For a long time, slow payment was just something contractors and subcontractors accepted as part of the industry. Owners paid general contractors late, general contractors paid subs even later, and everyone below the top of the chain financed the job on their own credit. Over the past several years, a number of Canadian provinces have introduced prompt payment legislation aimed at fixing exactly that problem. This guide is a practical overview, not legal advice — the rules differ by province, are still evolving in some jurisdictions, and you should confirm the current requirements that apply to your contracts with a construction lawyer or your accountant.
What prompt payment legislation is trying to fix
The core idea behind prompt payment laws is simple: once an owner is satisfied with an invoice, payment should move down the contracting chain within a defined window, rather than sitting until it suits whoever is holding the money. Before these laws existed, there was often no legal deadline forcing an owner to pay a general contractor, or a general contractor to pay a sub, once the work was accepted.
That gap let payment delays cascade. A subcontractor at the bottom of the chain could do the work, submit an accurate invoice, and still wait months while money moved slowly — or not at all — through several layers above them. Prompt payment legislation sets statutory timelines and gives unpaid parties a faster way to enforce them.
Where prompt payment rules apply
Several Canadian provinces have introduced prompt payment regimes in recent years, generally alongside changes to their construction lien or builders' lien legislation. Coverage, timelines, and the types of contracts affected are not identical from province to province, and legislation in this area has continued to change. Do not assume a rule that applies in one province applies the same way in another.
- Confirm whether prompt payment rules apply to your specific contract type and project
- Check whether the legislation covers private projects, public projects, or both in your province
- Verify current statutory payment and adjudication timelines with a construction lawyer
- Re-check the rules periodically — this area of law has been actively evolving
How the payment chain typically works
While the details vary, prompt payment regimes generally follow a similar shape. An owner receives a proper invoice from the general contractor and has a defined window to pay it in full or dispute it in writing. Once the general contractor is paid, they in turn have their own window to pay subcontractors for the portion of the work covered by that payment, and the obligation cascades down the chain in the same way.
The mechanism only works if invoices are proper — meaning they meet whatever form and content requirements the legislation sets out. An invoice missing required information may not start the clock at all, which is one of the most common ways contractors accidentally give up the protection the law is meant to provide.
Adjudication: a faster way to resolve disputes
Alongside payment deadlines, many prompt payment regimes introduced adjudication — a faster, interim dispute resolution process that runs in weeks rather than the months or years a court claim can take. Adjudication decisions are typically binding on an interim basis, meaning the losing party generally has to pay in the short term even if they intend to dispute the outcome later through litigation or arbitration.
Adjudication is not a replacement for a well-drafted contract or a lien claim — it is an additional tool. Whether a specific dispute qualifies for adjudication, and what the process requires, depends on your province's legislation and your contract terms.
What this means for your paperwork
Prompt payment legislation puts a premium on invoicing discipline. If your invoices are vague, missing required details, or sent irregularly, you make it harder to prove when the clock started — and harder to rely on the legal protections you may be entitled to.
- Send invoices on a consistent schedule tied to completed work or milestones
- Include the information your province's legislation requires on a proper invoice
- Keep a clear record of when each invoice was sent and to whom
- Document any dispute or non-payment notice you receive, and when you received it
- Track payment dates against the applicable statutory deadlines
How BuildersBridge helps you stay organized
BuildersBridge will not tell you which prompt payment rules apply to your project — that determination depends on your province, your contract, and the specifics of the job, and it belongs with your lawyer or accountant. What it does is give you the invoicing discipline that prompt payment regimes reward: progress billing tied to project milestones, invoices generated with the correct GST, HST, or PST for the province, and a record of when each invoice was sent and when it was paid.
Because invoices, change orders, and payments are all tied to the same project record, you have a clear, dated paper trail if you ever need to show when an invoice was sent and what it covered — which is exactly the kind of record prompt payment and adjudication processes rely on.
A practical checklist
Before you assume prompt payment protections apply — or fail to apply — to a job, work through this list.
- Confirm with a construction lawyer whether prompt payment legislation applies to this contract and province
- Build your invoicing schedule around the payment triggers the legislation expects
- Make sure every invoice meets your province's requirements for a proper invoice
- Know the statutory deadlines that apply to you, in writing, not from memory
- Keep records organized so you could reconstruct the payment timeline if a dispute arose