How government contractors get paid: timing, invoices and factoring

When federal payments arrive under the Prompt Payment Act, how to invoice so payment isn't delayed, how factoring and assignment of claims work, and why award value isn't profit.

Payment timing: the contract, with the Prompt Payment Act behind it

The Prompt Payment Act (31 U.S.C. chapter 39), carried out by FAR subpart 32.9 and the payment clause in your contract, sets when payment is due. For most fixed-price supplies and services it is 30 days after the later of a proper invoice or government acceptance of the work. Construction, architect-engineer work and perishable goods have their own deadlines, and cost-reimbursement contracts are paid under their own clause. If the agency pays a proper invoice late, it owes interest on the late amount without your asking.

Payment waits for acceptance: work delivered but not yet accepted is not yet due. Some contracts include progress payments or performance-based payments; read the financing clauses before you plan cash flow.

Invoice once, correctly

An invoice that isn't proper is returned, and the 30 days start again from a corrected one. Accuracy beats speed.

Keep your SAM.gov registration active and its banking details current: payments go to the account in SAM.
Submit in the system the contract names: Defense contracts use Wide Area Workflow (WAWF) in the PIEE platform; many civilian agencies use Treasury's Invoice Processing Platform (IPP).
Match the contract number, line items, quantities and unit prices exactly.
Attach receiving or acceptance documents when the contract asks for them.
Keep a copy of every submission and every rejection notice.

Factoring: cash sooner, at a cost

Factoring sells or pledges an invoice to a finance company, which advances most of it now, collects the payment and keeps a fee. When the government pays you directly, the money can be assigned only under the Assignment of Claims Act (FAR subpart 32.8): to a bank, trust company or other financing institution, on a contract of $1,000 or more that doesn't forbid assignment, with written notice to the contracting officer and the paying office. The assignee must be registered in SAM separately; don't change your own SAM banking details to the factor's.

A subcontractor's invoice is owed by the prime, not the government, so a subcontractor's factor collects from the prime. Compare the advance rate, the fees, recourse (who absorbs a payment that never comes) and what happens if the invoice is disputed.

Award value is revenue, not profit

Profit is what is left after direct costs (labor, materials, subcontracts), overhead, general and administrative costs, and financing costs such as factoring fees or interest on a credit line. Fixed-price contracts leave cost overruns with you. Cost-reimbursement contracts repay allowable costs under FAR part 31 and add a fee, with more accounting and compliance work.

Put the payment delay into your price before you bid: weeks between paying your staff and being paid are a real cost. USAspending.gov shows award amounts, not margins.

Paying your own subcontractors

The prime pays subcontractors under the subcontract's terms. When a contract includes FAR 52.232-40, a prime that receives accelerated payments must, to the maximum extent practicable and within 15 days, pay its small business subcontractors early once it has their proper invoice. On construction contracts, FAR 52.232-27 requires primes to pay subcontractors within 7 days of being paid.

On SpendQuery

Official sources

Questions people ask

How long does the government take to pay an invoice?

For most fixed-price contracts, 30 days after the later of a proper invoice or acceptance of the work, under the Prompt Payment Act and FAR subpart 32.9. Your contract's payment clause sets the exact terms.

Does the government pay interest when it pays late?

Generally yes: under the Prompt Payment Act an agency that pays a proper invoice late owes interest on the late amount, paid automatically.

Can I get cash before the government pays me?

Possibly: factoring or a bank line of credit against the receivable (assigned under the Assignment of Claims Act when the government pays you directly), or contract financing such as progress payments when the contract provides it. Each costs something; compare them.

Is the contract amount what I keep?

No. Subtract direct costs, overhead, general and administrative costs and financing costs; what remains is profit.

More guides

Updated 2026-10-20. General information, not legal advice; the solicitation and the FAR govern each purchase.