Overview
FAR 32.905 establishes the mandatory criteria for what constitutes a "proper invoice" and details the internal Government documentation required to authorize payment. It serves as the procedural foundation for the Prompt Payment Act, ensuring that both contractors and Government officials follow specific timelines and data requirements to facilitate timely disbursements.
Key Rules
- Proper Invoice Requirements: To be valid, an invoice must generally include ten specific elements, including the contractor's name/address, invoice date/number, contract/order number, description of supplies/services, shipping/payment terms, and EFT banking information.
- Defective Invoice Notification: If an invoice is improper, the Government must notify the contractor and return the invoice within 7 days of receipt (with shorter windows of 3 to 5 days for specific food and dairy products).
- Interest Penalty Adjustment: If the Government fails to provide timely notice of a defective invoice, the required payment due date must be adjusted, potentially triggering interest penalties sooner.
- Authorization to Pay: Most payments must be supported by a receiving report or certified voucher. This report must be forwarded to the payment office by the 5th working day after acceptance or approval.
- Mandatory Date Stamping: Both the designated billing office and the payment office are required to annotate invoices and receiving reports with the actual date of receipt to track compliance with payment timelines.
Practical Implications
- Strict Compliance is Mandatory: Contractors must treat the "proper invoice" list as a checklist; missing even one minor element (like a phone number for a point of contact or an incorrect contract number) gives the Government legal grounds to return the invoice and reset the Prompt Payment clock.
- Administrative Alignment: Contractors must ensure that the name, address, and banking information on the invoice match exactly what is registered in the System for Award Management (SAM) or the specific terms of the contract to avoid administrative rejections.
- Timeliness Protection: The 7-day return rule provides contractors with a layer of protection; if the Government waits two weeks to tell a contractor an invoice is wrong, the contractor may be entitled to interest because the Government failed its "timely notice" obligation.