PROMPT PAYMENT
What You Need to Know About
Prompt Payment
By Simone Abrahamsohn
In a collective effort to make prompt payment in the construction industry the priority that it deserves to be , 10 Alberta trade contractor associations have banded together in the hope that results will be achieved through strength in numbers .
Working towards the unified goal of enforcing payment regulation , i . e ., 30 days after the invoice date ( and not – as has become frustratingly common – payment three to six months after receipt of invoices ), the Alberta Trade Contractors Coalition ( ATCC ) was formed with the participation of the Sheet Metal Contractors Association of Alberta ( SMCAA ) in partnership with the Mechanical Contractors Association ( MCAA ), Electrical Contractors Association of Alberta ( ECAA ), Alberta Roofing Contractors Association ( ARCA ), Provincial Glaziers Association of Alberta ( PGAA ), Masonry Contractors Association of Alberta ( MCA ), Thermal Insulation Association of Alberta ( TIAA ), Heating Refrigeration & Air Conditioning Contractors of Canada ( HRAI ), Alberta Wall and Ceiling Association ( AWCA ) and the Canadian Automatic Sprinkler Association ( CASA ).
The mandate of the ATCC ensures that each member will participate in the development of ATCC strategies , policies and position statements required to pursue the adoption of Prompt Payment Legislation by the Government of Alberta . The required actions include : developing clear messaging around the need for Prompt Payment Legislation in the industry , establishing group statements to be presented to applicable government departments in order to achieve implementation of Prompt Payment Legislation , and developing an effective strategy ( including key contacts , measurable objectives and outcomes ) for realizing the collective goal .
A study by the firm Raymond Chabot Grant Thornton ( RCGT ) states that in the construction industry , the sectors with the highest percentage of customer accounts receivable over 120 days are those of the civil engineering and roads and the institutional setting . Customers in these areas are mainly in the public sector . Late payments often hurt small and medium-sized businesses who don ’ t always have as much credit accessibility , and may be at risk of experiencing financial difficulty .
In May 2013 , the Ontario Legislature passed Bill 69 , The Prompt Payment Act , through seconded reading whereupon it was sent for review by Standing Committee . Bill 69 subsequently died on the floor later that fall as the minority government that supported the Bill was prorogued for an election . Learning from what transpired in Ontario , the ATCC is actively pursuing a broader coalition with a mandate to seek solutions to diminish the use of unjustified delayed payment practices and eliminate the negative impact they have on all construction industry stakeholders .
Legislation
In a random survey conducted by the ATCC , 86 per cent of companies surveyed said late payments were a moderate or serious prompt payment problem . In 2014 , the average amount of outstanding payments for accounts over 60 days due was $ 223,819.92 ( with average gross sales of companies being $ 6,866,426.42 , predominantly from private accounts ).
Some potential solutions to decrease payment times include increased communication with company owners to ensure the money is available and establishing clear regulations on the maximum time between job completion and payment . Additionally , increasing the consequences for late payments , i . e ., adding interest to the delayed transparency in the payment process between owners and general contracters and possibly a public list of owners / contractors that have violated payment terms .
Moving forward , the coalition is seeking a better balance in the construction industry and more accountability among all sectors within the industry for prompt payment of contracted services that have been delivered . Right now , those who deliver contracted services have little protection and very few rights when they attempt to collect payment for services rendered . Ideally , Alberta trade contractors will have late payments prevented rather than needing to rely on post-hoc solutions so that both owners and general contractors will be satisfied , and we can keep Alberta building . ❖
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