Free tool · Government contractors
Prompt payment interest calculator
The short answer
When a federal agency pays an invoice late, it owes interest at the Treasury Prompt Payment rate, 4.75% for July 1, 2026 to December 31, 2026, compounded every 30 days. A $120,000.00 invoice paid 45 days late earns about $713.44. States set their own rules; pick yours below.
Prompt Payment Act (31 U.S.C. 3901-3907; 5 CFR 1315): generally 30 days after a proper invoice. Treasury rate 4.75% for July 1, 2026 to December 31, 2026; interest is added to principal every 30 days.
Estimate only, not legal advice. Contract terms, acceptance dates and state caps can change the amount.
How prompt payment interest is calculated
For federal agencies, interest runs from the day after the payment due date through the day payment is made, at the Treasury Prompt Payment rate in effect on the day after the due date. It is simple daily interest on a 360-day year, and unpaid interest is added to the principal every 30 days. Agencies owe it automatically; you do not have to ask.
State rules vary: some use a fixed monthly rate, some tie the rate to a published index, and some cap the total. This calculator uses simple interest for states unless you switch on 30-day compounding. Check your state's statute, cited with each result.
Interest is not cash flow
Prompt payment interest compensates you for a late payment after the fact. It does not cover payroll while you wait. Contractors who are routinely paid in 45 to 90 days often factor approved government invoices to get most of the cash in a day or two, then let the agency pay the funder. See factoring for government contractors and how fast every state pays vendors.
Questions people ask
What is the current Prompt Payment Act interest rate?
4.75% a year for July 1, 2026 to December 31, 2026, set by the Treasury and published by the Bureau of the Fiscal Service each January and July.
Does the government pay interest automatically?
Under the federal Prompt Payment Act, yes: agencies must add late-payment interest without a request, as long as you submitted a proper invoice. Interest under $1 is generally not paid. If it is missing, raise it with the contracting officer or payment office.
When does the 30-day clock start?
Generally on the later of the day the designated office receives a proper invoice or the day the government accepts the goods or services (or the 7th day after delivery, when acceptance is deemed). Contract terms can set a different due date.
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