FAR 52.232-25—Prompt Payment.
Plain-English Summary
FAR 52.232-25, Prompt Payment, sets the Government’s rules for when invoice payments are due, how a proper invoice must be submitted, and when payment is considered made for purposes of calculating timeliness and interest. It covers the general 30-day payment rule, special accelerated payment timelines for certain food products and related perishables, and the treatment of contracts that do not require invoices (such as periodic lease payments). The clause also defines what makes an invoice “proper,” including required invoice data elements, where invoices must be sent, and how the Government must handle defective invoices by returning them within specified timeframes. It addresses the effect of missing receipt dates, acceptance of supplies or services, final invoices subject to settlement actions, and the special rule that payment is deemed made on the date of a check or EFT. In practice, this clause is central to cash flow management for contractors and to payment administration for contracting and payment offices, because it determines when the clock starts, when interest may accrue, and what documentation is needed to avoid delay. It also interacts with other payment clauses, but expressly controls over them for invoice payments unless another paragraph in the clause provides otherwise.
Key Rules
Clause controls invoice payments
This clause governs invoice payments notwithstanding any other payment clause in the contract. It establishes the operative rules for due dates, proper invoices, and when payment is considered made.
Thirty-day payment standard
For most invoices, the Government must pay by the later of 30 days after the designated billing office receives a proper invoice or 30 days after Government acceptance of the supplies or services. For final invoices subject to settlement actions, acceptance is deemed to occur on the effective date of the settlement.
Receipt date matters
If the billing office does not annotate the invoice with the actual date of receipt, the due date is generally 30 days after the contractor’s invoice date, provided a proper invoice was received and there is no dispute over quantity, quality, or compliance.
Special food-product deadlines
Meat, fish, perishable agricultural commodities, dairy products, edible fats or oils, and food products made from edible fats or oils have accelerated payment deadlines, generally 7 or 10 days depending on the product category. These deadlines are intended to reflect the perishability and commercial practices of those markets.
No invoice, contract date governs
If the contract does not require an invoice for payment, such as some periodic lease payments, the due date is whatever the contract states. The clause defers to the contract’s own payment schedule in those cases.
Proper invoice requirements
The contractor must submit invoices to the designated billing office and include all required data elements, such as contractor name and address, invoice date and number, contract number, description and pricing, shipping/payment terms, payment address, contact information for defective invoices, and any required TIN or EFT information.
Defective invoices must be returned quickly
If an invoice is not proper, the billing office must return it within 7 days, or within 3 days for meat/fish and 5 days for certain perishables. The Government must consider late notice when calculating any interest penalty owed to the contractor.
Payment date is when funds are issued
The Government considers payment made on the date a check is dated or the date an EFT is made. This matters for determining whether payment was timely and whether interest penalties apply.
Calendar days apply
All days in the clause are calendar days unless the clause says otherwise. The clause also notes a special rule for payments due on Saturdays, Sundays, and legal holidays.
Responsibilities
Contracting Officer / Agency
Ensure the contract includes the clause when prescribed, and administer payment terms consistently with the clause. The agency must recognize the proper due date, apply the special rules for perishables and non-invoice payments, and coordinate with the designated billing and payment offices so invoices are processed on time.
Designated Billing Office
Receive invoices, annotate the actual date of receipt when required, determine whether an invoice is proper, and return defective invoices within the required timeframes with reasons for rejection. The billing office must also route proper invoices for payment processing without unnecessary delay.
Designated Payment Office
Make payment by the applicable due date, calculate timeliness based on the clause, and treat payment as made on the check date or EFT date. The payment office must also account for interest penalties when payment is late under the Prompt Payment rules.
Contractor
Prepare and submit a proper invoice to the designated billing office, include all required information, and ensure the invoice is accurate, complete, and timely. The contractor must also provide required EFT or TIN information when the contract requires it and respond promptly to defective-invoice notices or payment issues.
Contract Administration / Receiving Activity
Provide timely acceptance of supplies or services so the payment clock can start, and document acceptance dates accurately. For final invoices tied to settlement actions, the responsible office must ensure the settlement effective date is clear because it controls deemed acceptance.
Practical Implications
Contractors should treat invoice quality as a cash-flow issue: missing contract numbers, wrong addresses, omitted line-item detail, or missing EFT/TIN data can stop the payment clock and delay payment.
Government offices should date-stamp invoices on receipt and return defective invoices within the required window; failing to do so can shorten the Government’s time to pay and increase interest exposure.
Acceptance timing is critical because the 30-day clock may run from acceptance rather than invoice receipt, so late or undocumented acceptance can create disputes over when payment is due.
Special food and perishables rules are easy to miss; contracting and payment staff must identify whether the product falls into an accelerated category and apply the shorter deadlines.
For contracts without invoices, parties should not assume the standard 30-day rule applies; the contract language controls, so lease and similar recurring-payment arrangements need careful review.
Because payment is deemed made on the check date or EFT date, internal processing delays before issuance can create prompt-payment interest liability even if the funds reach the contractor later.
Official Regulatory Text
As prescribed in 32.908 (c) , insert the following clause: Prompt Payment (Jan 2017) Notwithstanding any other payment clause in this contract, the Government will make invoice payments under the terms and conditions specified in this clause. The Government considers payment as being made on the day a check is dated or the date of an electronic funds transfer (EFT). Definitions of pertinent terms are set forth in sections 2.101 , 32.001 , and 32.902 of the Federal Acquisition Regulation. All days referred to in this clause are calendar days, unless otherwise specified. (However, see paragraph (a)(4) of this clause concerning payments due on Saturdays, Sundays, and legal holidays.) (a) Invoice payments- (1) Due date. (i) Except as indicated in paragraphs (a)(2) and (c) of this clause, the due date for making invoice payments by the designated payment office is the later of the following two events: (A) The 30 thday after the designated billing office receives a proper invoice from the Contractor (except as provided in paragraph (a)(1)(ii) of this clause). (B) The 30 thday after Government acceptance of supplies delivered or services performed. For a final invoice, when the payment amount is subject to contract settlement actions, acceptance is deemed to occur on the effective date of the contract settlement. (ii) If the designated billing office fails to annotate the invoice with the actual date of receipt at the time of receipt, the invoice payment due date is the 30 thday after the date of the Contractor’s invoice, provided the designated billing office receives a proper invoice and there is no disagreement over quantity, quality, or Contractor compliance with contract requirements. (2) Certain food products and other payments. (i) Due dates on Contractor invoices for meat, meat food products, or fish; perishable agricultural commodities; and dairy products, edible fats or oils, and food products prepared from edible fats or oils are- (A) For meat or meat food products, as defined in section 2(a)(3) of the Packers and Stockyard Act of1921 ( 7 U.S.C. 182(3) ), and as further defined in Pub.L.98-181, including any edible fresh or frozen poultry meat, any perishable poultry meat food product, fresh eggs, and any perishable egg product, as close as possible to, but not later than, the 7 thday after product delivery. (B) For fresh or frozen fish, as defined in section 204(3) of the Fish and Seafood Promotion Act of1986 ( 16 U.S.C. 4003(3) ), as close as possible to, but not later than, the 7 thday after product delivery. (C) For perishable agricultural commodities, as defined in section 1(4) of the Perishable Agricultural Commodities Act of1930 ( 7 U.S.C. 499a (4)), as close as possible to, but not later than, the 10 thday after product delivery, unless another date is specified in the contract. (D) For dairy products, as defined in section 111(e) of the Dairy Production Stabilization Act of1983 ( 7 U.S.C. 4502(e) ), edible fats or oils, and food products prepared from edible fats or oils, as close as possible to, but not later than, the 10 thday after the date on which a proper invoice has been received. Liquid milk, cheese, certain processed cheese products, butter, yogurt, ice cream, mayonnaise, salad dressings, and other similar products, fall within this classification. Nothing in the Act limits this classification to refrigerated products. When questions arise regarding the proper classification of a specific product, prevailing industry practices will be followed in specifying a contract payment due date. The burden of proof that a classification of a specific product is, in fact, prevailing industry practice is upon the Contractor making the representation. (ii) If the contract does not require submission of an invoice for payment ( e.g., periodic lease payments), the due date will be as specified in the contract. (3) Contractor's invoice . The Contractor shall prepare and submit invoices to the designated billing office specified in the contract. A proper invoice must include the items listed in paragraphs (a)(3)(i) through (a)(3)(x) of this clause. If the invoice does not comply with these requirements, the designated billing office will return it within 7 days after receipt (3 days for meat, meat food products, or fish; 5 days for perishable agricultural commodities, dairy products, edible fats or oils, and food products prepared from edible fats or oils), with the reasons why it is not a proper invoice. The Government will take into account untimely notification when computing any interest penalty owed the Contractor. (i) Name and address of the Contractor. (ii) Invoice date and invoice number. (The Contractor should date invoices as close as possible to the date of the mailing or transmission.) (iii) Contract number or other authorization for supplies delivered or services performed (including order number and line item number). (iv) Description, quantity, unit of measure, unit price, and extended price of supplies delivered or services performed. (v) Shipping and payment terms ( e.g., shipment number and date of shipment, discount for prompt payment terms). Bill of lading number and weight of shipment will be shown for shipments on Government bills of lading. (vi) Name and address of Contractor official to whom payment is to be sent (must be the same as that in the contract or in a proper notice of assignment). (vii) Name (where practicable), title, phone number, and mailing address of person to notify in the event of a defective invoice. (viii) Taxpayer Identification Number (TIN). The Contractor shall include its TIN on the invoice only if required elsewhere in this contract. (ix) Electronic funds transfer (EFT) banking information. (A) The Contractor shall include EFT banking information on the invoice only if required elsewhere in this contract. (B) If EFT banking information is not required to be on the invoice, in order for the invoice to be a proper invoice, the Contractor shall have submitted correct EFT banking information in accordance with the applicable solicitation provision ( e.g., 52.232-38 , Submission of Electronic Funds Transfer Information with Offer), contract clause ( e.g., 52.232-33 , Payment by Electronic Funds Transfer-System for Award Management, or 52.232-34 , Payment by Electronic Funds Transfer-Other Than System for Award Management), or applicable agency procedures. (C) EFT banking information is not required if the Government waived the requirement to pay by EFT. (x) Any other information or documentation required by the contract ( e.g., evidence of shipment). (4) Interest penalty . The designated payment office will pay an interest penalty automatically, without request from the Contractor, if payment is not made by the due date and the conditions listed in paragraphs (a)(4)(i) through (a)(4)(iii) of this clause are met, if applicable. However, when the due date falls on a Saturday, Sunday, or legal holiday, the designated payment office may make payment on the following working day without incurring a late payment interest penalty. (i) The designated billing office received a proper invoice. (ii) The Government processed a receiving report or other Government documentation authorizing payment, and there was no disagreement over quantity, quality, or Contractor compliance with any contract term or condition. (iii) In the case of a final invoice for any balance of funds due the Contractor for supplies delivered or services performed, the amount was not subject to further contract settlement actions between the Government and the Contractor. (5) Computing penalty amount . The Government will compute the interest penalty in accordance with the Office of Management and Budget prompt payment regulations at 5 CFR Part 1315 . (i) For the sole purpose of computing an interest penalty that might be due the Contractor, Government acceptance is deemed to occur constructively on the 7 thday (unless otherwise specified in this contract) after the Contractor delivers the supplies or performs the services in accordance with the terms and conditions of the contract, unless there is a disagreement over quantity, quality, or Contractor compliance with a contract provision. If actual acceptance occurs within the constructive acceptance period, the Government will base the determination of an interest penalty on the actual date of acceptance. The constructive acceptance requirement does not, however, compel Government officials to accept supplies or services, perform contract administration functions, or make payment prior to fulfilling their responsibilities. (ii) The prompt payment regulations at 5 CFR1315.10(c) do not require the Government to pay interest penalties if payment delays are due to disagreement between the Government and the Contractor over the payment amount or other issues involving contract compliance, or on amounts temporarily withheld or retained in accordance with the terms of the contract. The Government and the Contractor shall resolve claims involving disputes and any interest that may be payable in accordance with the clause at FAR 52.233-1 , Disputes. (6) Discounts for prompt payment . The designated payment office will pay an interest penalty automatically, without request from the Contractor, if the Government takes a discount for prompt payment improperly. The Government will calculate the interest penalty in accordance with the prompt payment regulations at 5 CFR Part 1315 . (7) Additional interest penalty. (i) The designated payment office will pay a penalty amount, calculated in accordance with the prompt payment regulations at 5 CFR Part 1315 in addition to the interest penalty amount only if- (A) The Government owes an interest penalty of $1 or more; (B) The designated payment office does not pay the interest penalty within 10 days after the date the invoice amount is paid; and (C) The Contractor makes a written demand to the designated payment office for additional penalty payment, in accordance with paragraph (a)(7)(ii) of this clause, postmarked not later than 40 days after the invoice amount is paid. (ii) (A) The Contractor shall support written demands for additional penalty payments with the following data. The Government will not request any additional data. The Contractor shall- (1) 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; (2) Attach a copy of the invoice on which the unpaid late payment interest is due; and (3) State that payment of the principal has been received, including the date of receipt. (B) If there is no postmark or the postmark is illegible- (1) The designated payment office that receives the demand will annotate it with the date of receipt, provided the demand is received on or before the 40th day after payment was made; or (2) If the designated payment office fails to make the required annotation, the Government will determine the demand’s validity based on the date the Contractor has placed on the demand, provided such date is no later than the 40th day after payment was made. (iii) The additional penalty does not apply to payments regulated by other Government regulations ( e.g., payments under utility contracts subject to tariffs and regulation). (b) Contract financing payment . If this contract provides for contract financing, the Government will make contract financing payments in accordance with the applicable contract financing clause. (c) Fast payment procedure due dates . If this contract contains the clause at 52.213-1 , Fast Payment Procedure, payments will be made within 15 days after the date of receipt of the invoice. (d) Overpayments . If the Contractor becomes aware of a duplicate contract financing or invoice payment or that the Government has otherwise overpaid on a contract financing or invoice payment, the Contractor shall- (1) Remit the overpayment amount to the payment office cited in the contract along with a description of the overpayment including the- (i) Circumstances of the overpayment ( e.g. , duplicate payment, erroneous payment, liquidation errors, date(s) of overpayment); (ii) Affected contract number and delivery order number if applicable; (iii) Affected line item or subline item, if applicable; and (iv) Contractor point of contact. (2) Provide a copy of the remittance and supporting documentation to the Contracting Officer. (End of clause) Alternate I (Feb 2002) . As prescribed in 32.908 (c)(3), add the following paragraph (e) to the basic clause: (e) Invoices for interim payments . For interim payments under this cost-reimbursement contract for services- (1) Paragraphs (a)(2), (a)(3), (a)(4)(ii), (a)(4)(iii), and (a)(5)(i) do not apply; (2) For purposes of computing late payment interest penalties that may apply, the due date for payment is the 30 thday after the designated billing office receives a proper invoice; and (3) The contractor shall submit invoices for interim payments in accordance with paragraph (a) of FAR 52.216-7 , Allowable Cost and Payment. If the invoice does not comply with contract requirements, it will be returned within 7 days after the date the designated billing office received the invoice.