Late payment issues in the construction industry have long been a source of frustration for contractors and subcontractors across Canada. In British Columbia, relief might finally be on the way as new regulations targeting this persistent problem take effect.
The provincial government has introduced prompt payment legislation aimed at ensuring contractors and subcontractors receive compensation for their work in a timely manner. These measures represent a significant shift in how cash flows through construction projects in the province.
“We’ve seen far too many cases where small and medium-sized contractors wait 90, 120, or even 180 days to get paid for completed work,” says Valerie Chen, executive director of the BC Construction Association. “This creates impossible cash flow situations, especially for smaller operators who still need to pay their workers and suppliers.”
The new regulations establish a clear payment timeline, requiring project owners to pay contractors within 28 days of receiving a proper invoice. Contractors must then pay their subcontractors within seven days of receiving that payment. This cascading payment structure aims to ensure money flows through the entire construction chain efficiently.
For Jordan Bateman, VP of the Independent Contractors and Businesses Association, the change couldn’t come soon enough. “The old way of doing business put tremendous pressure on the smallest players in our industry. These folks aren’t banks – they can’t finance projects for months while waiting to get paid for work they’ve already completed.”
Late payments have broader economic consequences beyond just immediate cash flow problems. According to data from Statistics Canada, construction represents about 9% of BC’s GDP, with thousands of small and medium-sized businesses participating in the sector. When payments are delayed, it creates ripple effects: delayed hiring, postponed equipment purchases, and even business failures.
One Vancouver Island contractor, who wished to remain anonymous, described the reality: “I’ve had to take out personal loans to cover payroll because a general contractor was sitting on our payment for three months. My crew has families to feed – they can’t wait for some corporate accounting department to process our invoice.”
The regulations also introduce an adjudication system, providing contractors with a faster and less expensive way to resolve payment disputes compared to traditional litigation. This mechanism allows smaller operations to pursue what they’re owed without getting caught in lengthy legal battles they can’t afford.
Industry response has been largely positive, though some developers and property owners have expressed concerns about the rigid timelines. “The challenge comes when there are legitimate issues with the work performed,” notes Raymond Wilson, a commercial property developer in Kelowna. “Sometimes we need more time to properly assess complex installations, but the regulations don’t always provide that flexibility.”
To prepare for the changes, many contractors are upgrading their invoicing systems and documentation procedures. Proper invoicing is crucial, as the payment clock only starts once a correctly formatted invoice has been submitted.
“We’ve invested in new software and trained our team on exactly what constitutes a proper invoice under the new rules,” explains Sarah Nagra, who runs a Surrey-based electrical contracting business. “The regulations are only helpful if you follow them to the letter.”
BC joins Ontario and several other provinces that have already implemented similar prompt payment legislation. Early data from Ontario, which introduced comparable rules in 2019, suggests a positive impact on payment timelines across the industry.
For workers in the construction sector, the regulations represent recognition of a longstanding issue that has affected their livelihoods. “I’ve worked on sites where everyone knew payment would be late – it was just accepted as part of the business,” says Miguel Rodriguez, a concrete finisher with 15 years of experience. “These rules send a message that our work has value, and that value should be promptly compensated.”
Construction industry advocates point out that prompt payment also benefits project owners and the public. When contractors aren’t forced to build payment delays into their bids, project costs can potentially decrease. Additionally, when companies aren’t struggling with cash flow, they can focus on quality and safety rather than merely surviving until the next payment arrives.
The regulations include a phase-in period to allow the industry to adjust, with full enforcement expected by mid-2024. The government has promised to monitor implementation closely and make adjustments if needed.
As BC’s construction industry adapts to these new payment structures, the hope is that more predictable cash flow will strengthen the sector, particularly for the smaller operators who form the backbone of the industry. For thousands of tradespeople across the province, getting paid on time for completed work shouldn’t be revolutionary – but for many, it will be a welcome change.
