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Prompt Payment 

The Prompt Payment rule makes sure that valid and proper invoices submitted by vendors are paid on time by federal agencies. If a vendor submits a proper and valid invoice, the agency must pay it on time. If not, the payment is late. In most cases when an agency pays a vendor late, it must pay interest. Prompt Payment determines those interest penalties and provides a variety of related resources for agency use.  The prompt payment interest rate for July 1, 2018 – December 31, 2018 is 3.500 percent (Final Rule: 5 CFR Part 1315 ).

Accelerated Payments

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 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. 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. 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.”

U.S. Department of State

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