Friday, January 2, 2015

Prompt Payment Interest Rate - Jan to Jun 2015

The Prompt Payment Interest Rate is slightly increased for the first six months of 2015. It has risen from 2.000 percent to 2.125 percent. This is the interest rate that the Government must pay contractors when it is delinquent, for whatever reason in paying for the delivery of goods or services, including progress payments and cost vouchers (i.e. public vouchers or WAWF submissions). It is often referred to as the Prompt Payment Interest Rate. It also applies to interest paid under the Contract Disputes Act.

This interest rate applies whether a contractor requests interest. In most cases, in the event payment on a voucher is delayed, the Government will add the interest. Generally, it begins accruing 30 days after receipt of an "adequate" voucher. Thus, if say the auditor rejects a WAWF submission because of an inadequacy, the clock doesn't begin until it has been revised and accepted.

Here's a table showing the interest rate history since 2012.

Some of you may remember the early 1980s with the astronomically high interest rates. The Prompt Payment interest rate peaked in 1982 at 15.5 percent. We were auditors back then and were continuously being cautioned not to do anything that would delay payments to contractors.

Click here for a complete table of historical rates.

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