Which Act requires 'pay on time or pay interest'?

Which Act requires 'pay on time or pay interest'?

• A. Debt Collection Improvement Act
• B. Prompt Payment Act
• C. Federal Prompt Funds Act
• D. Timely Payment Act

Answer: (B)

Pay on time or pay interest is the hallmark of the Prompt Payment Act. This law requires federal agencies to pay properly submitted invoices promptly, and if a payment is late, interest must be paid to the vendor. It creates a financial incentive for agencies to avoid delays and helps suppliers maintain cash flow. The other items focus on different topics—one deals with collecting government debts, another concerns the availability of funds, and the remaining option doesn’t address prompt payment. So the Act that directly imposes timely payments with interest penalties is the Prompt Payment Act.

Pay on time or pay interest is the hallmark of the Prompt Payment Act. This law requires federal agencies to pay properly submitted invoices promptly, and if a payment is late, interest must be paid to the vendor. It creates a financial incentive for agencies to avoid delays and helps suppliers maintain cash flow. The other items focus on different topics—one deals with collecting government debts, another concerns the availability of funds, and the remaining option doesn’t address prompt payment. So the Act that directly imposes timely payments with interest penalties is the Prompt Payment Act.