Prompt Payment Matters

Kegler Brown Construction Newsletter

In a modern world where technology can ensure that payment occurs electronically in a matter of seconds, payment on construction projects continues to lag. Often owners (and their lenders or funding agencies) do not fully appreciate the adverse practical impact slow payment can have on their construction projects.

Our experience has been that when owners commit to make quick payment to the contractor who promises to make prompt payment to all subcontractors and suppliers, regardless of tier, many problems are avoided and the chances of a successful and timely project are greatly enhanced. Owners need to consider whether the advantages of holding money longer are outweighed by the practical advantages experienced by ensuring that prompt payment is made to the contractors and subcontractors working on the site, who are expected to make payroll every Friday and pay their suppliers every thirty (30) days.