What interest does a federal agency owe on a late payment?
Work out the interest a federal agency must add when it pays your invoice late, from the amount, the due date and the date it paid, and the extra penalty you can ask for if it leaves the interest out.
When a federal agency pays a proper invoice late, the Prompt Payment Act says it must add an interest penalty, without you asking. The payment is usually due 30 days after the agency receives a proper invoice, or 30 days after it accepts the goods or services, whichever is later.
Interest runs from the day after the due date until the day the agency pays. The rate is the one in effect on the day after the due date, set by the Treasury every six months, and it stays the same for the whole time. Interest is worked out on a 360-day year. At the end of each 30 days, unpaid interest is added to the amount, so later interest is charged on it too. Interest stops after one year.
If the agency pays the invoice but not the interest, you can ask in writing for an additional penalty: the same amount again as the interest, at least $25 and at most $5,000.
Results
- Days interest runs for
- 75
- Whole 30-day periods (interest added each time)
- 2
- Days after the last whole period
- 15
- Interest
- $413.64
- Additional penalty if the interest is left out
- $413.64
- Ask for it in writing by
- August 23, 2026
| Days late | Interest | Total paid |
|---|---|---|
| 30 | $165.00 | $48,165.00 |
| 60 | $330.57 | $48,330.57 |
| 90 | $496.70 | $48,496.70 |
| 180 | $998.55 | $48,998.55 |
| 365 | $2,046.52 | $50,046.52 |
The numbers stay in this browser. They are kept in the page address after the # sign, so you can save or share a result, and browsers never send that part to a server. Privacy
Worked example: A $48,000 invoice paid 75 days late
A made-up example: payment was due on April 30, 2026, and the agency paid on July 14, 2026. Interest started on May 1, 2026, so it uses the rate for January 1 to June 30, 2026, which was 4 1/8% (4.125%). The 75 days are two 30-day periods and 15 days more.
- Days late: April 30, 2026 to July 14, 2026
- 75
- Rate in effect from January 1, 2026
- 4.125% a year
- Interest added after each 30 days: 2 times
- 0.344% each time
- Simple interest for the last 15 days
- 4.125% × 15 ÷ 360
- Interest: $48,000 × (1 + 4.125% ÷ 12)^2 × (1 + 4.125% × 15 ÷ 360) − $48,000
- $413.64
- Total the agency pays
- $48,413.64
- Additional penalty, if the interest is left out
- $413.64
Paid 180 days late instead, the interest would be $998.55: interest is added to the amount every 30 days, so it grows a little faster than simple interest, and it stops after a year.
Worth knowing
- For working out interest, the agency is treated as accepting goods or services 7 days after you deliver them, unless the contract says otherwise or there is a disagreement over quantity, quality or compliance.
- When the due date falls on a Saturday, Sunday or legal holiday, the agency can pay on the next working day without interest. This calculator allows for weekends, not holidays.
- No interest is due while you and the agency disagree over the amount or whether the contract was met, on financing payments such as progress payments, or on amounts the contract lets the agency hold back. Interest under $1 need not be paid.
- The agency should send a notice with the interest showing the amount, the days late and the rate. To ask for the additional penalty, write within 40 days of the payment, say which invoice the interest is due on, attach a copy, and state when you received the payment.
- Interest stops after a year, or once you file a claim for it under the Contract Disputes Act.
- The Treasury sets a new rate from each January 1 and July 1. The rate for January 1, 2027 had not been published when this page was checked.
- The Act covers federal agencies only. With other customers, any late fee or interest comes from your contract and your state's law.
Routes this works for
Sources
- 5 CFR 1315.10: late payment interest penalties (from the day after the due date, the rate on that day, 360-day year, added every 30 days for up to a year, under $1 not paid) · checked October 21, 2026
- 5 CFR 1315.11: additional penalties (100% of the interest, at least $25, at most $5,000, asked for in writing within 40 days) · checked October 21, 2026
- 5 CFR 1315.17: formulas, with the monthly compounding formula and its worked examples · checked October 21, 2026
- 48 CFR 52.232-25 (FAR): Prompt Payment clause (due dates, constructive acceptance on the 7th day, weekends and holidays) · checked October 21, 2026
- 48 CFR 32.907 (FAR): interest penalties, and the written demand for the additional penalty · checked October 21, 2026
- Bureau of the Fiscal Service: Prompt Payment (the current rate, 4.75% for July 1 to December 31, 2026) · checked October 21, 2026
- Federal Register 2026-13903: Prompt Payment Interest Rate; Contract Disputes Act (4 3/4% for July 1 to December 31, 2026) · checked October 21, 2026
- Federal Register 2026-02176: Prompt Payment Interest Rate; Contract Disputes Act (4 1/8% for January 1 to June 30, 2026) · checked October 21, 2026
- Federal Register: every Prompt Payment Interest Rate notice (the rates in the table, from January 2020) · checked October 21, 2026
Something wrong or out of date?
Every fact here comes from a source, and rules and limits change. Email what looks wrong to data@fundladder.uk and, if you can, where you saw the right information. We use your email only to check the correction and reply. Privacy