32.906
Making payments
FAR 32.906 ensures timely, accurate, and properly documented payments to contractors, with clear rules for payment timing, partial deliveries, and prompt payment discounts.
Overview
FAR 32.906 outlines the procedures and requirements for making payments to contractors under government contracts. It establishes rules for the timing of payments, handling of partial deliveries, use of contractor invoice numbers, and application of discounts for prompt payment. The regulation ensures that payments are made in accordance with contract terms, prevents premature payments, and provides guidance for handling payment timing around weekends and holidays. It also emphasizes the importance of accurate invoice processing and proper documentation for calculating due dates and interest penalties.
Key Rules
- Timing of Payments
- Payments are generally not made earlier than 7 days before the due date unless specifically authorized by the agency head.
- Payment Office Procedures
- Checks must be mailed on the date they are issued; EFT payments must settle by the due date; payments due on non-working days may be made on the next business day without penalty.
- Partial Deliveries
- Contracts should allow for payment on accepted partial deliveries or performance, unless prohibited by contract terms.
- Invoice Identification
- Payments must reference the contractor's invoice number for tracking and reconciliation.
- Discounts for Prompt Payment
- Payment offices must pay within the discount period to take advantage of prompt payment discounts, with specific rules for calculating the period and handling non-working days.
Responsibilities
- Contracting Officers: Structure contracts to allow partial payments where appropriate and ensure compliance with payment timing rules.
- Contractors: Submit proper invoices with clear invoice numbers and specify any prompt payment discounts.
- Agencies: Ensure payment offices follow timing, documentation, and discount procedures, and accurately process invoices.
Practical Implications
- This section ensures timely and accurate payments, reduces disputes over payment timing, and incentivizes prompt invoice submission and processing. Contractors benefit from clear rules on when to expect payment and how discounts are handled. Common pitfalls include failing to submit proper invoices, misunderstanding discount periods, or not structuring contracts to allow partial payments.