With the current government shutdown causing slowdowns in invoice approvals, many TSPs are understandably concerned about how these delays might impact payment timelines.
Although Daycos has not seen any Prompt Payment Interest (PPI) situations to date, we want to help our partners stay prepared in case payment timelines are affected by current delays.
We believe that clarity prevents chaos. So, let’s break down how PPI works, what triggers it, and how to navigate potential payment delays.
What Is Prompt Payment Interest?
The Third Party Payment System (TPPS) is how the government pays Transportation Service Providers electronically. When a TSP’s invoice isn’t paid within 30 calendar days from the date the invoice is created in TPPS, Prompt Payment Interest begins to accrue.
The interest amount is based on the number of days that exceed that 30-day window.
In short: when the government misses its payment window, PPI compensates the TSP for the delay.
The Importance of a “Proper Invoice”
The clock for PPI only starts ticking once TPPS receives a proper invoice. Missing or incorrect information can stop the process cold. To qualify as “proper,” an invoice must include:
- Vendor name or SCAC
- Invoice date
- Bill of Lading (BL) number
- Line item details (price, weight, quantity, services)
- Notice of Service Completion (NOSC)
- DD Form 619 (if required by Service)
If any of these are missing or inaccurate, the invoice is deemed improper, pausing the PPI clock until corrections are made.
How the PPI Clock Works
Think of the PPI timeline as a stopwatch with a few important rules:
- Starts: When TPPS receives a proper invoice.
- Stops: When an invoice is found to be improper, or during disputes or documentation requests.
- Resets to zero: Once corrections are made, disputes are resolved, or missing documents are received.
PPSOs are required to notify TSPs of improper invoices within 7 calendar days. If that notification takes longer, the allowable payment window shortens accordingly — a key point to track when reviewing delayed payments.
When Penalty Interest Comes Into Play
If PPI isn’t paid within 10 days of the invoice payment, a TSP can request penalty interest within 40 days.
Penalty interest equals 100% of the original interest, with a minimum of $25 and a maximum of $5,000.
Tier 2 Help Desk will review these requests, and when valid, an eBill for penalty interest may be generated.
Who Handles What
Here’s the quick chain of responsibility:
- USTRANSCOM creates the eBills for PPI owed.
- Origin PPSO approves those eBills.
- DFAS reimburses the TPPS provider for interest when appropriate.
Knowing who manages each step can help keep things moving — and avoid getting lost in the shuffle.
A Few Real-World Scenarios
In practice, PPI isn’t always straightforward. Invoices held up by disputes, delayed approvals, or missing documents can all affect when the clock starts, stops, or resets. Each situation determines whether interest is owed — and how much.
That’s why clear communication, prompt documentation, and accurate billing are critical.
The Takeaway
Prompt Payment Interest isn’t just a penalty — it’s a protection for TSPs. But to make it work for you, accuracy and attention to detail matter from the very start.
At Daycos, we’re here to equip you with the information and resources you need to understand Prompt Payment Interest — so you can determine if it applies to your situation and take the right next steps.
If you have questions about the timeline of an invoice or whether PPI might apply, reach out to our team. We’re always happy to help you make sense of the details that make a difference.
