Agencies should pay vendors early after getting a proper invoice if it is in the best interest of the government and if any one of these is true:
- the invoice is under $2,500
- the payment is to a small business
- the payment is related to an emergency, disaster, or military deployment
OMB policy (OMB M-11-32 and OMB M-14-10) now requires agencies to pay prime contractors as soon as possible with the goal of paying within 15 days of receiving a proper invoice. To support this policy, the Federal Acquisition Regulatory Council created a new clause for agencies to incorporate into their contracts requiring prime contractors to accelerate payments to their small business subcontractors when they receive accelerated payments from the government.
OMB’s 2014 memorandum extends the 2011 policy to December 31, 2016.
The goal of the OMB policy is to help small business contractors, and to help larger prime contractors have the money to promptly pay their small business subcontractors.
For more information, read FAR 52.232-40.
Other Situations for Early Payment
In some situations, agencies may pay a proper invoice early even without evidence that the goods or services were received. An agency head or designee may determine, on a case-by-case basis, that early payment is necessary.
For more information, read 5 CFR §1315.4(j).
Please note, the paragraph of the regulation also states, "This authority must be used cautiously, weighing the benefits of making a payment early against the good stewardship inherent in effective cash management practices."
Last modified 08/07/18