Federal prompt-payment clocks: 4 dates to check

Before you mark a federal invoice as late, write down four specific dates on your calendar.

• The first is the payment due date, which is the 30th day after the designated billing office receives a proper invoice from the contractor, according to Acquisition.GOV .
• The second is the constructive acceptance date, which occurs on the 7th day after the contractor delivers supplies or performs services in accordance with the contract terms, according to Acquisition.GOV . This 7th-day mark is used specifically for computing an interest penalty, not as a guarantee that the agency accepts the work on that day.
• The third date is when interest begins, which is the day after the required payment date.
• The fourth date is the last day to make a written demand, not later than 40 days after the underlying payment, according to Legal Information Institute .

When you calculate potential interest, use the 7th-day constructive acceptance rule for completed work or services, as defined in the regulation, according to Acquisition.GOV .

In 1982, Congress passed the Prompt Payment Act to require Federal agencies to pay their bills on a timely basis, according to Bureau of the Fiscal Service .

The Act imposes three specific duties on Federal agencies: pay bills on a timely basis, pay interest penalties when payments are made late, and take discounts, according to Bureau of the Fiscal Service . These duties create the framework for the four clocks you must track before treating a federal invoice as late. The first clock is the invoice due date, which sets when the agency must pay the principal amount. The second clock is the constructive acceptance day, a specific date used to compute interest if the agency does not pay on time. The third clock is the interest period, which begins the day after the required payment date and continues until the agency pays. The fourth clock is the written demand deadline, which applies if the agency fails to pay the interest penalty itself.

Understanding these distinct periods is critical because they trigger different financial consequences. In most cases, when an agency pays a vendor late, the agency must pay interest, according to Bureau of the Fiscal Service . This interest obligation is separate from the principal payment deadline. You cannot assume that the date the agency receives the invoice is the same as the date interest starts. You must identify the specific date the agency is required to pay the principal, then determine when the interest period begins relative to that date.

The 30-day clock and the 7-day clock measure different events and serve different purposes in the prompt payment process.

The invoice payment due date is the 30 thday after the designated billing office receives a proper invoice from the contractor, according to Acquisition.GOV . This date sets when the agency must pay the principal amount of the invoice. The sentence includes an exception for cases provided in paragraph (b)(3) of the section, but the standard rule for a proper invoice is the 30-day count from arrival.

If the designated billing office fails to annotate the invoice with the actual date the invoice arrived, the invoice payment due date is the 30 thday after the date of the contractor's invoice, according to Acquisition.GOV . This fallback rule applies provided the designated billing office receives a proper invoice and there is no disagreement over quantity, quality, or contractor compliance with contract requirements. See public works contract items for a related contract check. When that date is missing, the invoice date becomes the anchor for the 30-day count.

The 7-day clock is not the payment due date. Government acceptance is deemed to occur constructively on the 7 thday after the contractor delivers supplies or performs services in accordance with the terms and conditions of the contract, according to Acquisition.GOV . This constructive acceptance is used for computing an interest penalty, unless there is a disagreement over quantity, quality, or contractor compliance with a contract requirement. For completed work or services, the regulation states that for the sole purpose of computing an interest penalty that might be due the contractor, Government acceptance is deemed to occur constructively on the 7 thday after the contractor completes the work or services in accordance with the terms and conditions of the contract, according to Acquisition.GOV .

This 7-day period is a calculation tool for interest, not a statement that the agency always accepts the work on day 7. It does not replace the 30-day payment clock. The two clocks run independently: one determines when the invoice is due for payment, and the other provides a benchmark date for interest calculations if payment is late.

The interest penalty period begins on the day after the required payment date and ends on the date on which payment is made, according to Legal Information Institute . This start date is fixed by the regulation and does not depend on when the shop sends a reminder or when the agency acknowledges the invoice. If the agency pays on the required payment date, the interest period has not begun. If the agency pays one day late, the interest period covers that single day. The end date is always the date payment is made, not a projected date or a date the shop estimates.

A business concern is entitled to an interest penalty of $1.00 or more which is owed under this section, and such penalty shall be paid without regard to whether the business concern has requested payment of such penalty, according to Legal Information Institute . This $1.00 floor means that if the calculated interest penalty is less than one dollar, the sentence does not cover it. The penalty must be paid even if the shop has not asked for it. The shop does not need to send a separate demand for the interest penalty to trigger payment of amounts of $1.00 or more. The regulation requires payment of the owed penalty regardless of a request.

Write the required payment date on the invoice file. See partial billing rules before the invoice goes out. Count the day after that date as the first day of the interest period. Record the actual payment date when the agency pays. The interest period is the span between those two dates. If the payment date is the same as the required payment date, the interest period is zero days. If the payment date is later, the interest period is the number of days between the day after the required payment date and the payment date. Keep this record with the invoice so the interest period is documented.

If the agency pays the invoice but skips the interest penalty, two separate deadlines control your next move. The first is a ten-day window. Under 31 U.S. Code § 3902, the penalty is considered unpaid if the agency does not pay it within 10 days after the date the underlying payment is made, according to Legal Information Institute . This ten-day clock is distinct from the invoice due date; it starts only after the principal payment occurs.

The second deadline is a forty-day demand window. You must make a written demand that the agency pay the penalty, and this demand cannot be made later than 40 days after the date the underlying payment is made, according to Legal Information Institute . This 40-day period is strictly for the written demand regarding the missing penalty. It is not the invoice due date, and it does not extend the time to pay the original invoice.

If the penalty remains unpaid after any 30-day period, the amount is added to the principal amount of the debt, and a penalty accrues thereafter on the added amount, according to Legal Information Institute .

To track these dates, record the date the agency pays the principal. Count 10 days from that date to see if the penalty was paid. If not, count 40 days from the principal payment date to determine the deadline for your written demand. If the penalty is still unpaid after 30 days, note that it becomes part of the principal for future penalty calculations.

A shop delivers supplies and sends a proper invoice. The 7th day after delivery is constructive acceptance for interest only. The 30th day after the billing office gets that invoice is the payment due date. If the agency pays on the due date, the interest period is zero days. If it pays later, interest runs from the next day until the payment date. If the penalty is still missing 10 days after the payment, it is unpaid. A written demand must go out not later than 40 days after that payment. These dates are illustrative.

The Prompt Payment interest rate for July 1– December 31, 2026 is 4.75%, according to Bureau of the Fiscal Service . This figure applies strictly to that half-year period. Do not use the 4.75 percent figure for any period other than July 1 through December 31, 2026. The rate changes when the new half-year begins, so checking the current published rate before calculating penalties is a necessary step.

The interest shall be computed at the rate of interest established by the Secretary of the Treasury, and published in the Federal Register, for interest payments under section 7109(a)(1) and (b) of title 41, which is in effect at the time the agency accrues the obligation to pay a late payment interest penalty, according to U.S. Government Publishing Office . This rule ties the calculation to the specific Treasury rate active when the agency becomes obligated to pay the late payment interest penalty. It does not lock in a single percentage for the life of the contract.

A shortage of agency funds does not cancel the interest obligation. The temporary unavailability of funds to make a timely payment due for property or services does not relieve the head of an agency from the obligation to pay interest penalties under this section, according to Legal Information Institute . If the agency lacks funds on the due date, the interest penalty still accrues. You should not assume that a budget issue pauses the clock or removes the penalty.

When you calculate interest on an unpaid federal invoice, verify which half-year the accrual date falls into. See invoice total calculation when you add the penalty to the invoice. If the obligation to pay the late payment interest penalty arises in the first half of 2026, the rate in effect at that time applies. Keep a record of the date the agency accrues the obligation, as that date determines which published rate you use.

The table below quotes the four clocks and the half-year rate.

Action step: Check your records for any federal invoices where the principal was paid but the interest penalty was not. If the 10-day window has passed, verify that you have sent a written demand within the 40-day limit.

How many days after a proper invoice is the usual federal payment due?

The standard payment window for a proper invoice is 30 days from the date the designated billing office receives it. This 30-day period defines when the agency is required to pay the invoice. You use this date to determine if the agency is late.

What is the 7-day clock used for?

The 7-day clock refers to the period of constructive acceptance used to compute interest penalties. It is not the invoice due date. This clock helps establish when the agency is considered to have accepted the work for the purpose of calculating late payment interest.

When does interest start?

Interest begins on the day after the required payment date. It continues until the date on which payment is actually made, according to Legal Information Institute . This period defines the duration for which the interest penalty is owed.

What rate applies from July 1 through December 31, 2026?

The Prompt Payment interest rate for July 1 through December 31, 2026 is 4.75%, and this figure is only for that half-year, according to Bureau of the Fiscal Service .

Does a shortage of agency funds cancel the interest?

No, the temporary unavailability of funds does not relieve the head of an agency from the obligation to pay interest penalties, according to Legal Information Institute . The agency remains responsible for the penalty even if funds are temporarily unavailable.