Many states and the federal government set payment deadlines for construction. Here is how to use them.
In this article
What these laws do
Prompt payment acts set deadlines for owners and contractors to pay invoices, often with interest for late payment. The federal government and many states have them, with different rules for public and private work.
Public projects
Rules for public owners are common and usually clearer.
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Private projects
Some states extend protections to private projects.
Payment chain
Many laws also set deadlines for paying subcontractors after the GC is paid.
Interest
Late payments may accrue interest set by law.
Retainage rules
Some laws limit retainage percentages or set release timelines.
Proper invoices
Deadlines usually start with a proper invoice. Follow requirements exactly.
Documentation
Keep records of submission dates and approvals.
Enforcing rights
Polite reminders citing the law often work. Legal advice for disputes.
An example
A subcontractor on a public school project hadn't been paid weeks after the GC received payment. A letter referencing the state prompt payment rules and interest led to payment within days.
Where to start
Look up the prompt payment rules in the states where you work and add the deadlines to your billing calendar.
Common mistakes
Incomplete invoices, not tracking dates and not knowing the rules apply.
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Frequently asked questions
What is a prompt payment act?
It is a law that sets deadlines for paying contractors and subcontractors, often with interest on late payments. Rules differ for public and private projects and by state.