What Sales Managers Need to Know About Canada’s New Prompt Payment Act

The Federal Prompt Payment for Construction Work Act comes into force, which impacts payment timelines for construction projects. This Act applies to federal building contracts across Canada.

Sales managers need to understand these new rules. They will affect how you plan, negotiate, and manage federal construction projects.

When Do the New Rules Apply?

The law took effect on the 9th of December 2023. It covers federal land and buildings. Certain provinces are exempt based on their payment laws (like Alberta). Older contracts have a 1-year grace period.

What is a “Service Provider” Under the Law?

A service provider is a contractor hired by the government for federal properties. It does not include lessors or lessees of federal properties.

What Happens if Supplier Doesn’t Get Paid on Time?

D. Bronwhyn Simmons and David Josiah Allison from Miller Thomson mentioned that contractors can demand adjudication if a proper invoice isn’t paid within 28 days. An impartial third party will decide on payment disputes. Their decision can only be overturned in court.

The law aims to improve payment speed and contractor rights. But it also introduces new legal complexities. Through preparation, you can minimise disruption and demonstrate value to clients.

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