XL EaglePrompt Payment Act
Prompt Payment Act. The Prompt Payment Act requires federal agencies to pay contractors on time. For most contracts, payment is due 30 days after the agency receives a proper invoice or accepts the work, whichever is later. If the agency pays late, it generally owes an interest penalty automatically.
An invoice must be 'proper,' meaning it includes all the information the contract requires. On construction contracts, primes must also pay their subcontractors within a set number of days after they are paid, or pay interest.
Why it matters to a small contractor
Most late federal payments trace back to an invoice that was not proper. Use the exact invoicing system and format the contract requires, include the contract number, line items, and dates, and keep proof of when you submitted. If you are a sub, read the payment terms in your subcontract closely.
Example
A small HVAC contractor submits an invoice through the agency's online system, but leaves out the contract line item number. The agency rejects it as improper, and the 30-day clock starts over when the corrected invoice is filed.
Prompt Payment Act: common questions
How long does the government have to pay an invoice?
Generally 30 days after receiving a proper invoice or accepting the work, whichever is later. Some contracts set different terms, so check the payment clause.
Do primes have to pay subcontractors promptly?
On construction contracts, the prompt payment clause requires primes to pay subs within a short period after being paid, or pay interest. Other subcontract terms depend on your agreement.
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