Invoice Payment & the Prompt Payment Act
Also known as: Delivery payment, final payment, net-30, Prompt Payment Act (PPA)
What you do here: Submit a proper invoice for accepted supplies or services
At a Glance
- Who it's for
- Every contractor billing for accepted supplies or services
- When you get paid
- Generally within 30 days of a proper invoice (14 days for construction)
- Governing clause
- FAR 52.232-25, Prompt Payment (52.232-27 for construction)
- Cash-flow effect
- Payment comes after you deliver — you finance the work until then
- If they pay late
- The government owes automatic Prompt Payment Act interest
What It Is
Invoice payment is the ordinary mechanism for getting paid on a fixed-price contract. You perform, the government inspects and accepts, you submit an invoice, and the government pays. The Prompt Payment Act — implemented in FAR Subpart 32.9 and Treasury's 5 CFR Part 1315 — sets the clock: a proper invoice is due for payment on the date specified in the contract, and if none is specified, 30 days after the designated billing office receives a proper invoice (or 30 days after acceptance, whichever is later). Miss that date and the government owes interest automatically, with no request required from you. The catch is the phrase "proper invoice": if your invoice is missing a required element, the government can return it, and the clock does not start until you fix and resubmit.
When It’s Used
- On firm-fixed-price supply and service contracts, this is how you get paid for what you deliver.
- On commercial-item awards using the SF 1449, where invoicing follows the same prompt-payment rules.
- As the final payment on almost any contract type, once work is complete and accepted.
- Alongside financing payments (progress or performance-based payments) that are later liquidated against these delivery invoices.
Key Features
| Feature | What It Means |
|---|---|
| Proper invoice | Payment only starts when you submit an invoice with all the elements FAR 32.905 requires — name, invoice date and number, contract and order number, description and quantity, price, shipping terms, and remittance details. A defective invoice is returned within 7 days and the clock restarts. |
| 30-day standard | Unless the contract says otherwise, payment is due 30 days after the designated billing office gets a proper invoice, or 30 days after the government accepts the supplies/services — whichever is later. |
| Constructive acceptance | If the contract is silent, acceptance is deemed to occur 7 days after delivery of supplies or performance of services, so the government can't stall the clock by simply not signing off. |
| Automatic interest | Late payment triggers Prompt Payment Act interest at the Treasury rate, calculated and paid by the government without you having to ask — though you should still track it. |
| Accelerated small-business payments | Agency policy (and OMB guidance) directs contracting agencies to pay small-business primes as soon as practicable, with a goal of 15 days, and to flow accelerated payments down to small-business subcontractors. |
The SDVOSB Cash-Flow Angle
For a small prime, the 30-day clock is your working-capital lifeline — and the accelerated-payment policy for small businesses can shorten it to about 15 days, which materially eases payroll between milestones. But the government's obligation to pay your small-business subcontractors quickly depends on you actually invoicing and passing the money down. Build your price-to-win around the reality that you fund labor and materials before the first invoice clears, and know that a single missing field on your invoice resets the entire clock.
How to Get Paid
- Read the contract's invoicing instructions (often in Section G) to find the designated billing office and any required format.
- Wait for — or document — inspection and acceptance before billing for delivered items.
- Submit a proper invoice with every element in FAR 32.905; double-check the contract and CLIN numbers.
- Send it to the correct billing office (electronically, where required — see WAWF/IPP).
- Track the 30-day (or 15-day accelerated) window and flag any late payment for Prompt Payment Act interest.
Watch Out For
- A "proper invoice" is a term of art — omit a required element and the invoice is returned and the payment clock never started.
- Billing before acceptance can get your invoice rejected; the clock runs from acceptance or receipt of a proper invoice, whichever is later.
- Prompt Payment Act interest does not run on financing payments (progress/performance-based payments) — only on delivery/invoice payments.
- Sending the invoice to the contracting officer instead of the designated billing office can delay payment without starting the interest clock.
Run the Numbers
Frequently Asked
How long does the government have to pay a federal contractor's invoice?
Under the Prompt Payment Act (FAR Subpart 32.9), a proper invoice is due for payment on the date the contract specifies, or if none is specified, within 30 days of the designated billing office receiving a proper invoice — or 30 days after the government accepts the goods or services, whichever is later. Construction contracts use a 14-day cycle. If the government pays late, it owes interest automatically.
What makes an invoice a "proper invoice"?
FAR 32.905 lists the required elements: the contractor's name and address, invoice date and a unique invoice number, the contract and order number, a description, quantity, unit of measure, unit price and extended price of the items, shipping and payment terms, the name/title/phone of a point of contact, and any taxpayer identification or banking information the contract requires. If an element is missing, the government must return the invoice within 7 days, and the payment clock does not begin until you resubmit a corrected invoice.
Does the government pay small businesses faster?
Yes, as a matter of policy. Federal agencies are directed to accelerate payments to small-business prime contractors, targeting roughly 15 days after receipt of a proper invoice, and to flow accelerated payments down to small-business subcontractors. This is policy rather than a hard statutory 15-day guarantee, but it is a real cash-flow advantage of holding a small-business status.
Primary Sources
- FAR Subpart 32.9 — Prompt Payment
- FAR 32.905 — Payment documentation and process
- FAR 52.232-25 — Prompt Payment (clause)
- 5 CFR Part 1315 — Prompt Payment (Treasury)
Plain-English reference, not legal, accounting, or financial advice. Payment and financing terms are set by each contract, and the FAR is amended from time to time — always read the actual contract clauses and invoicing instructions, confirm the applicable procedures with the contracting officer and payment office, and consult qualified counsel or an accountant for your specific situation before relying on this.
Change log (1)
- LaunchedPublished the federal contract financing & payment methods reference covering how an SDVOSB gets paid — invoice payment and the Prompt Payment Act (FAR Subpart 32.9 / 52.232-25), progress payments based on cost (FAR Subpart 32.5 / 52.232-16), performance-based payments (FAR Subpart 32.10 / 52.232-32), commercial product & service financing (FAR Subpart 32.2 / 52.232-29 & -30), construction progress payments and retainage (FAR 32.103 / 52.232-5 & -27), cost-reimbursement and T&M public vouchers (FAR 52.216-7 / Subpart 42.7), payment by electronic funds transfer through SAM (FAR Subpart 32.11 / 52.232-33), electronic invoicing via WAWF and IPP (FAR 32.905 / DFARS 252.232-7003), assignment of claims for bank financing (FAR Subpart 32.8 / 52.232-23), and contract debts and government offsets (FAR Subpart 32.6 / 52.232-17) — each with an at-a-glance quick-facts card, a when-it's-used list, a key-features table, an SDVOSB cash-flow angle, a how-to-get-paid checklist, watch-outs, FAQPage, Article, Dataset, and BreadcrumbList structured data, primary-source citations, and cross-links into the glossary, how-to guides, FAQ, contract types, clauses, forms, thresholds, and the price-to-win and limitations-on-subcontracting calculators.