Prompt payment requirements establish a time period in which property owners or GCs must make payments to contractors and subcontractors.
In construction, the average payment takes nearly three months; the longest of any industry. State and federal requirements attempt to ensure that parties to a construction project receive payment within a reasonable amount of time.
The federal Prompt Payment Act applies to federal construction contracts. It requires that these contracts include a clause requiring the prime contractor to pay subcontractors for “satisfactory” work within seven days of being paid by the government.
States have their own prompt payment laws. These laws seek to reduce the time it takes for contractors, subcontractors, and suppliers to receive payment for the work and materials they provide. Laws and regulations try to establish a timeline for construction payments that is fair and reasonable for the people providing work and materials on a project.
In general, these requirements apply universally to public projects, i.e. state and federal construction jobs. Laws in some states apply these requirements to private projects as well.
Prompt payment requirements are not always cut-and-dry. The laws create a timeline for payment that often starts when a party receives a “proper” or “undisputed” invoice. As a result, the interpretation of the requirements can be quite subjective.
The New York prompt pay provisions are a set of statutes that regulate timely payment on private and public projects. These statutes create default pay schedules and penalties for non-compliance....
The Ohio Prompt Pay laws regulate the timing of payments on both public and private projects. Late payment is a problem in the construction industry as a whole. In order...
The Nevada Prompt Payment Acts were enacted to ensure that anyone working on a private or public project within the state are paid in a timely fashion. This is achieved...
The Michigan prompt pay and retainage laws apply to almost every type of public works projects within the state. Maintaining cash flow on a project is vital to a contractor’s...
The Alabama Prompt Pay laws were enacted to quell one of the most damaging practices in the construction industry; slow payment. Having to chase down payment is both costly and...
The Pennsylvania Prompt Pay Act provides protections to anyone receiving payment on public or private construction projects within the state. The statutes set payment requirements to both those making payment and...
The South Carolina Prompt Pay Act was enacted to essentially set a default payment schedule on construction projects. These provisions ensure that contractors, subs, and material suppliers who perform in...
Contractors sometimes have to wait a long time for payment. A demand letter can be a powerful weapon in your arsenal to get paid faster. If you are waiting on...
The Virginia Prompt Pay Act was enacted to ensure timely payments for contractors and suppliers working on public works projects. This is achieved by imposing interest rates on any late...
The Washington Prompt Pay Act essentially creates timeframes for the payment of invoices on all public works projects within the state. These statutes cover payment and retainage to all tiers...