

Does Rhode Island have prompt payment statute on private projects?

Rhode Island does not provide a prompt payment statute for private projects.

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Rhode Island Prompt Payment Public Projects FAQs

Do I have to send a letter or file anything to qualify for Prompt Payment Penalties or Remedies in Rhode Island?

In order for the provisions of the Rhode prompt pay statutes to apply, the party requesting payment must submit a proper invoice, unless the contract specifically holds that the party is entitled to payment at specific predetermined intervals without the need to do so.

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Can I include Prompt Payment Fees in my Rhode Island Mechanics Liens Claim or Bond Claim?

No. Rhode Island doesn’t allow miscellaneous amounts to be included on the face of a bond claim.

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If I am paid late according to Prompt Payment Statutes, can I obtain interest or other Penalty Payments?

In Rhode Island, interest begins to accrue immediately upon the failure to make timely payment. However, interest does not accrue if the payment is withheld for a valid reasons for which payment may be withheld, or due to a lien or other attachment or legal process against the money due.

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

Pennsylvania allows payments to be withheld for the following reasons:

  1. The state controller determines that there is reasonable cause to believe that payment is not properly due;
  2. If payment must be preceded by an inspection period or by an audit in order to determine the resources used in fulfilling the contract;
  3. The necessary state government appropriation required to authorize payment has not yet been enacted;
  4. The balance of the fund from which payment is to be made is insufficient;
  5. A proper invoice must be examined by the federal government prior to payment;
  6. Noncompliance with the terms or conditions of the contract;
  7. The required payment date is modified pursuant to relevant law
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Rhode Island Prompt Payment Statutes

Getting informed about prompt payment laws is important. An examination of Rhode Island’s 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. Rhode Island’s specific laws can be found in: R.I. Gen. Laws §§ 42-11.1-1 – 42-11.1-16, 37-13-5, and are reproduced below.

Prompt Payment Statute on Private Projects

Does Rhode Island have Prompt Payment Statute on Private Projects?

Rhode Island does not provide a prompt payment statute for private projects.

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Prompt Payment Statute on Public Projects

§ 42-11.1-1: Policy

Firms and organizations that do business with the state expect and deserve to be paid in a prompt and timely manner. Unjustified delays in paying vendors, construction contractors, and providers of service may discourage such firms and organizations from doing business with the state and may ultimately increase the costs to the state government of purchasing materials, equipment, and supplies; undertaking construction and reconstruction projects; and obtaining a wide variety of professional and other specialized services including those that are provided to persons in need. Consequently, this legislation sets standards for the payment of bills incurred by state agencies within specified periods of time and requires interest payments in situations where contract payments do not conform to these standards. Consistent with accepted business practices and with sound principles of fiscal management, it is the intent of this legislation to encourage state agencies in all three (3) branches of state government to make payments at least as expeditiously as they currently do and further reduce existing payment processing times whenever feasible, while at the same time permitting the state agencies to perform proper and reasonable financial oversight activities designed to ensure that the state government receives the quality of goods and services to which it is entitled to ensure that public funds are spent in a prudent and responsible manner.

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§ 42-11.1-2: Definitions

As used in this chapter, the following terms shall have the following meanings unless otherwise specified:

(1) “Contract” means an enforceable agreement entered into by a contractor and a state agency.

(2) “Contractor” means any person, partnership, firm, corporation, or association:

(i) Selling materials, equipment, or supplies or leasing property or equipment to a state agency:

(ii) Constructing, reconstructing, rehabilitating, or repairing buildings or highways for, or on behalf of, a state agency; or

(iii) Rendering or providing services pursuant to a contract with a state agency, including, without limitation, services which help people in need.

(3) “Designated payment office” means the office designated by the state agency to which a proper invoice is to be submitted by a contractor.

(4) “Payment date” means the date on which a payment is due according to a contract.

(5) “Proper invoice” means a written request for a contract payment that is submitted by a contractor setting forth the description, price, and quantity of goods, property or services delivered or rendered, in such form and supported by such other substantiating documentation as the state controller or individual state agency may reasonably require. In the case of state highway and bridge construction contracts, periodic payment estimates prepared by the department of transportation shall be considered proper invoices for purposes of this chapter and such estimates shall be prepared monthly or more often and shall include the total amount of work done from the date of the prior estimate.

(6) “Receipt of an invoice” means the date on which a proper invoice is actually received in the designated payment office or the date on which the state agency receives the purchased goods, property, or services covered by the proper invoice, whichever is later.

(7) “Required payment date” means the date by which a contract payment must be made in order for the state government not to become liable for interest payments, pursuant to subsections (b) and (g) of § 42-11.1-5.

(8) “Set-off ” means the reduction by the controller of a payment due to a contractor by an amount equal to the amount of an unpaid legally enforceable debt owed by the contractor to the state or any amount which the state is entitled to withhold under the terms of the contract, or any amount owed by the contractor to the state by way of a statutory obligation or enforceable lien, of which the contractor had previous knowledge or notice.

(9) “State agency” means any department, board, bureau, commission, division, office, council, institution, authority or committee in the executive, legislative, or judicial branches of state government; including the University of Rhode Island and all other quasi-public bodies created by state law whose purpose and function are directly related to the health, safety, and welfare of the general populace of the state, including the Rhode Island lottery.

(10) “State funds” means funds held by the general treasurer in the general fund of the state.

(11) “Nonprofit provider” means any not for profit firm, partnership, or corporation which provides services to people in need pursuant to a contract with a state agency. A nonprofit provider is a contractor for purposes of this chapter. A nonprofit provider shall not be considered a public benefit corporation for the purposes of § 42-11.1-14.

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§ 42-11.1-3: Time Period for Payment

(a) All bills shall be paid within thirty (30) working days of receipt of a proper invoice or other contractual dates for periodic payments, except when a contractor has failed to submit a bill in accordance with contractually imposed time frames.

(b) Each contractor shall make payment to subcontractors within ten (10) days of receipt of payment by the state; provided, however, that the contractor may setoff a payment due to a subcontractor by an amount equal to the amount of an unpaid legally enforceable debt owed by the subcontractor to the contractor or any amount which the contractor is entitled to withhold under the terms of the contract entered into by the contractor and subcontractor, or any amount owed by the subcontractor to the contractor by way of a statutory obligation, or enforceable lien, of which the contractor or subcontractor had previous knowledge or notice, or has reason to believe exists.

(c) This section shall not apply to contractors or subcontractors performing work pursuant to a contract awarded by the department of transportation unless the subcontractor provides a payment and performance bond in an amount equal to the contract between the contractor and subcontractor.

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§ 42-11.1-4: Partial Payment

Partial payments shall be made by the state on partial deliveries or partial completion of services in accordance with the contract. Each completed delivery or service must be paid in accordance with the provisions of § 42-11.1-3.

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§ 42-11.1-5: Determination of Eligibility for Payment of Interest

(a) Each state agency which is required to make a payment from state funds according to a contract and which does not make the contract payment by the required payment date shall make an interest payment to the contractor in accordance with this chapter on the amount of the contract payment which is due, unless failure to make such contract payment is the result of a lien, attachment, or other legal process against the money due the contractor, or unless the amount of the interest payment as computed in accordance with the provisions of § 42-11.1-6 is less than ten dollars ($10.00).

(b) The required payment date shall be thirty (30) working days after the receipt of an invoice for the amount of the contract payment due, except when:

(1) The state controller in the course of his or her audit determines that there is reasonable cause to believe that payment may not properly be due, in whole or in part;

(2) In accordance with specific statutory or contractual provisions payment must be preceded by an inspection period or by an audit to determine the resources applied or used by a contractor in fulfilling the terms of the contract;

(3) The necessary state government appropriation required to authorize payment has yet to be enacted;

(4) The cash balance of the fund or sub-fund from which the payment is to be made is insufficient to finance the payment;

(5) A proper invoice must be examined by the federal government prior to payment;

(6) The goods or property have not been delivered or the services have not been rendered by the contractor in compliance with the terms or conditions of the contract;

(7) The required payment date is modified in accordance with subsection (d) of this section.

(c) Any time taken to satisfy or rectify any of the types of conditions described in subsection (b) shall extend the required payment date by an equal period of time.

(d) Each state agency shall have five (5) working days after receipt of any invoice by the state agency at its designated payment office to notify the contractor of defects in the delivered goods, property, or services. Defects in the invoice or improprieties shall delay the commencement of the time period specified in subsection (b) of this section. When a state agency fails to notify a contractor of such defects or suspected improprieties within five (5) working days of receiving the invoice, the number of days allowed for payment of the corrected proper invoice will be reduced by the number of days between the fifth day and the day that notification was transmitted to the contractor. If the state agency, in such situations, fails to provide reasonable grounds for its contention that a defect or impropriety exists, the required payment date shall be calculated from the date of receipt of an invoice.

(e) The budget office shall have five (5) working days after receipt of invoice to transmit the invoice to the controller’s office for processing.

(f) Notwithstanding any provision of the general law of the state of Rhode Island or any tariffs promulgated in accord therewith to the contrary, the provisions of this chapter shall provide the sole basis for determining and making interest payments on invoices submitted by public utilities to state agencies.

(g) A proper invoice submitted by the contractor shall be required to initiate any payment, except where the contract provides that the contractor will be paid at predetermined intervals without having to submit an invoice for each scheduled payment, in which case the state agency responsible for making the purchase shall submit an approval voucher to the state controller for the payment that is due and, for the purposes of determining eligibility for payment of interest and subject to the exception of time-to-rectify provisions of subsection (b) of this section, the required payment date shall be the payment due date specified in accordance with the contract.

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§ 42-11.1-6: Computation of Interest Payment

(a) Interest payments on amounts due to a contractor according to this chapter shall be paid to the contractor for the period beginning on the date after the required payment date and ending on the day a proper invoice was approved for payment by the controller’s office.

(b) Each state department, agency, or project administering state funds shall calculate and pay interest upon payment of the principal sums due. Interest payment shall accompany payment of the net amount due for goods and service.

(c) Agencies shall not require companies to petition, invoice, bill, or wait any additional days to receive interest due.

(d) Interest shall be paid at a rate equal to the prime interest rate as reported on the money market page of the Wall Street Journal published on the first regular business day of each month.

(e) Unpaid interest shall compound every month overdue.

(f) Interest shall be paid from funds appropriated to the particular state agency with which a contract exists. If more than one state agency has caused a late payment, with respect to a particular contract, each state agency shall bear a proportionate share of the interest payment.

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§ 42-11.1-7: Determination of Appropriations for Interest Payments

Except in situations when federal law or other provisions of this chapter require otherwise, an interest payment required by this chapter shall be paid from the same appropriation as that from which the related proper invoice is paid, provided, however, that the interest payment shall not reduce the amount of money that otherwise will be payable to the contractor under the terms of the relevant contract and that if the obligation to make an interest payment is incurred in whole or in part because it takes the controller’s office more than seventeen (17) working days from the date it receives an approvable voucher from another state agency, excluding legal holidays, to process a contract payment, then the portion of the total interest payment that is attributable to delays by the controller’s office shall be paid from funds made available to the controller’s office. Notwithstanding any other provision of law to the contrary, if the amount of money available from any above mentioned appropriation to the state agency which received the proper invoice is insufficient to pay the interest and if for any reason it is not feasible for the director of the budget to exercise the transfer or interchange authority, the director of the budget may issue a voucher or vouchers transferring or interchanging within a fund such amount as is needed to pay the interest to the appropriation within the fund from the unspent balance of any appropriation that is available to the same state agency. In exercising the latter transfer or interchange authority, the director of the budget shall transfer or interchange amounts that are not needed to accomplish the purposes for which the appropriation was made, except, however, the director of the budget may, to the extent he or she deems it practicable, transfer or interchange amounts from appropriations that otherwise would be available for the administration and operations of the state agency which incurred the interest payment. Any such voucher or vouchers issued by the director of the budget shall be sent to the state controller.

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§ 42-11.1-8: Exclusion of Interest from Reimbursement Rates

Any interest paid to a contractor under the provisions of this chapter shall not be included as revenue for the purposes of determining any reimbursement rates applicable to the contractor.

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§ 42-11.1-9: Disclaimer of State Responsibility for Interest Payments Incurred by Contractors

In the event that an interest payment is made by or incurred by a contractor in the course of transacting business with any entity other than a state agency, the interest shall not be an obligation of the state and the state shall not reimburse the contractor for the interest, nor shall any monies expended for the interest payments be counted toward any matching requirement applicable to grants or payments of state funds unless expressly permitted by statute or regulation.

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§ 42-11.1-10: Acceptance of Payment

The acceptance of payment, in whole or in part, by a contractor shall not be deemed to constitute a waiver of interest otherwise due under the provisions of this chapter.

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§ 42-11.1-11: Chapter to Control; Contractual Waiver Void

No contract entered into after January 1, 1988 shall contain any provision requiring the payment of interest in a manner inconsistent with this chapter, and any provision contained in the contract which waives the right to the payment of interest is hereby declared to be contrary to public policy and wholly void.

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§ 42-11.1-12: Judicial Review

Any determination made by a state agency according to § 42-11.1-5(d) shall be subject to judicial review in a proceeding according to the procedures outlined in the Administrative Procedures Act, chapter 35 of this title. The proceedings shall only be commenced in the absence, or upon completion, of other review procedures specified in the applicable contract or by applicable regulations.

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§ 42-11.1-14: Inapplicability of Chapter

(a) The provisions of this chapter shall not apply to payments due and owing by the state:

(1) Under the eminent domain procedure law, chapter 6 of title 37;

(2) As interest allowed on judgments rendered by a court according to any provision of law other than those provisions contained in this chapter;

(3) To the federal government; to any state agency or its related instrumentalities; to any duly constituted unit of local government including, but not limited to, cities, towns, school districts, special districts, or any of their related instrumentalities; to any public authority or public benefit corporation; or to employees of state agencies when acting in, or incidental to, their public employment capacity;

(4) To contractors of third party payment agreements;

(5) To entities which receive state funds through any intermediary organization other than a state agency; or

(6) In situations where the controller exercises a legally authorized set-off against all or part of the payment due the contractor.

(b) The treasury department shall have three (3) working days to transmit payment following receipt of paperwork from the controller’s office.

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§ 42-11.1-15: Quarterly Reports of Late Payments and Interest

The department of administration shall file quarterly reports with the governor and general treasurer. Included in the report shall be:

(a) The date and dollar amount of late payments by state and agency; and

(b) The amount of interest paid.

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§ 42-11.1-16: Partial Payment; Certificate of Continuance

(a) A nonprofit provider who provides services to a state agency pursuant to an existing contract shall notify the state agency ninety (90) days prior to the termination of the existing contract of its (the nonprofit provider’s) intent to enter into a new contract with the state agency to provide services. Notification shall be by certified mail, return receipt requested.

(b) Within thirty (30) days of the receipt of the notification, the state agency shall enter into a new contract with the nonprofit provider or notify the nonprofit provider of its (the state agency’s) intent to enter into a new contract or notify the nonprofit provider that it (the state agency’s) will not enter into a new contract with the provider.

(c) If the state notifies the nonprofit provider of its (the state agency’s) intent to enter into a new contract, and a new contract has not been effectuated fifteen (15) days prior to the termination of the existing contract, then the state shall issue to the nonprofit provider a certificate of continuance. No more than four (4) certificates of continuance for each individual nonprofit provider may be issued in a fiscal year.

(d) The certificate of continuance shall be valid for thirty (30) days, shall allow the nonprofit provider to continue to provide the services and shall pay the nonprofit provider a sum, at least, equal to one-twelfth ( 1/12) of the most recently expired contract between the state agency and the nonprofit provider.

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