GUIDELINES

FOR

CALCULATING

PROMPT PAYMENT INTEREST

FOR

WEEKENDS AND FEDERAL HOLIDAYS

2022

Website: http://www.fms.treas.gov/prompt/index.html.

Email: PromptPayment@fiscal.treasury.gov

DEPARTMENT OF THE TREASURY
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The purpose of these guidelines is to bring clarity on how to Prompt Payment interest is to be calculated when a due 

date fall on a weekend or Federal holiday.

 

In 1982, Congress passed the Prompt Payment Act (Pub. L. 97-177, 96 Stat. 85) requiring Federal agencies to:

 to pay their bills timely;

 To pay interest penalties when payments are late, and;

 To take discounts, if economically justified.

The Prompt Payment Act applies to contracts for goods or services awarded by Executive Branch agencies (31 

U.S.C. §§ 3901-3907; 5 CFR §§ 1315.1 et seq.). Specifically, it applies to the payment types listed in § 1315.1.

WHAT DAYS ARE INCLUDED WHEN CALCULATING THE 30-DAYS LEADING TO THE PAYMENT DUE DATE?

All consecutive days are included (inclusive of business days, weekends, and holidays). If the contract terms 

require payment to be made in 30 days, payment must be made by the 30th calendar day. (5 CFR §§ 1315. 2(k), 

1315.4(g)).

WHAT IS THE DUE DATE FOR WHEN THE 30TH DAY FALLS ON A WEEKEND OR HOLIDAY?

If the 30th day falls on a weekend or holiday, agencies are given a grace period to make a payment on the next 

business day. (5 CFR § 1315.4(h), § 1315.10(a)(1)). 

MATTER OF: Prompt Payment Discounts: When Payment is Due on Local Holidays, B-217644 (10/31/85) (when 

an act is to be performed within a certain number of days and the last day falls on a weekend or a Federal legal 

holiday, performance on the following business day is proper); MATTER OF: OMB, B-17644.1 (3/31/89) (in 

response to OMB’s request, GAO recommended that Prompt Payment deadlines that expire on Saturdays, 

Sundays, or legal holidays should be extended to the end of the next day that is not a Saturday, Sunday, or legal 

holiday). 

AGENCY TIP: Agencies lack the power to unilaterally change the due date. However, the application of the 

grace period has the practical effect of allowing agencies to make a payment, when a due date 

falls on Saturdays, Sundays and/or Federal Holidays, on the next business day.

30 DAY CALCULATION

PURPOSE OF THE GUIDELINES

APPLICATION

BACKGROUND
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Agencies are given a grace period if a due date falls on a Saturday or Sunday. Payment may be made on the 

following business day without incurring late payment interest penalties. If either Saturday or Sunday is the due 

date, payment must be made on Monday. 

AGENCY TIP: Interest does NOT begin on the payable date (Monday) in this example. Interest is calculated from 

the day after the payment date (Tuesday). “Interest will be calculated from the day after the 

payment due date through the payment date at the interest rate in effect on the day after the 

payment due date.” (5 CFR § 1315.10(a)(1)).

EXAMPLE 1: WHEN A DUE DATE FALLS ON A SATURDAY OR SUNDAY WHEN WOULD 

INTEREST BEGIN TO ACCRUE?
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Payments falling due on a weekend, or a Federal Holiday may be made on the following business day without 

incurring late payment interest penalties. 

AGENCY TIP: If a due date initially fell on a Monday (Federal Holiday), payment must be made on Tuesday. 

Interest would begin accruing on Wednesday, (if payment were not disbursed on Tuesday).

EXAMPLE 2: WHEN A DUE DATES FALLING ON A MONDAY (HOLIDAY) WHEN WOULD 

INTEREST BEIN TO ACCRUE
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Due Date means “the date on which Federal payment “should be made”. (5 CFR § 1315.2(p)).

AGENCY TIP: The day the payment “should be made” refers to:

 The next business day (after a weekend or federal holiday) when the payment is made in the

grace period context. 

 And not the “original” due date. 

WHEN DOES INTEREST BEGIN TO ACCRUE?

 Interest is calculated from the day after the payment due date (e.g. the next business day). (5 CFR § 

1315.10(a)(1)). “The interest penalty shall be paid for the period beginning on the day after the required 

payment date and ending on the date on which payment is made.” (31 U.S.C. § 3902(b)).

This is the same as Example 2, except a late Same Day ACH payment is made on Friday. The grace period allows 

for a payment due on a Monday (Federal Holiday) to be made on Tuesday without incurring interest penalties. 

AGENCY TIP: Auditors stress that the Monday due date cannot be changed. When the grace period is applied, 

the interest calculation does not revert back to the Monday due date if a late payment is made via 

Same Day ACH on Friday (instead of the Tuesday payable date). Interest continues to accrue from 

Wednesday to the settlement date. Three days of interest are owed (assuming Same Day ACH 

payment is made on Friday). 

EXAMPLE 3: WHAT IF THE DUE DATE FALLS ON A MONDAY (HOLIDAY) AND LATE 

PAYMENT IS MADE ON FRIDAY

BEGINNING DATE OF INTEREST ACCRUAL WHEN A PAYMENT “SHOULD BE MADE”
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WHAT IS THE “PAYMENT DATE”?

“Payment Date: Payment will be considered to be made on the settlement date for an Electronic Funds Transfer 

(EFT) payment or the date of the check for a check payment. Payments falling due on a weekend or federal holiday 

may be made on the following business day without incurring late payment interest penalties.” (5 CFR § 

1315.4(h)).

 Checks - Payment date means “the date on which a check for payment is dated...” 5 CFR § 1315.2(z).

 The EFT - Payment date means “...the date of an Electronic Funds Transfer EFT (settlement date)“ 

5 CFR § 1315.2(z). Settlement date means “the date on which an EFT payment is credited to the vendor’s 

financial institution. 5 CFR § 1315.2(ee). Interest is calculated through the settlement date.

DETERMINATION OF THE “PAYMENT DATE” – ENDING DATE OF INTEREST ACCRUAL
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WHAT CONDITIONS APPLY TO SAME DAY ACH PAYMENT DATES?

 A Same Day ACH payment cannot exceed $1,000,000. The total $ value of Same Day ACH requests made by 

a specific ALC and TAS combination cannot exceed $50 million on a single payment date. 

 All Same Day ACH payment requests through SPS must be made by 4:00 p.m. Eastern Time (ET) in order to 

meet the Federal Reserve's Same Day window of 4:45 p.m. ET. 

 Treasury-disbursed federal entities have the discretion to decide if a payment should be made by Same Day 

ACH.

 Treasury Financial Manual, Vol. 1, Part 4A, Chapter 3000, § 30115.10i.

If an agency timely originates a payment using the Same Day ACH on a banking day, such as Friday, for a 

payment that is due on Friday, the payment is settled on the same day. (5 CFR § 1315.2(ee), § 1315.4(h)). Friday is 

the “payment date” and the “settlement date.” 

AGENCY TIP: No interest is calculated or owed.

SAME DAY ACH “PAYMENT DATE” 

EXAMPLE 4: WHAT IS THE “PAYMENT DATE” FOR SAME DAY ACH
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If an agency timely originates a payment using the Next Day ACH option on a Thursday, for a payment that is due 

on a Friday (Federal Holiday), the settlement will be the next banking day (Monday). No interest accrues. 

 The payee’s financial institution (at its discretion) may subsequently post the payment to the payee’s account as 

a provisional credit which allows the payee to have access to the funds early over the weekend. 

 Because of the grace period over the Federal Holiday and weekend, the payment may occur on the next 

business day (Monday). The actual settlement of funds between the Treasury General Account (TGA) and the 

payee’s financial institution will occur on the next banking day (Monday). 

AGENCY TIP: Same result would occur if the due date was either Saturday or Sunday,

EXAMPLE 5: WHAT IS THE “PAYMENT DATE” IF NEXT DAY ACH WERE USED (INSTEAD OF 

SAME DAY ACH)?
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Examples #5 & #6 are the same, except in example #6, the due date is a Thursday, which is prior to a Federal 

Holiday and a weekend AND at the time the Agency originates a Next Day Payment on Thursday, it is already late. 

AGENCY TIP: Interest begins accruing on Friday and goes through Monday when the payment settles. Four days 

of interest is owed.

ORIGINATED A LATED PAYMENT?
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HOW IS THE “PAYMENT DATE” DETERMINED IF: 

The agency does not meet the Treasury Financial Manual requirements with respect to the payment process.

 Interest will continue to accrue through to the settlement date. For example, for SAME DAY ACH payments, 

if the agency delay causes it to miss the 4:00 p.m. ET processing window, payment will settle the following 

business day. (In other words, in Example 4, if the 4:00 p.m. ET deadline on Friday were missed, the SAME 

DAY ACH would settle on the next business day (Monday)). Likewise, if the combination of a specific ALC 

and TAS exceed $50 million on a single payment date, all payments will settle the following business day.

Treasury Financial Manual, Vol. 1, Part 4A, Chapter 3000, § 30115.10i.

The National Payment Center of Excellence or the Federal Reserve delayed or made an error in “the issuance” of 

the payment due to outages, natural disasters affecting operations, etc.?

 Interest will continue to accrue through to the settlement date. The agency that originated the payment is 

responsible for paying for any additional days of prompt payment interest penalties. (5 CFR § 1315.10(b)(5)); 

Claim of Commercial Transfer Systems, Inc., B-213466 (May 1, 1984).

The Federal Reserve or the vendor bank delayed in crediting the EFT payment to the vendor’s account?

 No additional days of interest are due “[w]hen an EFT payment is not credited to the vendor's account by the 

payment due date because of the failure of the Federal Reserve or the vendor's bank to do so.” (5 CFR § 

1315.10(c)(4)). 

NATIONAL PAYMENT CENTER OF EXCELLENCE, FEDERAL RESERVE BANK, OR VENDOR