Frequently Asked Questions
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
- 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 discounts) , falls on a weekend or federal holiday, the payment is due on the following business day.
An invoice is deemed "received" and the appropriate payment period starts on the latter of these two dates:
- the date the agency marks the invoice with the date of receipt
- the 7th day after the date on which goods are delivered or services are completed, unless acceptance occurs earlier, or a longer acceptance period is specified in the contract
If the agency does not mark an invoice with the date of receipt, the date that the contractor put on the invoice starts the payment period.
Yes. An agency may use electronic invoices and other computer-related media in place of paper documents to speed up payments as long as adequate safeguards and controls are in place to ensure the integrity of the data.
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 required, the invoice 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.
Most federal payments are now completed via electronic funds transfer (EFT). If the agency pays by EFT, the agency must have the vendor's Taxpayer Identification Number (TIN) and EFT information. The agency may get that at the time of contracting or on the invoice. Even if the agency already has that information, it may require that the information appear on each invoice.
If the agency required a vendor to include TIN and EFT information on the invoice and the vendor did not do that, the invoice is not "proper."
For other information about payment documentation and process, refer to FAR 32.905.
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: An agency 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 minus 1 is 12; 12 minus 7 is 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.
Usually, it is not possible for an agency to know if the EFT information is correct until it tries to pay the invoice.
If a payment is rejected because the EFT information is not correct, the agency has an additional 7 days after receiving the correct EFT information to make a timely payment.
Example: An agency 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.
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.
Yes. Late payment rates for utility services that state, local, or foreign governments issue take precedence over the Prompt Payment interest when determining the amount of interest due for late payments.
The Prompt Payment law and regulations cover payments to businesses. It makes 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 and/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 were neither a published tariff covering due dates and interest nor a formal contract that explicitly covers due dates and interest.
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.
No. However, that issue is covered by the Federal Travel Regulation (41 CFR Parts 301-51, 52, 54, 70, 76). That rule 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.
Last modified 10/24/19