Getting Paid On Time (The Prompt Payment Act)

The Short Version

• On most federal contracts, payment is due 30 days after the billing office gets a proper invoice, or 30 days after the government accepts the work, whichever is later (FAR 32.904(b)). The contract can set a different date.
• When the government pays late and the conditions are met, the payment office pays interest "automatically, without request from the contractor" (FAR 32.907(a)).

What Makes An Invoice Proper

FAR 32.905(b) lists what a proper invoice must have:

1. Your name and address
2. The invoice date and invoice number
3. The contract number, with the order number and line item number
4. A description, quantity, unit of measure, unit price, and extended price
5. The shipping and payment terms
6. The name and address of the official to be paid, the same as in the contract
7. The name, title, phone number, and mailing address of the person to call about a problem with the invoice
8. Your TIN and bank details, only if the agency's procedures require them on the invoice
9. Anything else the contract requires

If the invoice is not proper, the billing office must send it back within 7 days with the reasons (FAR 32.905(b)(3)). The 30 days count from when it receives a proper invoice (FAR 32.904(b)).

When The Work Counts As Accepted

To figure interest, the government is treated as accepting the work on the 7th day after you deliver or perform, unless there is a disagreement over quantity, quality, or meeting the contract (FAR 32.904(b)(1)(ii)(B)). A contract can set a longer period when the government needs time to inspect or test.

Construction Is Different

Progress payments on a construction contract are due 14 days after the billing office receives a proper payment request (FAR 32.904(d)).

Faster Payment For Small Businesses

When a contract does not set a payment date, agencies "shall provide accelerated payments, to the fullest extent permitted by law, with a goal of 15 days after receipt of a proper invoice" to small business contractors (FAR 32.009-1(a)). It is a goal. It gives no new rights under the Prompt Payment Act (FAR 32.009-1(b)).

Late Payment Interest

• Interest is figured under the OMB rules in 5 CFR Part 1315 (FAR 32.907(e)).
• Treasury publishes the rate for each half year (January through June, and July through December). The rate on file in GradeTheBid: 4.75 percent a year for July 1, 2026 through December 31, 2026 (Federal Register Vol. 91, No. 130, July 9, 2026, page 42594). Check Treasury's page for the rate today.
• No interest is owed when the delay comes from a disagreement over the amount owed or whether the contract was met (FAR 32.907(d)).
• If the invoice is paid but the interest is not paid within 10 days, you can send a written demand for an extra penalty. It must be postmarked within 40 days after the invoice was paid. Say interest is due on a specific invoice, attach a copy of that invoice, and give the date you received the payment (FAR 32.907(c)).

Ways To Get Paid Sooner

• Keep the bank details in your SAM.gov registration current. Many contracts pay by electronic funds transfer from that record (FAR 52.232-33, named in FAR 32.905(b)).
• Send each invoice the way the contract says. SBA notes that to work with the Department of Defense, "you must be able to invoice and receive payments electronically."
• Keep a record of the day you sent each invoice and the day the work was accepted.

State And Local Bids

State and local governments have their own prompt payment laws. Texas, for example, has the Texas Prompt Payment Act, Texas Government Code Chapter 2251.

How GradeTheBid Helps

The Late Payment Interest Calculator (free) works out the interest owed on a late federal or Texas payment, with the rate and the official source shown. Getting Paid Letters drafts a polite late payment inquiry from the facts you type. The State Checklist shows each state's late payment law with its official source.