Prompt Payment of Local Government Bills

Cities, counties, towns, school districts, and political subdivisions or agencies of local government must pay vendor bills according to the terms of the contract with the vendor. If no contract term applies, the bill must be paid within a “standard payment period” unless there is a good faith dispute over the bill. See Minn. Stat. § 471.425. If the bill is not paid within the standard payment period, the public entity must pay interest charges.

Under the statute, the standard payment period from the date of receipt of the goods or services, or the invoice for the goods or services, whichever is later, is:

• 35 days for governing boards with regularly scheduled meetings at least once a month;
• 45 days for governing boards that do not regularly meet at least once a month; and
• 45 days for joint powers organizations.

If an invoice is incorrect, defective or otherwise improper, the statute requires the entity to notify the vendor within ten days of the date of receipt.

This statute applies to all goods, leases and rents, and contracts for services, construction, repair and remodeling. It provides a specific exception for certain contracts with a public utility or telephone company.

Date this Avoiding Pitfall was most recently published: 7/9/2021