Construction Prompt Payment Compliance
Ontario's 7-day payment rules are here. Alberta is enforcing. BC is coming. How to meet prompt payment deadlines without drowning in manual payments.
Prompt payment legislation overview
Canada is implementing prompt payment laws province by province. The goal: end the practice of delayed payments that squeeze subcontractors and create cash flow crises down the payment chain.
| Province | Status | Key Requirements |
|---|---|---|
| Federal | In effect | 28-day payment for federal projects |
| Ontario | In effect (phased) | 7-day payment to subs, 28-day from owner |
| Alberta | In effect | Prompt Payment Adjudication Act |
| Saskatchewan | In effect | Builders' Lien Amendment Act |
| Nova Scotia | In effect | Builders' Lien Act amendments |
| British Columbia | Expected 2026 | Similar to Ontario model |
The trend is clear: Every province is moving toward mandatory prompt payment. Getting your payment processes ready now means smoother compliance as new rules roll out.
Payment timelines you must meet
Under Ontario's Construction Act (the model most provinces are following):
Invoice includes all required information: work description, amount, HST, etc.
Unless you've issued a valid notice of non-payment (dispute).
Automatic interest on unpaid amounts. Rate set by regulation.
Non-payment gives subcontractor right to suspend without penalty.
The 7-day math problem
Invoice arrives Friday. You have until the following Friday to pay. But EFT takes 1-2 business days. So you actually need to submit by Wednesday.
Real deadline: 4-5 business days from invoice receipt to have payment submitted.
Consequences of non-compliance
Missing prompt payment deadlines triggers multiple consequences:
Automatic interest
Interest accrues automatically on late payments. No grace period. Rate is set by regulation (typically Bank of Canada rate + 2%).
Lien rights preserved
Non-payment preserves subcontractor lien rights. Liens complicate project completion, financing, and property transfer.
Work suspension
After notice period, subcontractor can suspend work without breaching contract. Project delays and schedule disruption follow.
Adjudication
Disputes go to mandatory adjudication. Fast (28 days) but adds cost and administrative burden. Adjudicator decisions are enforceable.
The business impact: Beyond legal consequences, late payment reputation damages relationships with quality subcontractors. The best subs have options—they'll prioritize contractors who pay on time.
The payment processing challenge
Why construction companies struggle with prompt payment:
High volume
A single project might have 20-50 subcontractors. Multiple active projects mean 100+ payments per payment cycle. Manual processing doesn't scale.
Progress billing complexity
Construction payments aren't simple vendor invoices. Progress billing, holdbacks, change orders, and partial payments require review before payment.
Short timelines
7 days sounds reasonable until you factor in: invoice review (1-2 days), approval (1 day), payment processing (1 day), EFT clearing (1-2 days). There's almost no buffer.
Per-transaction fee barrier
Payment platforms charging $1-2 per transaction become expensive at construction volume. 100 payments × $1.50 = $150/cycle. That adds up across projects.
Automating subcontractor payments
The solution: batch EFT processing that handles high volume without per-transaction fees and fast enough to meet 7-day deadlines.
How batch EFT helps
- Speed: Process 50+ payments in 15 minutes vs hours of manual entry
- Cost: Flat rate replaces per-transaction fees
- Accuracy: Validation catches errors before bank submission
- Audit trail: Every file is a record of payments made by deadline
Most construction accounting software (Jonas, Sage 300 CRE, Procore, CMiC) can export payment runs to Excel or CSV. Convert that export to CPA-005, upload to your bank, done.
Compliant payment workflow
A payment process that meets prompt payment timelines:
Date-stamp receipt immediately. The 7-day clock starts now.
Verify work completed, amounts correct, no disputes. Flag problems immediately.
Approved invoices go into the weekly payment run.
Export approved payments from accounting software, convert to bank file.
Submit EFT file. Ensure submission before daily cutoff (typically 4-6 PM).
1-2 business day clearing. Payment complete within 7-day window.
Weekly payment runs work best
Rather than paying each invoice individually, batch approved invoices into weekly payment runs. Every Tuesday: generate file, upload by Wednesday, funds arrive by Friday.
This gives a consistent rhythm that keeps you within the 7-day window for invoices received the previous week.
Summary
- Ontario requires 7-day payment to subcontractors; other provinces following
- Non-compliance triggers automatic interest, preserved lien rights, work suspension
- With EFT clearing time, actual processing window is 4-5 business days
- Manual payment processing can't reliably meet these timelines at scale
- Batch EFT: process 50+ payments in 15 minutes, flat rate, no per-transaction fees
- Weekly payment runs keep you consistently compliant
Ready for prompt payment compliance?
EFT Flow converts your construction accounting exports into bank-ready CPA-005 files. Process 50+ subcontractor payments in minutes. Meet every deadline, every time.