CONTRACT ADMIN & INVOICINGFAR Part 32 (Contract Financing)
FAR 52.232-25: Prompt Payment (Net 30 & Statutory Late Interest)
Official federal procurement regulation analysis, contractor performance obligations, and risk mitigation strategies for small businesses.
REGULATORY CONTEXT
Official Acquisition.gov Text ↗What It Means in Plain English
Enforces the Prompt Payment Act, requiring federal agencies to pay contractor invoices within 30 days of receiving a proper invoice, or automatically add Treasury-set late payment interest penalties.
Where This Clause Appears in Federal RFPs:
Mandatory in all federal fixed-price supply and service contracts.
Mandatory Statutory Requirements
- 30-Day Payment Clock: Payment is due 30 days after the designated billing office receives a proper invoice or 30 days after agency acceptance of work (whichever is later).
- Automatic Interest Penalty: If payment is late, the government MUST automatically pay interest at the U.S. Treasury rate without the contractor needing to request it.
- 7-Day Defective Invoice Notice: The agency must notify the contractor within 7 days of invoice receipt if an invoice is defective or missing required details.
Contractor Compliance Obligations
- Include all 10 proper invoice elements: Contract Number, Order Number, CLIN, Item Description, Quantity, Unit Price, Shipping/Payment Terms, UEI, Banking Info, and Submitter Contact.
- Submit through the agency's designated electronic invoicing portal (e.g. IPP, WAWF/PIEE).
⚠️ Audit Trap & High-Risk Pitfall
Submitting an invoice without the exact CLIN or with an incorrect UEI causes immediate rejection and resets the 30-day clock.
Frequently Asked Questions About FAR 52.232-25
What happens if an agency pays my invoice on Day 45?
The agency must pay interest for the 15 days of delay calculated at the published Treasury prompt payment interest rate, included in the payment disbursement.