Understanding Prompt Payments Laws & Regulations

Prompt payment laws and regulations were created to ensure timely payment for work completed and materials supplied. These laws typically require that payments be made within a specified period after an invoice is submitted, often 30 days, and establish procedures for resolving payment disputes.

These laws aim to foster a more equitable and efficient payment process for contractors and subcontractors. DBEs often rely on prompt payment to maintain cash flow, hire workers, and invest in new projects to sustain work and reduce disparities. Many states struggle with prompt payment compliance and face penalties from FHWA and other regulatory agencies. Proactive monitoring of payments to contractors can help state DOTs avoid the ire of federal agencies while also improving the reporting and verification processes for contractors.