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Prompt payment interest calculator

Prompt payment statutes turn a late cheque into a debt that grows. The federal rate is published twice a year and most states have their own act with its own rate and its own clock. This works out the interest for the days a payment was actually late, either the federal way (a 360-day year, compounded every 30 days, for up to a year) or as simple interest at your state or contract rate.

Pre-filled with the federal rate published for July 1 - December 31, 2026. The federal method follows the Treasury rule: a 360-day year, unpaid interest added to the principal every 30 days, and no accrual past one year. Switch to simple interest and overwrite the rate for a state act or a contract clause.

Method
$

14 on federal construction progress payments (FAR 52.232-27).

%

Federal rate for July 1 - December 31, 2026: 4.75%.

Interest calculation
Payment due2026-07-29
Days late37
Payment statement
Principal unpaid48,450.00
Interest at 4.75% for 37 days236.71
Total claimed48,686.71

A black seal and a red seal joined by a notched ruler
Two dates, and the interest that runs between them.

What the interest is actually for

Interest under a prompt payment act is not a penalty you have to sue for — on federal work it accrues automatically once a proper invoice goes unpaid past its due date. The number is usually small next to the principal. Its value is as leverage: a payable that is quietly growing is a payable somebody in accounts wants closed.

Two definitions carry the whole calculation. A proper invoice is one with every element the contract requires — get one element wrong and the clock never started. And the due date is set by the contract or by statute: 14 days on federal construction progress payments, with retained amounts released by the date the contract names or the 30th day after final acceptance.

Where the days come from

Building the days-late count
InputSourceTrap
Invoice receivedBilling office date stampNot the date you posted it.
Days allowedContract, or 14 days federalA “net 30 from approval” clause moves the goalposts.
Improper invoiceMust be returned in 7 daysA late rejection does not stop the clock cleanly.
Paid dateDate funds are availableCheque date and cleared date are different days.
RatePublished semi-annuallyUse the rate for the period the debt ran.

Private jobs are governed by state prompt payment acts, not the federal one, and the rates and windows differ. Use your state's figure in the rate field, and read the act — several allow attorney fees to the prevailing party, which changes the arithmetic of the whole dispute.

Sources

  • U.S. Treasury, Bureau of the Fiscal Service - Prompt Payment interest rate

    The federal Prompt Payment interest rate for July 1 - December 31, 2026 is 4.75%. Treasury publishes a new rate every six months.

    Read 2026-10-18

  • 5 CFR § 1315.10(a)

    Federal late-payment interest runs from the day after the due date to the payment date, is calculated on a 360-day year, has unpaid interest added to the principal at the end of each 30-day period for up to one year, and stops accruing after one year.

    Read 2026-10-18

  • FAR 52.232-27(a)

    On a federal construction contract, a progress payment is due 14 days after the designated billing office receives a proper payment request; an improper invoice must be returned within 7 days with reasons.

    Read 2026-10-18

  • 31 U.S.C. § 3902(c)(1), (e)

    Federal Prompt Payment interest is paid without the contractor having to ask for it, and interest left unpaid after any 30-day period is added to the principal, so the penalty compounds.

    Read 2026-10-18

  • 31 U.S.C. § 3903(a)(6)

    On a federal construction contract, interest is owed on retained amounts approved for release that are not paid by the date the contract specifies or, if it specifies none, by the 30th day after final acceptance.

    Read 2026-10-18

  • 31 U.S.C. § 3903(a)(10)

    Federal agencies aim to pay small-business prime contractors within 15 days of a proper invoice when the contract sets no payment date.

    Read 2026-10-18

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