Under the Maryland Prompt Payment Act, a state agency must pay a proper invoice within 30 days after the payment becomes due under the contract or the agency receives the invoice, whichever comes later.1Maryland General Assembly. Maryland State Finance and Procurement Code 15-103 – Prompt Payment Vendors on small business reserve contracts get paid faster, within 15 days. When agencies miss the deadline, interest runs at a fixed 9% per year, but only if you invoice for it correctly. The rules live in the State Finance and Procurement Article, Title 15, Subtitle 1, and apply to state procurement contracts.
The 30-Day and 15-Day Deadlines
The core rule is simple. Once an agency receives a proper invoice and payment is due under the contract, the agency has 30 days to pay. The clock starts on the later of two dates: the day payment becomes due under the contract terms, or the day the agency actually receives the invoice. Deliver goods on March 1, invoice received March 10, clock starts March 10.
Small business reserve contracts run on a 15-day timeline instead. The shorter window recognizes that smaller vendors rarely have the cash reserves to wait a month for state money. If you hold Small Business Reserve certification, make sure it is current and reflected in eMaryland Marketplace Advantage, because the faster payment right depends on that status being on file.2Maryland General Assembly. Maryland State Finance and Procurement Code 15-103 – Prompt Payment
Behind the scenes, procurement regulations track slippage. Under COMAR 21.02.07.01, a payment request that has been sitting with the Comptroller’s General Accounting Division for more than 25 days from the later of the proper invoice date or the acceptance date is flagged as delayed, and the General Accounting Division notifies the agency and oversight authorities in writing.3Cornell Law Institute. Maryland Code of Regulations 21.02.07.01 – Duties, Responsibilities, and Authority Vendors do not file this flag; the system does. But it explains why persistent follow-up close to the 25-day mark often shakes payments loose.
What Counts as a Proper Invoice
The payment clock does not start on any invoice. It starts on a proper one. Maryland law requires every invoice on a procurement contract to carry three things: your federal employer identification number or Social Security number, the procurement contract or purchase order number (or another adequate description of the contract), and whatever additional documentation the regulation or the contract itself requires.4Maryland General Assembly. Maryland State Finance and Procurement Code 15-102 – Invoice
The third item is where vendors most often stall themselves. Different agencies and contract types require different backup: signed delivery tickets, timesheets, proof of inspection, subcontractor certifications. If your invoice is missing any required piece, the agency can treat it as not yet received for purposes of the 30-day deadline, and no interest accrues on the gap. Read the invoicing provisions of your contract before you send the first bill.
Interest at 9% When the State Is Late
If a state agency does not pay on time, interest accrues at a fixed rate of 9% per year on any amount due under the contract that remains unpaid more than 37 days after the agency received the invoice.5Maryland General Assembly. Maryland State Finance and Procurement Code 15-104 – Interest Interest begins on the 31st day after the payment became due or the agency received the invoice, whichever came later. The rate is set by statute, so it does not move with market conditions, and your calculation can be exact.
There is a trap here that costs vendors real money. To collect the interest, you must submit a separate invoice specifically for it, and you have only 30 days from the date on the state’s check for the underlying amount to do so. Miss that window and the agency owes you nothing extra.6Maryland General Assembly. Maryland State Finance and Procurement Code 15-105 – When Unit Not Liable for Interest Interest does not accrue on unpaid interest, and it caps at one year after the 31st day following invoice receipt. So the maximum interest exposure on any single overdue amount is roughly 9% of it.
When Interest Does Not Apply
The statute lists several situations where an agency owes no interest even if payment was slow. Beyond the 30-day interest-invoice requirement and the one-year cap, no interest is owed if you have filed a formal contract claim under Subtitle 2 of Title 15.6Maryland General Assembly. Maryland State Finance and Procurement Code 15-105 – When Unit Not Liable for Interest Filing a contract claim moves the dispute onto a different track and takes the prompt payment interest provisions off the table.
The regulations also recognize a “disputed invoices” category. A payment request flagged as disputed is excluded from the delayed-payment tracking system under COMAR 21.02.07.01.3Cornell Law Institute. Maryland Code of Regulations 21.02.07.01 – Duties, Responsibilities, and Authority A genuine disagreement over whether goods met specifications can legitimately pause the clock, though the dispute has to be real.
Private Construction Runs on a Different Statute
If your work is private construction rather than a state procurement contract, a different law controls. The Real Property Article, §9-302, sets the deadlines. Where a construction contract does not specify payment dates, the owner pays undisputed amounts within 30 days after either the occupancy permit is granted or the owner takes possession, whichever comes first. Where the contract does set payment dates, undisputed amounts are due within 7 days after the specified date.7Maryland General Assembly. Maryland Real Property Code 9-302 – Prompt Payment
Subcontractors have their own pass-through rule. A contractor or higher-tier subcontractor must pay undisputed amounts to a lower-tier subcontractor within 7 days of receiving each payment that includes that subcontractor’s work or materials.
These private construction rules do not cover contracts with the state, counties, municipal governments, boards of education, or public authorities. Those all fall back under the procurement statute discussed above. Single-family home construction sales and contracts covered by the Maryland Home Improvement Law are also excluded from §9-302.
Federal Contracts Are Not the Same
Vendors who work with both Maryland and federal agencies should not assume the rules match. The federal Prompt Payment Act also uses a 30-day standard, but the trigger is different: the clock starts on the later of the date the agency receives a proper invoice or the seventh day after goods are delivered or services completed, with the acceptance date substituting in if acceptance happens before that seventh day.8eCFR. 5 CFR 1315.4 – Prompt Payment Standards and Required Notices to Vendors Maryland’s version is simpler and tied to when payment becomes due under the contract or when the invoice arrives.
Federal prime contractors who receive accelerated payments from the government must pass those payments through to small business subcontractors within 15 days, with no fees for the acceleration.9Acquisition.GOV. FAR 52.232-40 – Providing Accelerated Payments to Small Business Subcontractors That parallels Maryland’s 15-day small business reserve timeline, though the federal payment flows through the prime rather than directly from the government.
On interest, the federal rate adjusts periodically with Treasury rates while Maryland’s 9% is locked in by statute. Which system pays better depends on where rates sit. Federal contracts also use their own excusable-delay provisions covering events like natural disasters, epidemics, and government actions, which can extend delivery schedules without triggering default.10Acquisition.GOV. FAR 52.249-14 – Excusable Delays