Federal Government personnel involved in reviewing contractor payment requests/ – invoices – are your efforts governed by the commonly accepted “accounts payable” accounting process “3-Way Match” process which should govern your efforts? Whether or not you know the term, the concepts need to govern your invoice review process.
FAR Part 32, “Contract Financing” describes the policies and procedures for a large range of types of contract financing that are available for use under contracts issued by the Federal Government agencies. If you are assigned to a role in contractor invoice review and approval, you likely recognize your fiduciary responsibility: to your program, to the agency – and to the contractor - to ensure that payments are made in the correct amounts – and on time.
In exchange for the contractor providing the goods/services described and specified in the contract details, the Government must promptly pay the amounts the contractor is entitled to or promptly disallow/reject the charges that are not verified as accurate and valid.
When you receive a contractor invoice, how can you know if they are actually entitled to the full amount billed – or have they made a mistake? The answer lies in the 3-way match process for determining payment entitlement by matching information from 3 unique, relevant documents. For a Government contract what 3 documents?
1. The contract (order, etc.) – know the contract and what it specifies:2. Completion evidence regarding the billable achievement, but recognize that acceptable evidence differs with different contract types and other factors, for example:
3. The contractor’s invoiced amounts – as broken down and the total invoice amount.
Also, the timeliness of completing your review matters – the Prompt Payment Act (FAR 32.9) requires the contractor to receive payment within 30 calendar days from receipt of a ‘proper’ invoice – or the contractor must also be paid interest for the late payment. That interest comes from your program/agency’s budget resources. The FAR also requires that the contractor be notified if there is anything wrong (dollar amount or otherwise) within 7 calendar days.
| Note: For small business contractors, agencies must accelerate invoice payments to 15 days, if possible, although 30 days remains the requirement for interest accrual purposes. Also, for various perishable types of items, invoice issues must be identified within 3 calendar days to avoid impacting the normal 30-day processing time for a resubmittal. |
Are you new to the invoice review process in your agency or in general? Or could you just use a refresher on best practices for assessing the contractor entitlement to be paid? One source of assistance is our Contractor Performance Intelligence™ (CPI™) app that will simplify how you manage your contractor performance from post-award to closeout. CPI provides the video tutorials, templates tailorable for your agency’s needs, and access to additional help when needed, as well as an extensive, user-friendly process flow with document flow and records management for the full range of post-award activities to successfully manage your contractors. The short video tutorials and other job aids are conveniently located in the app so that compliance and best practices are convenient.
Check out our video that provides an overview of CPI. Or better yet, request a demo at demo@seventhsenseconsulting.com or contact us at (301) 392-1895 or lakers@seventhsenseconsulting.com.
Make it an enlightened day,
Pat Shields
Director – Acquisition Practice
Seventh Sense Consulting