TECHNOLOGY REPORT
FIXING CONSTRUCTION’S
PAYMENT PROBLEM
Prompt payment promises to correct imbalances in the industry. It may also force general contractors to automate their payment processes BY JACOB STOLLER
I
The action is in response to industry pressure to take on the late payment problem that has plagued the industry for decades. According to PWC’s 2019/20 Working Capital Report, the average time it took a contractor to get paid in 2018 was 83 days. Prompt payment legislation will impose
some much needed payment standards and discourage unfair practices such as withholding excessive payments unjustifiably as a pressure tactic and putting cashflow pressure on the subcontractors. “GCs have historically had a very heavy hand to get their way with subcontractors,” says Glen Anderson, vice-president of
AAJAN / ISTOCK / GETTY IMAGES PLUS / GETTY IMAGES
n October of last year, Ontario became the first Canadian jurisdiction to make prompt payment on construction projects legally mandatory. Other provinces are expected to follow, and a federal statute mandating prompt payment on federal government contracts has been approved and is awaiting ratification.
Prompt payment legislation came into force in Ontario last fall. Federal rules are incoming, but have been put on hold due to the COVID-19 pandemic.
46 / OCTOBER 2020
