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How and when federal contractors get paid

The U.S. government is a reliable payer, but it pays on its own rules: electronic invoices, proper documentation and set time limits. Knowing them protects your cash flow, which matters most for small contractors.

The Prompt Payment Act

  • As a general rule the government must pay a proper invoice within 30 days of receiving it, unless the contract sets another date.
  • For construction progress payments the standard due date is 14 days after the payment request is received.
  • If the government pays late, it owes you interest penalties automatically, at a rate set by the Treasury.
  • An invoice that is missing required information is returned as improper, and the clock starts again when you resubmit, so get the details right the first time.

How you invoice

Invoices are submitted electronically through the system named in your contract (Department of Defense contracts, for example, use a dedicated electronic invoicing system). Payment goes to the bank account in your SAM.gov registration, which is one more reason to keep that registration accurate and active.

What a proper invoice needs

  • Your name and the address in the contract, the invoice date and number.
  • The contract number, line items, descriptions, quantities and prices that match the contract.
  • Payment terms and the name of the person to contact about it.
  • For construction, the documentation the contract requires, such as certified payrolls and progress certification.

Cash flow on construction jobs

  • Construction contracts are typically paid in monthly progress payments based on work completed.
  • The contracting officer may retain part of a progress payment (retainage) when progress is not satisfactory, and release it as performance improves or at completion.
  • You still pay workers weekly at prevailing wages and buy materials up front, so plan working capital before you bid.

Planning your first bid? Start with how to bid on federal construction contracts.

Last reviewed October 20, 2026. This guide is general information, not legal advice. Rules and dollar thresholds change, so check the solicitation and the official sources linked above.