Overview
This section provides standardized definitions for key terms used within FAR Subpart 32.9, ensuring uniform interpretation of payment timelines, methods, and contractor-offered incentives.
Key Rules
- Discount for prompt payment: Defined as a reduction in the invoice amount offered by the contractor in exchange for payment made before the actual due date.
- Mixed invoice: Refers to a single invoice that includes line items or services governed by different payment due dates.
- Payment date: For physical checks, it is the date printed on the check; for Electronic Funds Transfer (EFT), it is the settlement date.
- Settlement date: Specifically for EFT, this is the date the payment is credited to the contractor's financial institution.
Practical Implications
- Contractors and Government officials must monitor "settlement dates" rather than "initiation dates" to determine if an EFT payment was made on time or if interest penalties apply.
- Administrative care is required when processing "mixed invoices" to ensure that items with shorter payment windows do not trigger late fees while longer-term items are still being processed.