Cash flow problems can stop even the most organized construction businesses from running smoothly. When clients delay payments, you may still need to pay workers and buy materials for the next phase or start new projects.
To address this, Florida lawmakers passed a series of laws designed to establish clear expectations for when money must change hands. This blog discusses what prompt pay is and how it can affect your business.
How Florida protects your right to on-time payment
Florida does not have a single prompt payment law. Instead, several statutes cover different types of projects:
- Construction Contract Prompt Payment Law: This applies to private construction projects, including residential renovations and commercial developments, provided the agreement is in writing and a construction lien is authorized under state law.
- Local Government Prompt Payment Act: Covers construction performed for counties, municipalities, school boards, school districts and special taxing districts.
- Florida Prompt Payment Act: Applies to state-level projects, including work for state agencies, departments and institutions.
Each of these statutes creates enforceable due dates. When they are missed, the law provides remedies that go beyond simply waiting and hoping for the money to arrive.
Key deadlines you should know
Disbursement timelines differ based on whether you are working on a private or public project, and your position in the payment chain matters as well. Prime contractors, subcontractors and suppliers each have specific rights and obligations under these laws.
For private construction projects, the owner must pay you within 14 days after receiving a valid payment request. You can change this timeline in the contract only if both parties agree in writing. Once you receive the funds, you must pay your trade partners within a reasonable time set in your agreements or, if none exists, usually within 30 days.
Public projects work differently. Local governments must pay you within 20 to 25 days, depending on whether the invoice needs an agent’s approval. State agencies have 30 days. Once you receive funds, you must remit your subcontractors within 10 days and they must pay their suppliers within 7 days.
If payments are late, interest starts automatically. For private projects, the rate is the statutory judgment rate plus 12 percent per year or the contract rate if higher. For public projects, overdue invoices accrue interest at 2 percent per month starting from the due date.
How legal guidance may help
An attorney who understands Florida construction law can review contracts before they are signed. Some contract terms that seem standard may actually waive rights that the prompt payment laws would otherwise protect. They can also help calculate the full amount owed, including interest that is sometimes missed or underestimated.
When disputes come up, legal guidance can help clarify available options. This might include sending demand letters that reference specific laws, pursuing interest penalties that the other party may be unaware of or filing a construction lien to secure a claim against the property.