diff --git a/src/libs/actions/IOU/ReportWorkflow.ts b/src/libs/actions/IOU/ReportWorkflow.ts
index 6ad5d1c5d248..c6fe74547add 100644
--- a/src/libs/actions/IOU/ReportWorkflow.ts
+++ b/src/libs/actions/IOU/ReportWorkflow.ts
@@ -306,6 +306,20 @@ function getBadgeFromIOUReport(
     return undefined;
 }
 
+/**
+ * Determines if a p2p IOU can be paid by the current user using only the REPORTPREVIEW action's
+ * child* fields, without requiring the full IOU report to be loaded in Onyx. This is used as a
+ * fallback when the IOU report hasn't been fetched yet (e.g. right after login).
+ */
+function canPayIOUFromReportAction(action: ReportAction, chatReport: OnyxEntry<OnyxTypes.Report>, currentUserAccountID: number): boolean {
+    return (
+        action.childType === CONST.REPORT.TYPE.IOU &&
+        action.childReportID === chatReport?.iouReportID &&
+        action.childManagerAccountID === currentUserAccountID &&
+        action.childStatusNum !== CONST.REPORT.STATUS_NUM.REIMBURSED
+    );
+}
+
 function getIOUReportActionWithBadge(
     chatReport: OnyxEntry<OnyxTypes.Report>,
     policy: OnyxEntry<OnyxTypes.Policy>,
@@ -324,13 +338,25 @@ function getIOUReportActionWithBadge(
             continue;
         }
         const iouReport = getReportOrDraftReport(action.childReportID);
-        const badge = getBadgeFromIOUReport(iouReport, chatReport, policy, reportMetadata, invoiceReceiverPolicy, currentUserLogin, currentUserAccountID);
-        if (!badge) {
+
+        if (!iouReport) {
+            // Fallback for p2p IOUs when the IOU report isn't loaded in Onyx yet (e.g. right after login).
+            // Use the REPORTPREVIEW action's child* fields to determine PAY badge without the full report.
+            if (chatReport?.hasOutstandingChildRequest && canPayIOUFromReportAction(action, chatReport, currentUserAccountID)) {
+                if (!earliestAction || isOlderReportAction(action, earliestAction)) {
+                    earliestAction = action;
+                    actionBadge = CONST.REPORT.ACTION_BADGE.PAY;
+                }
+            }
             continue;
         }
-        if (!earliestAction || isOlderReportAction(action, earliestAction)) {
-            earliestAction = action;
-            actionBadge = badge;
+
+        const badge = getBadgeFromIOUReport(iouReport, chatReport, policy, reportMetadata, invoiceReceiverPolicy, currentUserLogin, currentUserAccountID);
+        if (badge) {
+            if (!earliestAction || isOlderReportAction(action, earliestAction)) {
+                earliestAction = action;
+                actionBadge = badge;
+            }
         }
     }
 
diff --git a/tests/actions/IOUTest/ReportWorkflowTest.ts b/tests/actions/IOUTest/ReportWorkflowTest.ts
index b95064183008..01de01f90443 100644
--- a/tests/actions/IOUTest/ReportWorkflowTest.ts
+++ b/tests/actions/IOUTest/ReportWorkflowTest.ts
@@ -3655,6 +3655,107 @@ describe('actions/IOU/ReportWorkflow', () => {
             expect(result.reportAction).toBeUndefined();
             expect(result.actionBadge).toBeUndefined();
         });
+
+        it('should return PAY badge for p2p IOU when IOU report is not loaded in Onyx', async () => {
+            const chatReportID = '800';
+            const iouReportID = '801';
+
+            const fakeChatReport: Report = {
+                ...createRandomReport(Number(chatReportID), undefined),
+                reportID: chatReportID,
+                iouReportID,
+                hasOutstandingChildRequest: true,
+            };
+
+            // Do NOT set the IOU report in Onyx — simulates fresh login where it hasn't loaded yet
+
+            const reportPreviewAction = {
+                reportActionID: '802',
+                actionName: CONST.REPORT.ACTIONS.TYPE.REPORT_PREVIEW,
+                created: '2024-08-08 19:00:00.000',
+                childReportID: iouReportID,
+                childType: CONST.REPORT.TYPE.IOU,
+                childManagerAccountID: RORY_ACCOUNT_ID,
+                childOwnerAccountID: CARLOS_ACCOUNT_ID,
+                childStatusNum: CONST.REPORT.STATUS_NUM.OPEN,
+                message: [{type: 'TEXT', text: 'IOU preview'}],
+            };
+            await Onyx.set(`${ONYXKEYS.COLLECTION.REPORT}${chatReportID}`, fakeChatReport);
+            await Onyx.set(`${ONYXKEYS.COLLECTION.REPORT_ACTIONS}${chatReportID}`, {
+                [reportPreviewAction.reportActionID]: reportPreviewAction,
+            });
+            await waitForBatchedUpdates();
+
+            const result = getIOUReportActionWithBadge(fakeChatReport, undefined, {}, undefined, RORY_EMAIL, RORY_ACCOUNT_ID);
+            expect(result.reportAction).toMatchObject(reportPreviewAction);
+            expect(result.actionBadge).toBe(CONST.REPORT.ACTION_BADGE.PAY);
+        });
+
+        it('should NOT return PAY badge fallback when IOU is already settled', async () => {
+            const chatReportID = '810';
+            const iouReportID = '811';
+
+            const fakeChatReport: Report = {
+                ...createRandomReport(Number(chatReportID), undefined),
+                reportID: chatReportID,
+                iouReportID,
+                hasOutstandingChildRequest: true,
+            };
+
+            const reportPreviewAction = {
+                reportActionID: '812',
+                actionName: CONST.REPORT.ACTIONS.TYPE.REPORT_PREVIEW,
+                created: '2024-08-08 19:00:00.000',
+                childReportID: iouReportID,
+                childType: CONST.REPORT.TYPE.IOU,
+                childManagerAccountID: RORY_ACCOUNT_ID,
+                childOwnerAccountID: CARLOS_ACCOUNT_ID,
+                childStatusNum: CONST.REPORT.STATUS_NUM.REIMBURSED,
+                message: [{type: 'TEXT', text: 'IOU preview'}],
+            };
+            await Onyx.set(`${ONYXKEYS.COLLECTION.REPORT}${chatReportID}`, fakeChatReport);
+            await Onyx.set(`${ONYXKEYS.COLLECTION.REPORT_ACTIONS}${chatReportID}`, {
+                [reportPreviewAction.reportActionID]: reportPreviewAction,
+            });
+            await waitForBatchedUpdates();
+
+            const result = getIOUReportActionWithBadge(fakeChatReport, undefined, {}, undefined, RORY_EMAIL, RORY_ACCOUNT_ID);
+            expect(result.reportAction).toBeUndefined();
+            expect(result.actionBadge).toBeUndefined();
+        });
+
+        it('should NOT return PAY badge fallback when current user is not the payer', async () => {
+            const chatReportID = '820';
+            const iouReportID = '821';
+
+            const fakeChatReport: Report = {
+                ...createRandomReport(Number(chatReportID), undefined),
+                reportID: chatReportID,
+                iouReportID,
+                hasOutstandingChildRequest: true,
+            };
+
+            const reportPreviewAction = {
+                reportActionID: '822',
+                actionName: CONST.REPORT.ACTIONS.TYPE.REPORT_PREVIEW,
+                created: '2024-08-08 19:00:00.000',
+                childReportID: iouReportID,
+                childType: CONST.REPORT.TYPE.IOU,
+                childManagerAccountID: CARLOS_ACCOUNT_ID, // Someone else is the payer
+                childOwnerAccountID: RORY_ACCOUNT_ID,
+                childStatusNum: CONST.REPORT.STATUS_NUM.OPEN,
+                message: [{type: 'TEXT', text: 'IOU preview'}],
+            };
+            await Onyx.set(`${ONYXKEYS.COLLECTION.REPORT}${chatReportID}`, fakeChatReport);
+            await Onyx.set(`${ONYXKEYS.COLLECTION.REPORT_ACTIONS}${chatReportID}`, {
+                [reportPreviewAction.reportActionID]: reportPreviewAction,
+            });
+            await waitForBatchedUpdates();
+
+            const result = getIOUReportActionWithBadge(fakeChatReport, undefined, {}, undefined, RORY_EMAIL, RORY_ACCOUNT_ID);
+            expect(result.reportAction).toBeUndefined();
+            expect(result.actionBadge).toBeUndefined();
+        });
     });
 
     describe('getBadgeFromIOUReport', () => {