Since 1982, the Prompt Pay Act has been in place to require federal agencies to make payments on time. When they are not made in a timely manner, interest builds. According to the Prompt Pay Act, every proper invoice must be paid with 30 days of its receipt. If an agency fails to pay within that timeframe, it will then be held liable for interest rates.
What does the Prompt Pay Act require?
An invoice does have to be “proper.” To be proper, an invoice must:
- Have the invoice date
- Include the name and address of the contractor
- Have applicable line item and contract numbers
- Include shipping and payment terms
- Include the title, name, phone number, and mailing address of whoever would be contacted in the case of a defective invoice
- The name and address of the person the payment should be sent to
- A description of the services performed or supplies delivered
There may be other items that have to be included based on your contract.
What happens when an invoice is rejected?
First, remember that the invoice cannot be rejected based on unusual requirements being imposed when they’re not in the initial contract. That means that a federal agency can’t make up unreasonable expectations for the invoice in a manner that delays payment.
Construction professionals deserve prompt payment when they complete jobs for the government and federal agencies. Failing to pay in a prompt manner may be a violation of the law, which is something to discuss with an attorney. The Prompt Pay Act gives you rights when a government entity fails to pay.