data tool
Prompt Payment Act interest calculator
When a US federal agency pays a vendor's proper invoice late, the Prompt Payment Act makes it pay interest at the rate the Treasury sets each January and July, 4.75% for July to December 2026. Interest is simple daily on a 360 day year and compounds every 30 days, for up to one year. This calculator follows the Bureau of the Fiscal Service's formula.
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- Runs on your device, nothing is uploaded
- Free, no sign in
- No watermark, no file limit
How it works
- 1
Enter the amount
Type the invoice amount paid late.
- 2
Enter the dates
Type the payment due date and the date the payment was made.
- 3
Check the rate
The rate fills in when the day after the due date falls in July to December 2026; otherwise type the rate the Fiscal Service published.
- 4
Read the result
The tiles show days late, the 30 day periods and extra days, the interest and the total due.
Who the Act covers
The Prompt Payment Act, 31 USC 3901 to 3907, applies to federal executive agencies paying for property and services under contracts. When an agency pays a proper invoice after its due date, usually 30 days after receiving it or the goods, whichever is later, it must pay an interest penalty without the vendor asking. The rate is set by the Treasury every six months and published by the Bureau of the Fiscal Service; it was 4.75% for 1 July to 31 December 2026.
The 30 day compounding
Under 5 CFR 1315.10, interest is calculated from the day after the due date through the payment date at the rate in effect on the day after the due date, and for up to one year, unpaid interest is added to the principal at the end of each 30 day period. The Fiscal Service's calculator puts that into one formula: P times (1 + r/12) to the power of n, times (1 + r/360 times d), minus P, where n is the number of whole 30 day periods and d the days left over.
The Fiscal Service's own example
The Fiscal Service gives the example of $1,500 due on 1 April and paid on 15 June at 6%. That is 75 days late, two 30 day periods and 15 days: $1,500 times 1.005 squared times (1 + 0.06/360 times 15), minus $1,500, which is $18.83. For a payment 10 days late it uses simple daily interest, P times r/360 times d. The calculator reproduces both, and its result for the April example is $18.83.
Two late payments, worked through
An $84,250 invoice due on 3 August 2026 and paid on 19 October 2026 is 77 days late, two 30 day periods and 17 days. At 4.75% the interest is $84,250 times (1 + 0.0475/12) squared, times (1 + 0.0475/360 times 17), minus $84,250, about $858.78. A $10 invoice paid 10 days late at the same rate earns about one cent, which is under a dollar and need not be paid. The example button loads the first case.
Limits on the penalty
Interest penalties of less than one dollar need not be paid. Interest does not keep accruing for more than one year, or after the vendor files a claim for it under the Contract Disputes Act. If the banking details the vendor supplied were wrong, interest does not start until seven days after the agency is told the correct details. The calculator caps the period at 365 days and shows a zero penalty under one dollar.
Invoicing a federal agency
Interest depends on a proper invoice, one that carries everything the contract requires, sent to the office the contract names. An invoice missing a contract number or a correct remit address can be returned, and the clock starts again. The proposals module issues invoices with numbered lines and a PDF; check the contract's invoice requirements before sending one to a federal customer.
Limits
- Rate checked on 21 October 2026 against the Bureau of the Fiscal Service: 4.75% for 1 July to 31 December 2026. For other periods, type the published rate.
- Federal agency payments only; state prompt payment laws use their own rates and are not modelled.
- Interest stops after one year, and amounts under one dollar need not be paid.
- The rate in effect on the day after the due date applies for the whole period.
What it does not do
- It does not decide whether an invoice was proper or the due date was right.
- It does not handle discounts taken late.
- It does not store the invoice details.
Questions people ask
What is the current Prompt Payment Act interest rate?
The Bureau of the Fiscal Service lists 4.75% for 1 July to 31 December 2026. The Treasury sets a new rate each January and July, so check the Fiscal Service's rates page for any payment due after that period. The calculator fills it in for that period.
When does a federal agency owe interest?
When it pays a proper invoice after the payment due date, which is generally 30 days after the designated office receives the invoice or accepts the goods or services, whichever is later. Interest runs from the day after the due date until payment.
Do I have to ask for the interest?
No. The agency must pay the interest penalty automatically with the late payment. If it does not, the vendor can ask for it in writing, and an unpaid penalty itself starts to earn interest. Penalties under one dollar need not be paid.
Why does the formula use 360 days?
The Fiscal Service's calculators use a 360 day year for the daily part of the interest and a monthly rate of r/12 for each 30 day period. Using 365 days would give a slightly smaller figure; the calculator follows the published formula.
Does the Prompt Payment Act apply to state agencies?
No. It covers federal executive agencies. Most states have their own prompt payment laws for state agencies and, in construction, for contractors and subcontractors, each with its own rates and deadlines that this calculator does not apply. Check the state statute.
What makes an invoice proper?
It must contain what the contract and the regulation require, such as the vendor's name and invoice date, the contract number, a description of the goods or services, quantities and prices, shipping and payment terms, and the name and address to send payment to. A defective invoice must be returned within seven days.
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Background reading: the question page on this.
Written and checked by the OneCraft team. Last checked .