Local government prompt payment laws: the interest a ride company can claim when a public buyer pays late

A local government prompt payment law gives a ride company two things when a county, school district or special district buys rides: a deadline to pay a proper invoice, and interest if the deadline passes. Florida, Texas and Illinois have such a law for ordinary service contracts. New York’s General Municipal Law 106-b and California’s Public Contract Code 20104.50 are written for construction work, not ride contracts, although New York City agencies follow their own 30-day rule.

Federal agencies run on a separate rule: 30 days from a proper invoice when the contract is silent, and Treasury interest paid automatically. Billing facilities for NEMT rides covers it. If you are still looking for public work, start with government NEMT contracts. This guide is about getting paid once you have it.

Who counts as a local government payer?

Counties, cities and school districts are covered in all three states, and so are special districts and authorities. Each statute lists them in its own words:

• Florida. The act’s “local governmental entity” covers counties, municipalities, school boards and school districts, authorities, special taxing districts and any other political subdivision, along with each one’s offices, boards, commissions and departments (section 218.72).
• Texas. A “political subdivision” is a county, a municipality, a public school district, or a special-purpose district or authority. State agencies are covered too, under the same chapter (Government Code 2251.001).
• Illinois. The act lists every county, township, municipality and school district, plus forest preserve, park, fire protection and sanitary districts and all other local governmental units. It does not apply to the State or its agencies (50 ILCS 505/2).

A nonprofit that runs a regional ride program on contract may not fit those lists. A Medicaid broker or health plan does not. For late payments from a broker, see what to do when a broker pays late.

When is a county’s payment late?

A payment is late on day 31 in Texas, after day 45 in Florida with interest starting at day 75, and no later than day 60 in Illinois, all counted from a proper invoice. The three clocks work differently:

What starts the count also differs:

• Texas counts from the later of the date the entity receives the goods, the date the service is completed, or the date it receives your invoice (2251.021). A ride company’s monthly invoice is usually the last of the three.
• Florida counts from the day the entity’s chief disbursement officer gets a proper invoice, after the governing body approves it where approval is required (218.73). Ask whether the board has to approve ride invoices and how often it meets. Each entity must stamp the date an invoice arrives (218.74(1)), so keep your own proof of delivery.
• Illinois counts from the later of the date the bill arrives or the date the services were received. If the official never approves or disapproves in time, the penalty is counted from day 60 (50 ILCS 505/3 and 505/5).

What does late interest add up to?

On one $12,400 invoice paid 100 days after receipt, the interest is $184.30 in Texas, $124.00 in Florida and $248.00 in Illinois. The example: a county receives your October invoice on November 2, 2026, and pays by transfer on February 10, 2027.

• Texas. The payment becomes overdue on December 3, the 31st day. Interest runs from that date until the county mails or transmits payment. Counting December 3 through February 10, the way the Comptroller counts, that is 70 days. At 7.75 percent, the Comptroller’s formula gives $12,400 x 7.75% x 70 / 365 = $184.30. The rate is the one in effect on September 1 of the fiscal year in which the payment becomes overdue.
• Florida. The payment is due December 17. Interest starts January 16, 30 days later. February 10 is 25 days after that, and any overdue period under a month counts as a whole month, so the charge is 1 percent of $12,400, or $124.00. You have to invoice it.
• Illinois. The county has until December 2 to approve the bill and until January 1 to pay if it approves on the last day. February 10 falls in the second month after January 1, and each month or fraction adds 1 percent of the amount approved and unpaid, so the penalty is 2 percent, or $248.00.

The Texas rate resets each September. The Comptroller lists 8.50 percent for fiscal 2026 and 7.75 percent for fiscal 2027, which applies to late payments from September 1, 2026 through August 31, 2027.

Do you have to ask for the interest?

In Texas you do not, in Florida you must, and in Illinois the act does not say you must. Texas requires a political subdivision to compute the interest, pay it with the principal, and not make the vendor petition, bill or wait an additional day for it (2251.027). Florida says the vendor “must invoice” the local government for the interest to receive it (218.74(4)). Illinois says the penalty “shall be added” (50 ILCS 505/4).

Where you have to ask, send the claim as its own invoice and put the math on it:

1. Reference the original invoice. Give its number, amount and the date the entity received it.
2. Cite the statute and the dates. Say when payment came due, when interest started and the date it was paid.
3. Show the rate and the count. Print the rate and the number of days or months.
4. State the amount owed. Give one total, and ask for it with the next payment.

An example of the wording, using the Florida figures above:

Invoice 2026-1102-INT. Interest under section 218.74(4), Florida Statutes, on invoice 2026-1102 for $12,400.00, received November 2, 2026. Payment was due December 17, 2026. Interest began January 16, 2027, at 1 percent a month, and the invoice was paid February 10, 2027, which counts as one month. Interest due: $124.00.

For the principal itself, use a regular past-due notice from the past due invoice letter.

What stops the interest clock?

A county that rejects an invoice as improper or disputes part of it has to tell you in writing within a short window: 10 days in Florida, 21 days in Texas, and in Illinois within the 30 days it has to approve or disapprove the bill. What each statute does with the interest after that:

• Florida. The entity must tell you in writing within 10 days that an invoice is improper and what to fix (218.76(1)). For a dispute, its own procedure has to begin within 30 days of receipt and end with a final decision within 45 days. If the decision goes your way, interest counts from the original due date. If it goes the entity’s way, interest starts 15 days after the decision. The procedure is not an administrative proceeding, and a court can decide the dispute from scratch.
• Texas. The entity must tell you within 21 days of the invoice about an error or disputed amount, with a detailed statement of the disputed part (2251.042). It may hold back no more than 110 percent of that amount. If you win, interest runs from the original overdue date. If the entity wins, you send a corrected invoice, which gets the same 31-day clock. The interest rules also do not apply to a payment that is late because of a bona fide dispute over the service performed (2251.002(a)(1)).
• Illinois. The official must approve or disapprove within 30 days, and mail written notice immediately when a bill is disapproved (50 ILCS 505/3).

Two Texas exceptions catch ride companies. The prompt payment rules do not apply when the invoice “is not mailed to the person to whom it is addressed in strict accordance with any instruction on the purchase order” (2251.002(a)(4)). Send invoices exactly where the purchase order says.

Grant-funded rides are the other. Texas does not apply the rules when the terms of a federal contract, grant, regulation or statute stop the entity from paying on time with federal funds. Florida says a local government should not buy with federal money without reasonable assurance that it will arrive, and any contingency must be written into the contract and the bid (218.77). Illinois lets a local agency whose money comes from the State certify that to the State, which must expedite the funds and reimburse any penalty caused by a delay of more than 45 days (50 ILCS 505/7). If a county pays for your rides from a state or federal grant, ask in the contract when it expects the money and what happens to your invoice if it comes late.

What do New York and California give a ride company?

The prompt payment statutes that reach local buyers in these two states are written for construction work, so they do not cover a ride contract. Each state also has a rule for its own agencies, and New York City adds one for the City’s agencies:

• New York, local. General Municipal Law 106-b requires a political subdivision to pay a requisition within 30 days (45 days where an elected official must approve progress payments) and to pay interest if it is late. It applies to contracts for building, rebuilding or altering a public work, so it does not reach a ride contract.
• New York City. The City’s Procurement Policy Board Rule 4-06 covers goods and services as well as construction. An agency has 30 days to pay, counted from the later of the day it receives a proper invoice or the seventh day after the services are performed, unless it accepts them sooner. Interest is the maximum rate the law allows, or a lower uniform rate that the Comptroller and the Office of Management and Budget set every six months. None is due on a disputed amount, on money held back under the contract, or when it comes to less than $25, and the City pays interest within 20 days after it pays the invoice.
• New York, state agencies. State Finance Law article 11-A covers a state agency’s contract for services, among others. Payment is due 30 calendar days, excluding legal holidays, after the agency receives a proper invoice, or 15 days for a qualifying small business that submits an electronic invoice asking for it. The agency has 15 days (7 for small businesses) to tell you about a defect. Interest runs from the day after the required payment date to the payment date, at the overpayment rate under Tax Law 1096(e), and is not paid below $10 (179-f and 179-g). The Tax Department’s table lists 6 percent a year for refunds from October 1 through December 31, 2026.
• California, state agencies. The California Prompt Payment Act applies to all state agencies (Government Code 927), which are to pay an undisputed invoice within 45 days or pay the late payment penalty. The agency calculates and pays that penalty without a separate invoice, and the rate changes each fiscal year.
• California, local agencies. Public Contract Code 20104.50 requires a local agency to pay an undisputed, properly submitted progress payment on a construction contract within 30 days, or return it as improper within 7 days. Interest is at the legal rate in Code of Civil Procedure 685.010(a). It is a construction rule and does not reach a ride contract.

For a county or school district ride contract in either state outside New York City, the payment terms in your agreement are what you have. Ask for a payment deadline, a named person who approves invoices, and a late interest clause before you sign. The state agency statutes still matter if you hold a contract with a state department, such as one that buys rides for the people it serves.

Can you stop rides when a county does not pay?

In Texas you can suspend work for an undisputed unpaid amount, after written notice and a wait. Under Government Code 2251.051, the county must have missed the payment deadline, and your notice must say that payment has not arrived and that you intend to suspend performance. You cannot suspend before the 10th day after the notice. You are not required to supply more services until you are paid, plus demobilization and remobilization costs. You are not responsible for damages from stopping unless the county told you in writing, before you stopped, that it had paid or that a bona fide dispute exists, and a dispute notice must list its specific reasons.

Riders with standing dialysis or treatment appointments make this a hard choice, so decide who tells them before you send the notice. Neither the Florida act nor the Illinois act contains a right to suspend work.

Fee rules also run both ways. In Texas the losing side pays the winner’s reasonable attorney fees in an action to collect an invoice or interest, and the loser can be you (2251.043). Florida courts award costs and reasonable attorney’s fees to the prevailing party (218.76(3)). Do not claim interest on an amount the county disputes in good faith unless you are ready to prove the invoice.

Read the payment clause before you sign

In Illinois a contract can lengthen your wait. In Texas and Florida it cannot take away the interest. The Illinois act says that longer payment periods agreed by the agency and the vendor replace the act’s own (50 ILCS 505/6), so a 90-day term in the agreement is the one that counts. In Texas a purported waiver of any right under the chapter is void (2251.004), and in Florida no contract may prohibit the interest the act allows (218.75).

Before you sign a public ride contract, check these:

1. Where invoices go. The office, the address or portal, and the format the entity expects.
2. Who approves. The person or board that approves invoices, and how often the board meets.
3. What pays. Local money, or a state or federal grant.
4. The payment term. The number of days, and what starts the count.

Keeping invoice dates in HealthRide

Each invoice in HealthRide gathers a customer’s completed trips for the period, priced from its rates, with a due date set from its payment terms. A past-due list shows which customers to follow up with, and payments received by check, ACH or wire are recorded against the invoice they pay. So the invoice dates and payment dates you need for an interest claim sit in one place. See invoicing.