Requires state agencies to pay small businesses within fifteen days of receipt of an invoice

BILL NUMBER:S5283A

Title of bill

An act to amend the state finance law, in relation to requiring state agencies to pay small businesses within fifteen days of receipt of an invoice

Purpose or general idea of bill

The purpose of this bill is to ensure that small businesses are paid within fifteen days of receipt of an invoice for certain payments so that they may continue to sustain themselves and conduct their business activities.

Summary of specific provisions

This bill amends the prompt payment provisions of section 179-f of the state finance law to ensure that small businesses are paid by state agencies within 15 days of receipt of an invoice for contracts other than highway construction contracts, unless certain conditions exist to justify a delay in payment. Such conditions would be required to be rectified as soon as possible in order for small businesses to be paid in a timely manner. Interest would start accruing on such payments when agencies do not provide payment to small businesses within 15 days.

This bill defines a small business as one whose primary place of business is in New York state, which has a significant business presence in the state, that is independently owned and operated, not dominant in its field, and employs no more than three hundred employees.

This bill would take effect on the 180th day after it shall have become a law, and would apply only to invoices received after such date.

Justification

Many small businesses have limited available funds to carry them from each respective pay period, let alone month to month. Therefore, in order to ensure that small businesses and their employees are given the best opportunity to succeed and sustain themselves, it is imperative to implement an accelerated prompt pay system to ensure the sustainability of these businesses. Shortening the prompt payment provisions of the state finance law from 30 days to 15 days will help to facilitate meaningful and lasting participation of small businesses on state contracts.

State agencies would have six months to implement these changes to their prompt payment systems. Given the advances the state has made with improving its business practices and processing of payments through the Statewide Financial System and other practices, this bill should be able to be implemented smoothly in order to help small businesses succeed. Similar provisions have been successfully implemented in other parts of the country.

Prior legislative history

This is a new bill.

Fiscal implications

Minimal.

Effective date

This act shall take effect on the 180th day after it shall have become a law and shall apply only to invoices received after such date.