Wisconsin’s Prompt Payment Law

If you’re a contractor working on Wisconsin state projects, you need to understand the state’s prompt payment law. This law protects you by ensuring you get paid on time – and if you don’t, you earn interest on late payments. Here’s everything you need to know about Wisconsin’s prompt payment requirements for public projects.

What is Wisconsin’s Prompt Payment Law?

Wisconsin’s prompt payment law, found in Section 16.528 of the Wisconsin Statutes, requires state agencies to pay contractors and suppliers within specific timeframes. This law applies only to public projects involving Wisconsin state agencies – it doesn’t cover private work or projects with local municipalities.

The law serves as your financial safety net when working with the state. It ensures you get paid promptly for your work and provides compensation when payments run late.

Key Payment Requirements

The 30-Day Rule

State agencies must issue payment within 30 days of receiving a properly completed invoice or the goods and services, whichever comes later. This means:

• The clock starts ticking when the state receives your complete, accurate invoice
• If you deliver services after submitting your invoice, payment is due 30 days from service completion
• The state must either mail a check or deposit an ACH payment within this timeframe

What Happens When Payments Are Late

If a state agency misses the 30-day deadline, they must pay you 12% interest, compounded monthly. This interest rate is significantly higher than most bank rates, making it costly for agencies to pay late.

The interest calculation begins immediately after the 30-day period expires. For example, if your payment is 10 days late, you’ll receive interest for those 10 days at the 12% annual rate.

The Importance of Properly Completed Invoices

Your invoice must be complete and accurate for the payment clock to start. If your invoice is missing required information or contains errors, the state will return it to you. This return stops the payment timeline and can significantly delay your money.

What Makes an Invoice “Properly Completed”

A properly completed invoice typically includes:

• Your business name and address
• Invoice number
• Invoice date
• Description of work performed or goods provided
• Purchase order number (if applicable)
• Correct payment amount
• Any other information required by your contract

Important: Never add late fees, penalties, or additional charges to your invoices. If you do, the state will automatically return your invoice, causing delays.

Real-World Payment Timeline Examples

Let’s look at how the prompt payment law works in practice:

Example 1: Standard Processing

• May 1: You create and date your invoice
• May 6: The state receives your properly completed invoice
• June 5: Payment deadline (30 days from May 6)

In this scenario, the state has until June 5 to issue your payment. If they pay on or before this date, no interest is owed.

Example 2: Invoice Issues Cause Delays

• May 1: You create and date your invoice
• May 3: The state receives your invoice, but it’s missing your invoice number
• May 6: The state returns your incomplete invoice
• May 10: You resubmit a corrected, complete invoice
• June 9: Payment deadline (30 days from May 10)

Notice how the incomplete invoice reset the entire timeline. The payment clock didn’t start until the state received your corrected invoice on May 10.

Common Invoice Mistakes That Cause Delays

Avoid these common errors that will get your invoice returned:

Missing Required Information

• No invoice number
• Missing purchase order number when required
• Incomplete business address
• Vague work descriptions

Prohibited Charges

• Late payment fees
• Processing charges
• Penalty fees
• Interest charges

Calculation Errors

• Incorrect totals
• Wrong tax amounts
• Pricing that doesn’t match contract terms

Why This Law Matters for Contractors

The prompt payment law provides several key benefits:

Predictable Cash Flow

You can count on payment within a specific timeframe, helping you manage your business finances and plan future projects.

Protection Against Late Payments

The 12% interest rate gives state agencies a strong incentive to pay on time. Few agencies want to pay this premium for late payments.

Clear Rules

The law removes guesswork about payment terms. You know exactly when payment is due and what happens if it’s late.

Tips for Faster Payments

Double-Check Your Invoices

Review every invoice before submission. Ensure all required fields are complete and accurate. A few minutes of checking can prevent weeks of delays.

Understand Contract Requirements

Each contract may have specific invoicing requirements. Read your contract carefully and follow all guidelines. Professional construction contract review can help you identify all invoicing requirements and payment terms before starting work.

Keep Detailed Records

Maintain records of when you submit invoices and when the state receives them. This documentation helps if payment disputes arise.

Submit Invoices Promptly

Don’t wait to submit invoices. The sooner you submit a properly completed invoice, the sooner you’ll get paid.

What to Do If Payment Is Late

If a state agency misses the 30-day deadline:

1. Calculate the interest owed: Use the 12% annual rate, compounded monthly
2. Contact the paying agency: Inquire about the delay and remind them of the interest requirement
3. Document everything: Keep records of late payments and communications
4. Be patient but persistent: State agencies must pay the interest, but you may need to follow up

If payment issues persist beyond state requirements, our construction debt collection services can help you recover what you’re owed.

Limitations of the Law

Remember these important limitations:

Public Projects Only

This law applies solely to Wisconsin state agencies. It doesn’t cover:

• Private sector projects
• Local government projects (cities, counties)
• Federal projects
• Work for other states

No Additional Fees Allowed

You cannot charge your own late fees or penalties. The state’s 12% interest is the only additional compensation for late payments.

Planning for Success

Understanding Wisconsin’s prompt payment law helps you work more effectively with state agencies. By submitting complete, accurate invoices and following proper procedures, you can ensure steady cash flow on public projects.

For comprehensive legal support with public contracting matters, our construction law attorneys can help you navigate complex regulations and protect your business interests.

The law creates a win-win situation: state agencies get clear invoicing standards, and contractors get reliable payment schedules with built-in protection against delays.

When bidding on Wisconsin state projects, factor this payment reliability into your proposals. Knowing you’ll receive payment within 30 days (plus interest if late) provides valuable predictability for your business operations.

Wisconsin’s prompt payment law demonstrates the state’s commitment to treating contractors fairly. By understanding and following these requirements, you can focus on delivering quality work while maintaining healthy cash flow for your business.