Prompt Payment RuleThe Prompt Payment rule (5 CFR Part 1315) requires Federal Agencies to pay commercial obligations within certain time periods and to pay interest penalties when payment is late.

Although the Government will typically not make invoice payments earlier than 7 days prior to the due dates, if a Government customer makes a late payment than you are entitled to Late Payment Interest. The Government will automatically pay interest without a request from the contractor as long as the following conditions are met:

  • The designated billing office received a proper invoice.
  • The Government processed a receiving report authorizing payment, and there was no disagreement over quantity, quality, or contractor compliance.
  • In the case of a final invoice, the payment amount is not subject to further contract settlement actions between the Government and the contractor.
  • The designated payment office paid the contractor after the due date.
  •  In the case of interim payments on cost-reimbursement contracts for services, when payment is made more than 30 days after the designated billing office receives a proper invoice.

Late Payment interest will typically be sent in a separate check or transfer outside the actual invoice payment.

If you feel you are entitled to Late Payment Interest there are actions you can take to dispute nonpayment. You must support written demands for additional penalty payments with the following data:

  • Specifically assert that late payment interest is due under a specific invoice, and request payment of all overdue late payment interest penalty and such additional penalty as may be required;
  • Attach a copy of the invoice on which the unpaid late payment interest is due; and
  • State that payment of the principal has been received, including the date of receipt.

It is important to be aware of Requested Delivery Dates (RDD) and Government Payments. Even if you have already shipped you product, they will generally not process a receiving report until the RDD, even though it may be 45 days from after you shipped. Your payment terms (Net 30) do not begin until the receiving report is processed.

If you have any questions, feel free to contact Coley GSA directly at 210-402-6766 or at info@coleygsa.com.

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