32.905 Payment documentation and process
Source: FAR 32.905 on acquisition.gov
Submitting a complete and accurate invoice with all required documentation is essential for timely government payment and to avoid processing delays or penalties.
Overview
FAR 32.905 outlines the required documentation and process for payment under government contracts. It specifies what constitutes a proper invoice, the supporting documentation needed for payment authorization, and the responsibilities of both contractors and government officials in the payment process. The regulation aims to ensure timely and accurate payments by establishing clear requirements for invoice content, submission, and processing.
Key Rules
- Proper Invoice Requirements
- Contractors must submit invoices containing specific information, such as contractor details, invoice date and number, contract and order numbers, item descriptions, quantities, prices, shipping/payment terms, and any other contractually required documentation. EFT and TIN information must be included if required by agency procedures.
- Interim Payments for Cost-Reimbursement Contracts
- Interim payment requests under cost-reimbursement contracts for services are considered proper invoices if they include all contract-required information.
- Invoice Review and Return
- If an invoice is deficient, the billing office must return it within specified timeframes (7, 5, or 3 days depending on the commodity) with reasons for rejection. Failure to do so may affect interest penalty calculations.
- Payment Authorization
- Payments (except certain interim payments) must be supported by a receiving report or other government documentation, which must include contract details, descriptions, quantities, delivery/performance dates, acceptance/approval dates, and the responsible official’s information.
- Invoice and Report Annotation
- Billing and payment offices must annotate invoices and receiving reports with the actual date of receipt.
Responsibilities
- Contracting Officers: Ensure contract clauses specify invoice and documentation requirements; oversee compliance.
- Contractors: Submit proper invoices with all required information; provide EFT and TIN details as needed.
- Agencies: Billing and payment offices must promptly annotate, review, and process invoices; return improper invoices within required timeframes; ensure payment is authorized by proper documentation.
Practical Implications
- This section ensures payments are processed efficiently and accurately, reducing disputes and delays. Contractors must pay close attention to invoice details and agency-specific requirements. Common pitfalls include missing information, late submission of supporting documents, and failure to comply with agency-specific EFT or TIN requirements.
(a) General. Payment will be based on receipt of a proper invoice and satisfactory contract performance.
(b) Content of invoices.
(1) A proper invoice must include the following items (except for interim payments on cost reimbursement contracts for services):
(i) Name and address of the contractor.
(ii) Invoice date and invoice number. (Contractors should date invoices as close as possible to the date of mailing or transmission.)
(iii) Contract number or other authorization for supplies delivered or services performed (including order number and line item number).
(iv) Description, quantity, unit of measure, unit price, and extended price of supplies delivered or services performed.
(v) Shipping and payment terms (e.g., shipment number and date of shipment, discount for prompt payment terms). Bill of lading number and weight of shipment will be shown for shipments on Government bills of lading.
(vi) Name and address of contractor official to whom payment is to be sent (must be the same as that in the contract or in a proper notice of assignment).
(vii) Name (where practicable), title, phone number, and mailing address of person to notify in the event of a defective invoice.
(viii) Taxpayer Identification Number (TIN). The contractor must include its TIN on the invoice only if required by agency procedures. (See 4.9 TIN requirements.)
(ix) Electronic funds transfer (EFT) banking information.
(A) The contractor must include EFT banking information on the invoice only if required by agency procedures.
(B) If EFT banking information is not required to be on the invoice, in order for the invoice to be a proper invoice, the contractor must have submitted correct EFT banking information in accordance with the applicable solicitation provision (e.g., 52.232-38, Submission of Electronic Funds Transfer Information with Offer), contract clause (e.g., 52.232-33, Payment by Electronic Funds Transfer-System for Award Management, or 52.232-34, Payment by Electronic Funds Transfer-Other Than System for Award Management), or applicable agency procedures.
(C) EFT banking information is not required if the Government waived the requirement to pay by EFT.
(x) Any other information or documentation required by the contract (e.g., evidence of shipment).
(2) An interim payment request under a cost-reimbursement contract for services constitutes a proper invoice for purposes of this subsection if it includes all of the information required by the contract.
(3) If the invoice does not comply with these requirements, the designated billing office must return it within 7 days after receipt (3 days on contracts for meat, meat food products, or fish; 5 days on contracts for perishable agricultural commodities, dairy products, edible fats or oils, and food products prepared from edible fats or oils), with the reasons why it is not a proper invoice. If such notice is not timely, then the designated billing office must adjust the due date for the purpose of determining an interest penalty, if any.
(c) Authorization to pay. All invoice payments, with the exception of interim payments on cost-reimbursement contracts for services, must be supported by a receiving report or other Government documentation authorizing payment (e.g., Government certified voucher). The agency receiving official should forward the receiving report or other Government documentation to the designated payment office by the 5th working day after Government acceptance or approval, unless other arrangements have been made. This period of time does not extend the due dates prescribed in this section. Acceptance should be completed as expeditiously as possible. The receiving report or other Government documentation authorizing payment must, as a minimum, include the following:
(1) Contract number or other authorization for supplies delivered or services performed.
(2) Description of supplies delivered or services performed.
(3) Quantities of supplies received and accepted or services performed, if applicable.
(4) Date supplies delivered or services performed.
(5) Date that the designated Government official-
(i) Accepted the supplies or services; or
(ii) Approved the progress payment request, if the request is being made under the clause at 52.232-5, Payments Under Fixed-Price Construction Contracts, or the clause at 52.232-10, Payments Under Fixed-Price Architect-Engineer Contracts.
(6) Signature, printed name, title, mailing address, and telephone number of the designated Government official responsible for acceptance or approval functions.
(d) Billing office. The designated billing office must immediately annotate each invoice with the actual date it receives the invoice.
(e) Payment office. The designated payment office will annotate each invoice and receiving report with the actual date it receives the invoice.