Paying on Time Matters: Best Practices for Public Agencies (Part 2 of 4)

Part 2 – What are California’s Legal Requirements for Payments

California law establishes different prompt payment requirements depending on agency type and procurement method. Understanding these differences is essential to avoid penalties and disputes.

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Construction

For construction contracts, Public Contract Code § 20104.50 requires:

• Payment of undisputed amounts of properly submitted invoices within 30 days, even if you need to withhold some money that is disputed.

• Return of unaccepted invoices within 7 days with explanation or face paying the invoice as submitted.

Non-Construction

For non-construction invoices, timelines are typically net-30 but can also be governed by:

• Contract terms

• Local policies or ordinances

• Government Claims Act processes

What To Do Next – Checklist

• Identify statutes applicable to your agency

• Review local ordinances and board policies for required timelines

• Consider separating construction vs. non-construction invoices

• Train staff on construction vs non-construction rules

Common Pitfalls

1. Applying one rule to all invoice types

2. Missing the 7-day return requirement for construction invoices

3. Not documenting disputes

4. Not paying undisputed construction amounts within statutory timelines

5. Relying on vendor memory instead of records

6. Failing to update policies when statutes change

Key Takeaways

• Construction invoices have clear statutory deadlines

• Non-construction timelines depend on local rules

• Documentation of why payment is not timely is critical

Learn how structured approval tracking for construction invoices can support compliance: https://www.colbitech.com/account-ability

Informational only; not legal advice. Consult counsel and auditors for compliance guidance.

This 4-part series provides a quick look based on a deeper dive article with code references and more detail click here