Invoice Compliance for the Federal Contractor
In the past we have talked about DCAA compliance on Federal Contractors and focused mainly on the accounting system. Many times some of the auxiliary systems get either "swept under the rug" or assumed that they are not a big issue. These auxiliary systems include timekeeping, invoicing, subcontracting among others. Obviously these systems utilize the accounting system and data but they also have regulations and must be done properly in order to maintain compliance. Today I would like to focus just on the Invoicing part.
The Federal Acquisition Regulations (FAR) give guidelines for invoicing the Federal Government in FAR Part 32.905. The basic requirements defined here include:
- Name and address of the contractor.
- Invoice date and invoice number.
- Contract number or other authorization for supplies delivered or services performed.
- Description, quantity, unit of measure, unit price, and extended price of supplies delivered or services performed.
- Shipping and payment terms.
- Name and address of contractor official to whom payment is to be sent.
- Name (where practicable), title, phone number, and mailing address of person to notify in the event of a defective invoice.
- Taxpayer Identification Number (TIN). The contractor must include its TIN on the invoice only if required by agency procedures.
- 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-Central Contractor Registration, or 52.232-34, Payment by Electronic Funds Transfer-Other Than Central Contractor Registration), or applicable agency procedures.
(C) EFT banking information is not required if the Government waived the requirement to pay by EFT.
- Any other information or documentation required by the contract (e.g., evidence of shipment).
We have seen, through many DCAA audits, that the Government is very concerned about some other items on the invoice as well. Things like billing to the correct CLIN on the Contract. While this may not be of high importance on a commercial type contract, on a Federal Contract this is highly important as different CLINs may have different funding sources. The DCAA is also concerned about seeing a column on the invoice that shows cumulative billing. In the commercial world cumulative billing may not be required on most work. Government Contracts generally provide both Contract Value as well as, and more importantly funded amounts. It is crucial that invoices reflect the remaining funds vs. remaining value left on the contract. If a contractor goes over the remaining funds they are at risk on Government contracts. This is very different from the commercial arena where commercial agreements are usually fully funded at the contract value. This is a way to assure that the billings are not exceeding the funding limits. There are also the use of Provisional Billing Rates in Cost type contracts that are very different from a commercial contract. The process behind Provisional Billing Rates is a whole different topic that we will reserve for another blog someday. The point here is that the contractor must obtain the provisional billing rate prior to invoicing the government.
In the past the government accepted paper invoices to this unique format. Recently, the Federal Government has become more integrated into the computer age and has set up electronic payment systems such as the Wide Area Work Flow (WAWF) in the Defense Department and the Payment Management System (PMS) in the Health Department to name a few. These systems will require the same type of information so it is still important for the accounting system to be able to generate the information so that the electronic forms can be entered quickly and efficiently.
Most accounting systems do not have the capability of generating invoices for the Federal Government (programs designed specifically to meet FAR and DCAA requirements such as Deltek First Essentials and others like this are the exception). To summarize, invoicing properly is paramount to efficient cash flow for a small business. Spending too much time trying to figure it out or making mistakes that cause payment delays are unacceptable for a small business.
WAWF Help and Invoicing the Federal Government
ReliAscent would like to add that we have a number of experts that provide federal government invoicing services and help with the Wide Area Workflow (WAWF) Portal. To learn more about our WAWF invoicing services, visit our WAWF page by clicking here.
In addition to our invoicing services, ReliAscent has also published a number of blogs and white papers. The list below details some of these resources:
- WAWF and Invoicing the Federal Government - YouTube Video
- Invoicing the Federal Government (Part I) - White Paper
- Invoicing the Federal Government (Part II) - White Paper