Prompt Payment Act
A federal law requiring agencies to pay valid invoices on time — generally within 30 days — or owe interest.
The Prompt Payment Act requires federal agencies to pay contractors within set timeframes — generally 30 days of receiving a proper invoice — and to pay interest penalties if they're late. It's a protection for contractors against slow government payment.
The catch is the phrase 'proper invoice': the payment clock only starts once the agency accepts a complete, correct invoice. A rejected or disputed invoice restarts the clock, which is why clean invoicing is so important to getting paid on time.
Even with the Act, real-world payment often stretches to 45–90 days once approval, acceptance, and disbursement are accounted for — which is the gap invoice factoring is designed to close.
Frequently asked questions
What is the Prompt Payment Act?
A federal law requiring agencies to pay valid invoices within a set window (usually 30 days) or owe interest. The clock starts when a proper invoice is accepted, not when the work is done.
Does the Prompt Payment Act guarantee fast payment?
Not in practice. It sets standards and penalties, but approval, acceptance, and disbursement steps mean payment commonly takes 45–90 days. Factoring bridges that gap.
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