Relates to the definition of small business

Title of bill

An act to amend the state finance law, in relation to the definition of "small business"; and to amend chapter 568 of the laws of 2015, amending the state finance law relating to requiring state agencies to pay small businesses within fifteen days of receipt of an invoice, in relation to the effectiveness thereof

Purpose or general idea of bill

The purpose of this bill is to amend chapter 568 of the laws of 2015 in order to implement an effective system to ensure that small businesses are paid within fifteen days of an agency receiving an invoice for certain payments so that it may continue to sustain itself and conduct its business activities.

Summary of specific provisions

Section 1 amends subdivision 6 of section 179-f of the state finance law as amended by chapter 36 of the laws of 2016 to clarify that a small business will be paid by agencies within 15 days of receipt of an invoice submitted electronically in conformance with the procedures of the statewide financial system, absent a showing by the contracting agency of circumstances beyond its control. Section 1 also amends subdivision 6 of section 179-f of the state finance law to amend the definition of "small business" to mean businesses that employ no more than 200 employees, rather than 300, and to provide that small businesses must upon request submit sufficient documentation to confirm its status as a small business.

Section 2 amends the effective date of chapter 568 of the laws of 2015 to provide for such laws effectiveness 365 days after it shall have become a law, March 31,2017, and shall apply only to invoices received after such date.

Section 3 provides for the effective date.

Justification

This bill reflects the agreed upon amendments to chapter 586 of the laws of 2015. (See approval memo 24 of 2015).

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.

Given the advances the state has made with improving its business practices and processing of payments through the Statewide Financial System and other practices, the provisions of this bill will 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 new legislation.

Fiscal implications for state and local governments

Minimal. EFFECTIVE DATE : This act shall take effect on the same date and in the same manner as a chapter of laws of 2015 amending the state finance law related to requiring state agencies to pay small businesses within fifteen days of receipt of an invoice, as amended, takes effect.