The Prompt Payment Act

Most people who are in the construction business have to focus on how their payments are made. Are they prompt? Or do the payments come way later? In the construction industry, payments for the materials, labor or any services you provide for any project should be made on time. This will save you the trouble of having to deal with disgruntled and unpaid employees. This is where the prompt payment act comes in handy. It will ensure that that you get paid faster for your services and you will not have to lacerate your wallet due to financial constraints.

In construction, especially if you are providing services to big, multi-dollar companies, they tend to delay their payment for the longest time possible until they find it strategically and financially liable to make the payment. As a construction contractor, you cannot afford to withhold payments to your subjects because you will be dealing with part-time laborers who will want to be paid on either daily or weekly basis. Some of these big companies have very sophisticated payment systems and it may take a while before you get paid. You may decide to use your own money or even get advances from lending institutions but in the final end, it will be a major setback on your financial status.

Many states have taken this matter seriously and they decided to enact the prompt payment act. The prompt payment act is a set of laws which require all parties involved in the construction process, from the general contractors to the suppliers of the required materials, be paid within a specified time frame. Most often than not, these time frames consist of short periods ranging from 1-2 weeks. The payment system is a chain reaction, the top level contractors are paid and they have subsequently 1-2 two weeks to pay their employees or the people working for them.

It is very important for to familiarize yourself with the prompt payment act in your state because the laws may vary from state to state. Familiarizing yourself with the prompt payment act will give you insight on the time frame of your payment and you can plan your spending for your construction business. There are very stringent rules which come with defaulting to adhere with the prompt payment act. As an employer, you have to ensure that you make your payments within the specified time frame. This brings us to the conclusion that the prompt payment act will make you get paid on time and faster.