What is the monthly interest rate for late payments to subcontractors and material suppliers according to the Prompt Pay Act?

The Prompt Pay Act specifies that the monthly interest rate for late payments to subcontractors and material suppliers is established at 1.5%. This rate is significant because it serves as an incentive for timely payments within the construction industry, ensuring that subcontractors and suppliers are not unduly delayed in receiving their payments for work completed or materials supplied. The 1.5% monthly interest can accumulate over time, making it an important factor for contractors to consider in their financial management and payment practices.

Understanding that this specific percentage is set to facilitate cash flow in construction projects helps to promote a healthier financial environment and maintains good relationships between contractors and their subcontractors or suppliers.