Payment Terms Legislation In United States

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United States

Please scroll down for a summary of payment terms in the United States and the various industries across which payment term legislation appears.

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Industries Laws Codes Notes Interest Rate


The Prompt Payment Act is federal law governing payment terms from government agencies. In general terms from the government are limited to 30 days, with 7 days for meat and poultry, 10 days for dairy and perishables, and 15 days for ‘fast pay’ terms aimed at SMEs.
The act also covers federal government construction projects requiring payment to the prime contractor within 14 days and further payments to the sub-contractors by 7 days after this payment. Each state has enacted its own laws covering public construction contracts and in most cases private construction as well.

United States Department of Agriculture – ‘Packers and stockyards act 1921’ requires livestock sold on a grade-and-yield basis to be paid by the end of the next business day after the final purchase price is determined. Live poultry obtained under a poultry growing arrangement must be paid for by the close of the 15th day following the week in which the poultry is slaughtered.

Californian Food and Agricultural Code 56302 states that if no payment period is agreed in contract between a dealer and the producer of a farm product the due date is 30 days from delivery.

Florida General Agricultural Laws 604.3 require non-stored grain to be paid for within 6 months of the date of the contract or delivery.

Idaho Commodity Dealer Law requires a commodity dealer to pay for agricultural commodities upon delivery or demand by the owner or agent, but not later than 30 days after delivery, unless otherwise agreed to by the parties in writing.

Iowa State Code 203.8 requires grain dealers to pay within 30 days of delivery unless a credit-sale contract, with a maximum of 12 months, is used.

Louisiana State Legislature Title 3, 3414:1-4 requires grain dealers for spot price contracts as well as purchases of rice and cotton to be paid within 10 working days of delivery.

Minnesota Statute 223.17 subdivision 5 requires payment for grain purchases by close of business on the day following sales or within 48 hours of the sale, whichever is later.

Missouri State law 276.461 requires grain dealers to make payment on delivery unless a written purchase contract or deferred payment contract is used.

Montana State code 80-4-608 requires grain dealers to pay 90% on delivery with the remaining 10% no later than 30 days from delivery.

Oregon State Law 576.705 requires agricultural commodities including seeds, animals, sugar beet and fish or seafood to be paid within 30 days of delivery.

Washington State Legislature 22-09-620 requires all agricultural commodities to be paid within 30 days of delivery unless otherwise specified in contract.

Nebraska State Statute 75-905 requires grain to be paid within 30 days of delivery.

The Federal Milk Marketing Order sets out payment timelines for milk associations and producers across areas of the United States. In general partial payments to dairy producers are on the 26th or 27th of the month with final payment by the 15th of the month following.

California is not covered by federal milk law and the Californian Federal Milk Marketing Order has a schedule of payments through cooperatives to producers with partial payments by the last day of the month and the final payment by the 19th of the month following delivery.

The Perishable Agricultural Commodities Act of 1930 requires “full payment promptly” by agents, buyers and brokerages for agricultural goods in the United States. Maximum payment times range from 5 to 30 days depending on the circumstances set out in 7 CFR 46.2(aa).


In 2014 the US Government launched the SupplierPay Initiative with 26 large companies, pledging to pay smaller suppliers earlier and provide more affordable working capital financing.

Interest Rate

The statutory interest rate for late payments from government entities under the Prompt Payment Act is set every six months by the Secretary of the Treasury and published in the Federal Register.


Late payment penalty laws for commercial contracts differ by state in the U.S. Many states do not provide a legal maximum penalty interest and some state laws require a grace period after payments become due before interest or a penalty can be applied.

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