The Prompt Payment Act, explained

The federal act, in four numbers

On federal construction work the Prompt Payment Act and its FAR clause set the timetable. A progress payment is due 14 days after the designated billing office receives a proper payment request. An invoice that is not proper must be returned within 7 days with the reasons. Retained amounts approved for release must be paid by the date the contract names or, absent one, by the 30th day after final acceptance. And where the contract sets no payment date, agencies aim to pay a small-business prime within 15 days.

Interest runs automatically once a payment is late — it is not something you have to sue for. Treasury publishes the rate every six months; for July 1 to December 31, 2026 it is 4.75 percent.

What makes an invoice 'proper'

The whole timetable hangs on the phrase proper invoice, and it is defined by the contract clause rather than by custom. Miss one required element and the clock never started — which is why a rejection on day 20 is far more expensive than it looks.

• Name and address of the contractor.
• Invoice date and invoice number.
• Contract number and any order number.
• Description, quantity, unit of measure, unit price and extended price.
• Shipping and payment terms, and remittance details.
• Name, title, phone and mailing address of the person to notify of a defect.

Build the submission so that every element is present the first time. The pay application generator covers the money lines; the administrative fields come from the contract.

State acts, and why they differ

Private jobs are governed by state prompt payment acts, not the federal one. They differ on almost everything that matters: how many days an owner has to pay a general, how many days a general then has to pay a sub, the interest rate, whether the rate is simple or compound, and whether attorney fees go to the prevailing party.

That last provision changes the arithmetic of a whole dispute. Where fees shift, a $12,000 unpaid application is worth pursuing that would otherwise be uneconomic. Read your state's act once, properly, and keep the two numbers — days and rate — on the wall.

How to actually use it

Interest is rarely the point. The point is that a payable which is quietly growing, with a statutory basis and a computed figure attached, is a payable that somebody in accounts wants closed. A one-page statement showing principal, days late, rate and interest does more than three chasing emails.

Attach it to the next chase, and if the silence continues, move to the escalation ladder rather than repeating yourself.