Formulas

• Late Interest Calculations
• Determining the Purchase Card Invoice Payment Date
• Discounts

Late Interest Calculations

Agencies that fail to make payment by the payment due date are required to pay a late interest penalty. The formulas available below can be used to calculate simple daily interest and monthly compounding interest. The Prompt Pay interest rate in effect on the first day after the payment was due, available below, should be used in both of these calculations.

• Prompt Pay Interest Rates History:
  List of the rates in effect during the specified periods from January 1979 to date.
• Interest Penalty Calculations
• Simple Daily Interest Calculator: Automatically calculates simple daily interest.
• Monthly Compounding Interest Calculator: Automatically calculates monthly compounding interest due to a vendor.

Determining the Purchase Card Invoice Payment Date

The revised Prompt Pay regulation requires agencies to determine Government-wide commercial purchase card payment dates based on an analysis of the total benefits to the federal government as a whole.

• Calculating Purchase Card Invoice Payment Date
  Includes a spreadsheet that may be used by agencies to determine when to pay purchase card invoices. This site also includes a manual calculation which may be used by agencies that choose not to use the spreadsheet.
• Current Value of Funds Rate
  Used for the spreadsheet and the manual calculation of the Purchase Card invoice payment date.

Taking a Discount

• On-line Discount Calculator
• Discount Formula
  To be used by federal agencies to evaluate the cost-effectiveness of a cash discount. See section 8040.40 of Treasury's Cash Management Regulations I TFM 6-8000 for the formula.
• Treasury Current Value of Funds Rate (Effective until December 31, 2007)
  Treasury's Cash Management Regulations I TFM 6-8000 prescribes the use of this rate by agencies as a comparison point in evaluating the cost-effectiveness of a cash discount. Please note that the current value of funds rate changed from 2% to 4% on July 1, 2006.