Canadian contractors have long struggled with late payments. While our neighbours to the south have implemented various prompt payment laws, Canada has taken a little longer to get onboard. Luckily, provincial governments and construction associations are leading the way.
Prompt Payment as Law
Prompt payment in Canada began in Ontario when the province commissioned a report from industry experts who broadly consulted the industry, conducted case studies, and produced a report entitled Striking the Balance: Expert Review of Ontario’s Construction Lien Act.3 By December 2017 this was adopted into legislation in the form of Bill 142, the Construction Lien Act Amendment Act, 2017. Manitoba, New Brunswick, and Quebec have all began to put their own laws in motion. Other provinces, namely British Columbia, Saskatchewan, and our own Alberta, have engaged stakeholders to consider reform on a more informal level.
Alberta Infrastructure Leading the Charge
Alberta Infrastructure has been paving the way for prompt payment legislation in Alberta by tailoring their contracts to address the issues of prompt payment and progressive release of holdback. In addition, The Alberta Construction Association has been working with AI to put pressure on the government. They are hoping that their most recent letter to the government will spur legislative action.
The Benefits Extend Further Than You Think
Prompt payment doesn’t just benefit contractors, it has a butterfly effect on the entire industry and the communities we do work in. Increased cash flow means more jobs for Albertans and their families since companies will be able to afford more staff. Small businesses will see the biggest benefit because prompt payment will allow them to pursue more work. In addition, the costs of financing receivables will be reduced, effectively increasing the number of competitive bids for a project.
Change is inevitable and the momentum towards prompt payment legislation is only growing. Here at Westcal Insulation Ltd, we fully support the drive towards legislation. We believe through fair business practice and regulation that the construction industry, and everyone affected by it, will have a brighter future.
