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Prompt Payment


More about accelerated payments

When should an agency pay early?

Agencies should pay vendors early after getting a proper invoice if it is in the best interest of the government and 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

When should an agency try to pay early?

OMB policy now requires agencies to pay prime contractors as soon as possible with the goal of paying within 15 days of receiving a proper invoice.

OMB M-11-32
OMB M-14-10

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.

FAR 52.232-40

What is the goal of the OMB policy?

To help small business contractors and to help larger prime contractors have the money to promptly pay their small business subcontractors.

Does the OMB policy to pay early have an end date?

OMB's 2014 memorandum extends the 2011 policy to December 31, 2016.

Do other situations allow for early payments?

In some situations, agencies may pay a proper invoice early even without evidence that the goods or services were received.

Who decides on other situations that allow early payments?

An agency head or designee may determine, on a case-by-case basis, that early payment is necessary.

5 CFR §1315.4(j)

That paragraph of the regulation also says, "This authority must be used cautiously, weighing the benefits of making a payment early against the good stewardship inherent in effective cash management practices."

Quick Links

  • Prompt Payment final rule (5 CFR Part 1315)
    Text version
    PDF version
  • Federal Acquisition Regulation 52.232-25
    (clauses related to prompt payments)
  • FAR EFT Final Rule: (3/4/99); published by DoD, GSA, and NASA
    The Federal Acquisition Regulation (FAR) Electronic Funds Transfer (EFT) final rule addresses the use of electronic funds transfer for federal contract payments and provides for the collection of banking information from vendors.

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