PROMPT PAYMENT-INTEREST

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104TH GENERAL ASSEMBLY
State of Illinois
2025 and 2026
SB2845

Introduced 1/13/2026, by Sen. Michael W. Halpin

SYNOPSIS AS INTRODUCED:

30 ILCS 540/3-2
30 ILCS 540/3-6
30 ILCS 540/7

from Ch. 127, par. 132.407

Amends the State Prompt Payment Act. Makes technical changes to
eliminate obsolete provisions. Provides that, if an agency incurs an
interest liability that cannot be charged to the same expenditure
authority account to which the related goods or services were charged due
to federal prohibitions, the agency may pay the interest from any moneys
appropriated to the agency that are not otherwise prohibited to be used for
the purpose of paying interest. Provides that, when a State official or
agency responsible for administering a contract receives a bill or invoice
from a contractor, that State official or agency shall confirm the date on
which the bill or invoice was received within 15 business days of receipt
and shall transmit any approved amount to the Comptroller within 30 days of
receipt. Provides that a State official or agency that is responsible for
administering a contract submits a voucher to the Comptroller for payment,
the official or agency shall make available electronically the voucher
number, the date of the voucher, and the amount of the voucher within 15
days after submitting the voucher to the Comptroller (currently, that
information shall be made available promptly).
LRB104 17184 HLH 30603 b

A BILL FOR

SB2845
LRB104 17184 HLH 30603 b
1

AN ACT concerning finance.

2

Be it enacted by the People of the State of Illinois,
3
represented in the General Assembly:

4

Section 5.
The State Prompt Payment Act is amended by
5
changing Sections 3-2, 3-6, and 7 as follows:

6

(30 ILCS 540/3-2)
7

Sec. 3-2.
Beginning July 1, 1993, in any instance where a
8
State official or agency is late in payment of a vendor's bill
9
or invoice for goods or services furnished to the State, as
10
defined in Section 1, properly approved in accordance with
11
rules promulgated under Section 3-3, the State official or
12
agency shall pay interest to the vendor in accordance with the
13
following:
14

(1)
(Blank).

Any bill, except a bill submitted under
15

Article V of the Illinois Public Aid Code and except as
16

provided under paragraph (1.05) of this Section, approved
17

for payment under this Section must be paid or the payment
18

issued to the payee within 60 days of receipt of a proper
19

bill or invoice. If payment is not issued to the payee
20

within this 60-day period, an interest penalty of 1.0% of
21

any amount approved and unpaid shall be added for each
22

month or fraction thereof after the end of this 60-day
23

period, until final payment is made. Any bill, except a

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1

bill for pharmacy or nursing facility services or goods,
2

and except as provided under paragraph (1.05) of this
3

Section, submitted under Article V of the Illinois Public
4

Aid Code approved for payment under this Section must be
5

paid or the payment issued to the payee within 60 days
6

after receipt of a proper bill or invoice, and, if payment
7

is not issued to the payee within this 60-day period, an
8

interest penalty of 2.0% of any amount approved and unpaid
9

shall be added for each month or fraction thereof after
10

the end of this 60-day period, until final payment is
11

made. Any bill for pharmacy or nursing facility services
12

or goods submitted under Article V of the Illinois Public
13

Aid Code, except as provided under paragraph (1.05) of
14

this Section, and approved for payment under this Section
15

must be paid or the payment issued to the payee within 60
16

days of receipt of a proper bill or invoice. If payment is
17

not issued to the payee within this 60-day period, an
18

interest penalty of 1.0% of any amount approved and unpaid
19

shall be added for each month or fraction thereof after
20

the end of this 60-day period, until final payment is
21

made.

22

(1.05) For State fiscal year 2012 and future fiscal
23

years, any bill approved for payment under this Section
24

must be paid or the payment issued to the payee within 90
25

days of receipt of a proper bill or invoice. If payment is
26

not issued to the payee within this 90-day period, an

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1

interest penalty of 1.0% of any amount approved and unpaid
2

shall be added for each month, or 0.033% (one-thirtieth of
3

one percent) of any amount approved and unpaid for each
4

day, after the end of this 90-day period, until final
5

payment is made.
6

(1.1) A State agency shall review
in a timely manner

7

each bill or invoice
within 30 days
after its receipt. If
8

the State agency determines that the bill or invoice
9

contains a defect making it unable to process the payment
10

request, the agency shall notify the vendor requesting
11

payment
as soon as possible after discovering the defect
12

pursuant to rules promulgated under Section 3-3; provided,
13

however, that the notice for construction related bills or
14

invoices must be given
not later than 30 days after the
15

bill or invoice was first submitted. The notice shall
16

identify the defect and any additional information
17

necessary to correct the defect. If one or more items on a
18

construction related bill or invoice are disapproved, but
19

not the entire bill or invoice, then the portion that is
20

not disapproved shall be paid
in accordance with the
21

requirements of this Act
.
22

(2) Where a State official or agency is late in
23

payment of a vendor's bill or invoice properly approved in
24

accordance with this Act, and different late payment terms
25

are not reduced to writing as a contractual agreement, the
26

State official or agency shall automatically pay interest

SB2845
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1

penalties required by this Section amounting to $50 or
2

more to the appropriate vendor. Each agency shall be
3

responsible for determining whether an interest penalty is
4

owed and for paying the interest to the vendor. Except as
5

provided in paragraph (4), an individual interest payment
6

amounting to $5 or less shall not be paid by the State.
7

Interest due to a vendor that amounts to greater than $5
8

and less than $50 shall not be paid but shall be accrued
9

until all interest due the vendor for all similar warrants
10

exceeds $50, at which time the accrued interest shall be
11

payable and interest will begin accruing again, except
12

that interest accrued as of the end of the fiscal year that
13

does not exceed $50 shall be payable at that time. In the
14

event an individual has paid a vendor for services in
15

advance, the provisions of this Section shall apply until
16

payment is made to that individual.
17

(3) The provisions of Public Act 96-1501 reducing the
18

interest rate on pharmacy claims under Article V of the
19

Illinois Public Aid Code to 1.0% per month shall apply to
20

any pharmacy bills for services and goods under Article V
21

of the Illinois Public Aid Code received on or after the
22

date 60 days before January 25, 2011 (the effective date
23

of Public Act 96-1501) except as provided under paragraph
24

(1.05) of this Section.
25

(4) Interest amounting to less than $5 shall not be
26

paid by the State, except for claims (i) to the Department

SB2845
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1

of Healthcare and Family Services or the Department of
2

Human Services, (ii) pursuant to Article V of the Illinois
3

Public Aid Code, the Covering ALL KIDS Health Insurance
4

Act, or the Children's Health Insurance Program Act, and
5

(iii) made (A) by pharmacies for prescriptive services or
6

(B) by any federally qualified health center for
7

prescriptive services or any other services.
8

Notwithstanding any provision to the contrary, interest
9
may not be paid under this Act when: (1) a Chief Procurement
10
Officer has voided the underlying contract for goods or
11
services under Article 50 of the Illinois Procurement Code; or
12
(2) the Auditor General is conducting a performance or program
13
audit and the Comptroller has held or is holding for review a
14
related contract or vouchers for payment of goods or services
15
in the exercise of duties under Section 9 of the State
16
Comptroller Act. In such event, interest shall not accrue
17
during the pendency of the Auditor General's review.
18
(Source: P.A. 100-1064, eff. 8-24-18.)

19

(30 ILCS 540/3-6)
20

Sec. 3-6.
Federal funds; lack of authority.
If an agency
21
incurs an interest liability under this Act that cannot be
22
charged to the same expenditure authority account to which the
23
related goods or services were charged due to federal
24
prohibitions, the agency is authorized to pay the interest
25
from its available appropriations from the General Revenue

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1
Fund
or from any other moneys appropriated to the agency and
2
not otherwise prohibited to be used for the purpose of paying
3
interest
, except that the Department of Transportation is
4
authorized to pay the interest from its available
5
appropriations from the Road Fund, as long as the original
6
goods or services were for purposes consistent with Section 11
7
of Article IX of the Illinois Constitution.
8
(Source: P.A. 103-588, eff. 6-5-24.)

9

(30 ILCS 540/7)

(from Ch. 127, par. 132.407)
10

Sec. 7.
Payments to subcontractors and material suppliers.
11

(a) When a State official or agency responsible for
12
administering a contract
receives a bill or invoice from a
13
contractor, that State official or agency shall confirm the
14
date on which the bill or invoice was received within 15
15
business days of receipt and shall transmit any approved
16
amount to the Comptroller within 30 days of receipt.
17

(a-1) When a State official or agency responsible for
18
administering a contract
submits a voucher to the Comptroller
19
for payment to a contractor, that State official or agency
20
shall
promptly
make available electronically the voucher
21
number, the date of the voucher, and the amount of the voucher
22
within 15 business days of submitting the voucher to the
23
Comptroller
. The State official or agency responsible for
24
administering the contract shall provide subcontractors and
25
material suppliers, known to the State official or agency,

SB2845
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1
with instructions on how to access the electronic information
2
on the Comptroller's website
.
3

(a-5) When a contractor receives any payment, the
4
contractor shall pay each subcontractor and material supplier
5
electronically within 10 business days or 15 calendar days,
6
whichever occurs earlier, or, if paid by a printed check, the
7
printed check must be postmarked within 10 business days or 15
8
calendar days, whichever occurs earlier, after receiving
9
payment in proportion to the work completed by each
10
subcontractor and material supplier its application or pay
11
estimate, plus interest received under this Act. When a
12
contractor receives any payment, the contractor shall pay each
13
lower-tiered subcontractor and material supplier and each
14
subcontractor and material supplier shall make payment to its
15
own respective subcontractors and material suppliers. If the
16
contractor receives less than the full payment due under the
17
public construction contract, the contractor shall be
18
obligated to disburse on a pro rata basis those funds
19
received, plus interest received under this Act, with the
20
contractor, subcontractors and material suppliers each
21
receiving a prorated portion based on the amount of payment
22
each has earned. When, however, the State official or agency
23
does not release the full payment due under the contract
24
because there are specific areas of work or materials the
25
State agency or official has determined are not suitable for
26
payment, then those specific subcontractors or material

SB2845
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1
suppliers involved shall not be paid for that portion of work
2
rejected or deemed not suitable for payment and all other
3
subcontractors and suppliers shall be paid based upon the
4
amount of payment each has earned, plus interest received
5
under this Act.
6

(a-10) For construction contracts with the Department of
7
Transportation, the contractor, subcontractor, or material
8
supplier, regardless of tier, shall not offset, decrease, or
9
diminish payment or payments that are due to its
10
subcontractors or material suppliers without reasonable cause.
11

A contractor, who refuses to make prompt payment within 10
12
business days or 15 calendar days, whichever occurs earlier,
13
after receiving payment, in whole or in part, shall provide to
14
the subcontractor or material supplier and the public owner or
15
its agent, a written notice of that refusal. The written
16
notice shall be made by a contractor no later than 5 calendar
17
days after payment is received by the contractor. The written
18
notice shall identify the Department of Transportation's
19
contract, any subcontract or material purchase agreement, a
20
detailed reason for refusal, the value of the payment to be
21
withheld, and the specific remedial actions required of the
22
subcontractor or material supplier so that payment may be
23
made. Written notice of refusal may be given in a form and
24
method which is acceptable to the parties and public owner.
25

(b) If the contractor, without reasonable cause, fails to
26
make full payment of amounts due under subsection (a) to its

SB2845
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LRB104 17184 HLH 30603 b
1
subcontractors and material suppliers within 10 business days
2
or 15 calendar days, whichever occurs earlier, after receipt
3
of payment from the State official or agency, the contractor
4
shall pay to its subcontractors and material suppliers, in
5
addition to the payment due them, interest in the amount of 2%
6
per month, calculated from the expiration of the
7
10-business-day period or the 15-calendar-day period until
8
fully paid. This subsection shall further apply to any
9
payments made by subcontractors and material suppliers to
10
their subcontractors and material suppliers and to all
11
payments made to lower tier subcontractors and material
12
suppliers throughout the contracting chain.
13

(1) If a contractor, without reasonable cause, fails
14

to make payment in full as provided in subsection (a-5)
15

within 10 business days or 15 calendar days, whichever
16

occurs earlier, after receipt of payment under the public
17

construction contract, any subcontractor or material
18

supplier to whom payments are owed may file a written
19

notice and request for administrative hearing with the
20

State official or agency setting forth the amount owed by
21

the contractor and the contractor's failure to timely pay
22

the amount owed. The written notice and request for
23

administrative hearing shall identify the public
24

construction contract, the contractor, and the amount
25

owed, and shall contain a sworn statement or attestation
26

to verify the accuracy of the notice. The notice and

SB2845
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LRB104 17184 HLH 30603 b
1

request for administrative hearing shall be filed with the
2

State official for the public construction contract, with
3

a copy of the notice concurrently provided to the
4

contractor. Notice to the State official may be made by
5

certified or registered mail, messenger service, or
6

personal service, and must include proof of delivery to
7

the State official.
8

(2) The State official or agency, within 15 calendar
9

days after receipt of a subcontractor's or material
10

supplier's written notice and request for administrative
11

hearing, shall hold a hearing convened by an
12

administrative law judge to determine whether the
13

contractor withheld payment, without reasonable cause,
14

from the subcontractors or material suppliers and what
15

amount, if any, is due to the subcontractors or material
16

suppliers, and the reasonable cause or causes asserted by
17

the contractor. The State official or agency shall provide
18

appropriate notice to the parties of the date, time, and
19

location of the hearing. Each contractor, subcontractor,
20

or material supplier has the right to be represented by
21

counsel at a hearing and to cross-examine witnesses and
22

challenge documents. Upon the request of the subcontractor
23

or material supplier and a showing of good cause,
24

reasonable continuances may be granted by the
25

administrative law judge.
26

(3) Upon a finding by the administrative law judge

SB2845
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LRB104 17184 HLH 30603 b
1

that the contractor failed to make payment in full,
2

without reasonable cause, as provided in subsection
3

(a-10), then the administrative law judge shall, in
4

writing, order the contractor to pay the amount owed to
5

the subcontractors or material suppliers plus interest
6

within 15 calendar days after the order.
7

(4) If a contractor fails to make full payment as
8

ordered under paragraph (3) of this subsection (b) within
9

15 days after the administrative law judge's order, then
10

the contractor shall be barred from entering into a State
11

public construction contract for a period of one year
12

beginning on the date of the administrative law judge's
13

order.
14

(5) If, on 2 or more occasions within a
15

3-calendar-year period, there is a finding by an
16

administrative law judge that the contractor failed to
17

make payment in full, without reasonable cause, and a
18

written order was issued to a contractor under paragraph
19

(3) of this subsection (b), then the contractor shall be
20

barred from entering into a State public construction
21

contract for a period of 6 months beginning on the date of
22

the administrative law judge's second written order, even
23

if the payments required under the orders were made in
24

full.
25

(6) If a contractor fails to make full payment as
26

ordered under paragraph (4) of this subsection (b), the

SB2845
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LRB104 17184 HLH 30603 b
1

subcontractor or material supplier may, within 30 days of
2

the date of that order, petition the State agency for an
3

order for reasonable attorney's fees and costs incurred in
4

the prosecution of the action under this subsection (b).
5

Upon that petition and taking of additional evidence, as
6

may be required, the administrative law judge may issue a
7

supplemental order directing the contractor to pay those
8

reasonable attorney's fees and costs.
9

(7) The written order of the administrative law judge
10

shall be final and appealable under the Administrative
11

Review Law.
12

(b-5) On or before July 2021, the Department of
13
Transportation shall publish on its website a searchable
14
database that allows for queries for each active construction
15
contract by the name of a subcontractor or the pay item such
16
that each pay item is associated with either the prime
17
contractor or a subcontractor.
18

(c) This Section shall not be construed to in any manner
19
diminish, negate, or interfere with the
20
contractor-subcontractor or contractor-material supplier
21
relationship or commercially useful function.
22

(d) This Section shall not preclude, bar, or stay the
23
rights, remedies, and defenses available to the parties by way
24
of the operation of their contract, purchase agreement, the
25
Mechanics Lien Act, or the Public Construction Bond Act.
26

(e) State officials and agencies may adopt rules as may be

SB2845
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1
deemed necessary in order to establish the formal procedures
2
required under this Section.
3

(f) As used in this Section:
4

"Payment" means the discharge of an obligation in money or
5
other valuable consideration or thing delivered in full or
6
partial satisfaction of an obligation to pay. "Payment" shall
7
include interest paid pursuant to this Act.
8

"Reasonable cause" may include, but is not limited to,
9
unsatisfactory workmanship or materials; failure to provide
10
documentation required by the contract, subcontract, or
11
material purchase agreement; claims made against the
12
Department of Transportation or the subcontractor pursuant to
13
subsection (c) of Section 23 of the Mechanics Lien Act or the
14
Public Construction Bond Act; judgments, levies, garnishments,
15
or other court-ordered assessments or offsets in favor of the
16
Department of Transportation or other State agency entered
17
against a subcontractor or material supplier. "Reasonable
18
cause" does not include payments issued to the contractor that
19
create a negative or reduced valuation pay application or pay
20
estimate due to a reduction of contract quantities or work not
21
performed or provided by the subcontractor or material
22
supplier; the interception or withholding of funds for reasons
23
not related to the subcontractor's or material supplier's work
24
on the contract; anticipated claims or assessments of third
25
parties not a party related to the contract or subcontract;
26
asserted claims or assessments of third parties that are not

SB2845
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LRB104 17184 HLH 30603 b
1
authorized by court order, administrative tribunal, or
2
statute. "Reasonable cause" further does not include the
3
withholding, offset, or reduction of payment, in whole or in
4
part, due to the assessment of liquidated damages or penalties
5
assessed by the Department of Transportation against the
6
contractor, unless the subcontractor's performance or supplied
7
materials were the sole and proximate cause of the liquidated
8
damage or penalty.
9
(Source: P.A. 100-43, eff. 8-9-17; 100-376, eff. 1-1-18;
10
100-863, eff. 8-14-18; 101-524, eff. 1-1-20
.)

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