Oklahoma Prompt Payment Law for Contractors

Prompt payment laws aim to ensure that contractors get paid promptly for their work to smooth out cash flow and maintain operational efficiency. In Oklahoma, the state has specific laws under its Prompt Payment Act with rules that vary for public and private projects. This article breaks them down, explaining notice requirements, when interest begins to accrue, and the interest rate that applies.

Part 1: Public Projects in Oklahoma

Notice Requirements

For public projects in Oklahoma, contractors must meet specific notice requirements to secure their payment rights. A contractor working on a public project should submit an invoice to the awarding public entity or general contractor within the agreed-upon billing cycle.

For subcontractors, Oklahoma law states they must submit a notice of unpaid balance or lien notice to the property owner or general contractor if payment is delayed. This step ensures that the public entity or lead contractor is aware of the payment delay and allows subcontractors to protect their interests.

When Interest Begins to Accrue

Under Oklahoma’s Prompt Payment Act, if payment is not made within 30 days of the submission of a proper and undisputed invoice, interest begins to accrue automatically. This period ensures contractors, subcontractors, and suppliers on public projects are not left waiting indefinitely for payment.

Applicable Interest Rate

For public projects, the law states an interest rate of 1.5% per month on any unpaid amount. Contractors should calculate this rate monthly, factoring in how long the payment has been delayed beyond the stipulated 30-day period.

Example: If a contractor is owed $10,000 and the payment is delayed by two months (60 days), an interest of $300 per month will accrue ($10,000 x 0.015 = $150 per month). For two months, this totals $300.

This steady accrual intends to nudge public entities and contractors managing public projects to pay promptly while also compensating the payee for the delay.

Part 2: Private Projects in Oklahoma

Notice Requirements

For private projects, the notice requirements are slightly distinct. Oklahoma’s statutes mandate that contractors and suppliers provide a notice of lien rights or work completion notice if payment deadlines are not honored.

Subcontractors must send a preliminary notice to retain their right to file a lien later. Typically, this notice must be provided within 75 days following the last date of work or delivery of materials.

Contractors, particularly general contractors, may also need to issue formal requests or reminders to the property owner depending on the contract terms.

When Interest Begins to Accrue

For private projects, interest begins to accrue once the agreed-upon payment period has passed. If no specific timeline is mentioned in the contract, contractors and subcontractors can look to Oklahoma’s prompt payment regulations, which require payment within 30 days of an undisputed invoice. Beyond this timeframe, delayed payments incur interest charges unless otherwise noted in the payment agreement.

Applicable Interest Rate

For private projects, the law specifies the same interest rate as public projects, at 1.5% per month on any unpaid balance. Contractors can use this rate to calculate the cost of delayed payments.

Example: Suppose a contractor is owed $15,000 for work completed but has not been paid for 45 days beyond the agreed payment date. After the initial 30-day period, interest of $225 per month begins to accrue ($15,000 x 0.015 = $225). For 15 additional unpaid days, you would calculate a prorated interest amount of $112.50, bringing the total interest to $337.50 for the period.

Protecting Payment Rights

To maximize protection under prompt payment laws for private projects, contractors should ensure all work agreements clearly detail payment terms, timelines, and repercussions for delays. Including interest terms in the contract is an added safeguard to support timely payment.

Practical Insights for Contractors

Understanding and adhering to Oklahoma’s Prompt Payment Law can save contractors from unnecessary losses and disputes. Here are some practical steps to streamline compliance and ensure timely payments for public and private projects:

Clear Documentation

Always maintain a detailed record of construction contracts, invoices, notices, and communication related to any payment delays. These documents are critical to asserting your rights under the law.

Send Timely Notices

Whether it’s a lien notice or an unpaid balance notice, make sure to send notices well within the required timeframes. Setting up automated reminders or workflows can prevent important deadlines from being missed.

Understand Contractual Terms

Before signing a contract, ensure that the payment terms and timelines outlined are consistent with Oklahoma’s legal requirements. If terms deviate from state law, consult with construction contract review services to ensure you are adequately protected.

Leverage the Accrual of Interest

Use the 1.5% monthly interest on delayed payments as a negotiating tool to encourage timely payments from clients or public entities. Contractors should track interest amounts diligently and communicate these charges to prompt action.

Protect Your Payment Rights – Get Legal Support Today

Oklahoma’s Prompt Payment Law provides robust protections for contractors working on both public and private projects. By understanding the notice requirements, accrual of interest, and applicable interest rate, contractors can safeguard their payment rights and maintain financial stability. If faced with prolonged payment issues or construction contract disputes, seeking professional legal guidance can help enforce your rights and recover what you’re owed.

With proactive measures and a good grasp of the law, contractors can focus on completing projects rather than chasing overdue payments. When payment delays persist despite following proper procedures, construction debt collection services can help recover unpaid invoices while you continue building your business.

Don’t let payment delays hurt your cash flow. Contact The Cromeens Law Firm today for expert guidance on prompt payment law compliance, contract review, and collection services tailored to the construction industry.