With government spending on a steady incline year over year, increasing your company’s footprint in the public sector with a GSA Schedule and other government contracts can help to grow your business’ revenue—but how do you actually invoice and receive payment from these agencies? In the private sector, it can be relatively straightforward in most cases, where the seller will specify the invoicing and payment schedule, and the buyer will (normally) oblige the established schedule for payment. However, in the government market, payment functions differently. Government buyers will reserve payment for something until it’s received.
Thanks to the Prompt Payment Act which has been in effect since 1982, federal agencies making payment on contracts in which this clause is present are generally required to make a payment within 30 days after receipt of the invoice to small businesses, if the deliverable is received and determined acceptable. Provisions specific to Electronic Funds Transfers (EFT) are generally identified at the task order level or in specific contract Requests for Proposals (RFPs) beyond GSA Schedule solicitation requirements.
So, for all government contractors, after you understand that the government doesn’t pay for something until they receive it (there are a few exceptions) and their payment terms are net 30 days, you should also understand when you can invoice and when those 30 days start.
Within the GSA Multiple Award Schedule (MAS) Solicitation, the government has established “Inspection/Acceptance” terms. Within a reasonable period, the government reserves the right to inspect or test any supplies or services that have been tendered for acceptance, per Federal Acquisition Regulation (FAR) 552.212-4, Commercial Products and Commercial Services.
The government may require repair or replacement of nonconforming supplies or reperformance of nonconforming services at no increase in contract price. If repair/replacement or reperformance will not correct the defects or is not possible, the government may seek a price reduction or adequate consideration for acceptance of nonconforming supplies or services.
This clause also specifies that the government must exercise its post-acceptance rights:
Upon satisfaction (confirmation of the products to the requirements of the contract), the government agency will accept those items for payment. As a recommendation, make sure you ask your government buyer for written confirmation of Inspection/Acceptance, so you can invoice accordingly and enforce payment terms.
For contractors selling products, this should be somewhat easy. For contractors performing services, it could depend on several factors. Within a Firm Fixed Price (FFP) contract award, you’ll want to identify your project milestones or service deliverables and match them up with an invoice schedule. If you don’t, the government could potentially withhold payment until the contract (task order) is completed.
Although the government pays in arrears, you can ask for and receive payment as quickly as every month. And for many small businesses, managing cash flow and understanding government payment terms can be essential to your success.
For GSA contractors, part of your awarded terms and conditions will include payment terms and any negotiated and awarded prompt payment discount that applies to your GSA Schedule, so be sure to understand what is in your terms and conditions.
As prescribed within the GSA MAS Solicitation, there are some basic requirements that contractors will need to be aware of when generating an invoice to a government buyer. A list of government invoice requirements is below:
The due date for making invoice payments by the designated payment office is the later of the following two events (whichever one comes later):
contractor. If the designated billing office fails to annotate the invoice with the date of
receipt at the time of receipt, the invoice payment due date shall be the 10th day after the
date of the contractor’s invoice; provided the contractor submitted a proper invoice and
no disagreement exists over quantity, quality, or contractor compliance with contract
requirements.
services-performed by the contractor.
It’s also important to remember that contractors are required to submit an original invoice, and three copies to the address designated in the contract to receive invoices. Many federal agencies will have different portals for invoice submission with specific login credentials and processes. One of the most commonly asked about portals is the Procurement Integrated Enterprise Environment (PIEE)’s Wide Area Workflow (WAWF) Portal, which is utilized with the Department of Defense (DoD) and includes agencies such as the U.S. Air Force, U.S. Navy, Army, among others.
Still looking for more information regarding the GSA sales and invoicing process? One of our consultants would be happy to help. Invoicing may not be the only process you have a question about. Keeping up with your GSA Schedule can be overwhelming, especially if you are a newer contractor or don’t have the bandwidth or time. Our experienced consultants are also here to help you set your GSA MAS Schedule up for success, whether you need help with submitting modifications, sales reporting, or maintaining general compliance.