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Prompt Payment

Prompt Payment

Note: If you are paying the bill for an agency credit card, see How to pay a Federal Agency's Credit Card Bill. A credit card bill is different from the vendor invoices we are covering on this page.

If a vendor submits a proper and valid invoice to the right people in a federal agency, the agency must pay the invoice on time. If not, the payment is late.

For a definition of "on time" see the Frequently Asked Questions.

What happens if a payment is late?

In most cases, when an agency pays a vendor late, the agency must pay interest.

The Prompt Payment interest rate for January 1, 2020 – June 30, 2020 is 2.125 percent.

To determine the amount of interest, use the Prompt Payment interest calculator (see Resources section).

May an agency pay early?

Discounts for early payments. A vendor may offer the agency a discount if the agency pays within a specified shorter time.

To determine the amount to pay with the discount, use the Prompt Payment discount calculator.

Accelerated payments. Agencies should pay vendors early in these cases:

  • The agency has received a proper invoice, and
  • It is in the best interest of the government, and
  • Any one of these 3 conditions is true:
    • The invoice is under $2,500, or
    • The payment is to a small business, or
    • The payment is related to an emergency, disaster, or military deployment

Final Rule: 5 CFR Part 1315

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EARLY PAYMENTS ON-TIME AND LATE PAYMENTS

Resources

Discounts on Payments Discount Calculator Simple Daily Interest Calculator Compounding Monthly Interest Calculator Interest Rates Purchase Card Information Rebate Spreadsheet    

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Last modified 04/30/20