Frequently Asked Questions

The OMB issued the directive M-15-19 in the summer of 2015 that by the end of 2018, federal agencies would need to "transition to electronic invoicing for appropriate federal procurements by one of the following means: migration to a designated Federal Shared Service Provider (FSSP) and adoption of the FSSP electronic invoicing solution; use of an OMB approved electronic invoicing solution that aligns with agency mission and support requirements; or cessation of any investments in new electronic invoicing solutions."

According to 31 U.S.C. § 3903(a) (1) and 31 C.F.R. § 1315.4(g), in most cases, payment is due on the payment date established in the contract or 30 days after a proper invoice is "received" (if no payment date is established in the contract).

According to 31 U.S.C. § 3901(a) (4) and 31 C.F.R. § 1315.4(b), if the invoice receipt date is annotated on the invoice, the invoice is deemed "received" on the later of the receipt date or 7 days after delivery of the goods or services [assuming: 1) no earlier acceptance occurred; and 2) the contract does not specify a longer acceptance period].

If the receipt date is not annotated on the invoice, the invoice is deemed "received" on the invoice date.

If there is no invoice, and the contract specifies that the delivery ticket may serve as the invoice, the invoice is deemed "received" on the delivery date.

The payment period starts when the designated agency office receives the invoice. The designated agency office is the office that is named in the purchase order, agreement, or contract. This office may be different from the office that issues the payment.

If an invoice does not have all the information that the agency requires, the invoice is not "proper." That means, it is not valid or complete.

The agency must return the invoice. The vendor must supply the information.

The payment period starts only when the agency receives a proper invoice that includes all required information. So, no late payment interest is due until the end of the payment period after the agency receives the fixed and now proper invoice.

If the agency pays by EFT, it must have the vendor's Taxpayer Identification Number (TIN) and the vendor's EFT information.

Even if the agency has that information already (for example, in the contract), the agency may require the information to be on each invoice. If the agency requires the information on each invoice and the vendor does not supply it, the invoice is not "proper." The agency returns the invoice for the vendor to fix.

The agency must send the invoice back to the vendor as soon as practicable, but no later than 7 days after receiving the invoice.

The agency must:

• give all reasons why the invoice is not proper and why it is being returned
• request a corrected invoice that is clearly marked as such

If the agency does not return the invoice within 7 days with the information about the problems and request for a corrected invoice, the payment period is shortened by the number of days between the 7th day and the day the agency sends the invoice back to the vendor.

Example: Agency X receives an invoice on November 1. It determines that the invoice is improper and returns it to the vendor on November 13. That is 5 days beyond the 7-day legal limit. (13 – 1 = 12. 12 – 7 = 5.) The agency receives a corrected invoice on November 20. If the normal payment period is 30 days, the payment would be due on December 19. However, the payment is now due on December 14, 5 days earlier.

A payment is due on whichever of these four conditions applies:

• The date specified in the contract
• In accordance with discount terms when the vendor has offered a discount and the agency has accepted those terms
• On an accelerated schedule when the conditions for accelerated payments apply
  (See the Prompt Payment home page for a list of conditions for accelerated payments.)
• 30 days after the agency has received a proper invoice

When calculating the payment due date, "day" means a calendar day including weekends and federal holidays.

When the payment due date, including a discount due date, falls on a weekend or federal holiday, the payment is due on the following business day.

No. Vendors may offer a discount to federal agencies, but they are not required to do so.

No. Agencies may take an offered discount if it is economically justified and if the agency has accepted the goods or services. To see if the discount is economically justified, use the discount calculator.

If the vendor submits a proper and valid invoice with an invoice date, that date starts the discount period.

If the invoice is proper and valid but does not have an invoice date, the discount period starts on the date the agency received the invoice.

If the agency takes the discount, it must pay according to the discount terms.

If the agency does not take the discount, it must pay within 30 days of receiving a proper invoice, unless the agency uses an accelerated payment.

It is not usually possible for an agency to know if the EFT information is correct until it tries to pay the invoice.

If the agency's payment is rejected because the EFT information is not correct, the agency has 7 days to inform the vendor of the problem. After the agency receives the corrected invoice, the agency may add 7 days to the normal payment period and still have the payment be on time.

Example: Agency X learns on November 1 that a payment did not reach a vendor because the EFT information was wrong.

Following the 7-day rule to inform vendors of a problem with an invoice, the agency must let the vendor know about the problem as soon as possible, but, in this case, no later than November 8.

The vendor submits a corrected invoice electronically on November 10 and the agency officially receives it that day.

The normal 30-day payment due date would then be December 10.

However, because the problem was caused by the vendor's incorrect EFT information, the agency has until December 17 to pay on time and have no interest to pay.

Yes.

The Prompt Payment law and regulations make no distinction between a utility and any other business.

However, utilities may have a published tariff that sets a payment due date and late payment interest penalty for all customers. Unless a federal agency has a formal contract with the utility company that specifies a payment due date or a payment interest that is different from the published tariff, the agency must pay according to the published tariff.

Thus, the due dates and interest provisions of the Prompt Payment law and regulations apply to utility payments only if there is neither a published tariff covering due dates and interest nor a formal contract that explicitly covers due dates and interest.

The vendor should consult with legal counsel to determine remedies under the Prompt Payment Act (31 U.S.C. § 3901 et following) and other applicable laws.

No. However, under a construction contract, an agency may withhold payment to a prime vendor if it learns that the prime vendor has failed to pay subcontractors in accordance with the terms of the contract.

No. However, agencies must pay other agencies electronically. They must also include advance billing and other payment terms in Interagency Agreements to ensure timely payments.

Yes. However, the applicable law is not the Prompt Payment Act.

The Federal Travel Regulation (41 CFR Parts 301-51, 52, 54, 70, 76) covers that issue. It requires agencies to reimburse an employee within 30 days after the employee submits a proper travel voucher to the approving official. Late payments on employee travel are subject to interest at the rate in effect for Prompt Payments.