On July 1, Florida legislation that imposes stronger consequences on late payments throughout the construction chain for certain services took effect. The consequences outlined in Florida Senate Bill 378 include higher interest rates on past due payments and criminal charges for those suspected of misappropriating funds.
"The statute change was based around trying to change payment habits," said Chris Ring, of NACM Secured Transaction Services (STS). "The statute change offers penalties to be inflicted. So, habits will change when and if material suppliers and subs choose to inflict penalties."
Credit professionals doing business within the state may expect to collect payments quicker with the aid of these key provisions:
The prospect of being charged with these violations could help payments promptly flow down to suppliers. "I don't see any downsides for material suppliers and contractors," Ring said. "I believe the change happened recently to provide more payment pressure. I wouldn't say specifically that it was a pandemic issue. However, Florida was hit hard by the pandemic, and it caused some project delays and in turn caused payment delays."
Suppliers also can benefit from the increased protection under the revised prompt payment laws by notifying potential individuals that can be held liable for holding funds. Read more about prompt payment statutes.
-Bryan Mason, editorial associate