As a small business doing work for the government, one thing you can count on is getting paid soon after you complete your portion of the contract. Thanks to the Prompt Payment Act, the government is required to pay small-business contractors within 30 days after a government invoice is received. But there's a catch. In order to receive your payment within the 30-day period, you need to make sure that your government invoice is deemed "proper."
If your government invoice isn't a "proper" invoice, the government will send it back to you within 7 days after it was received by the billing office, with a stated reason why it was rejected. After you correct your invoice and send it back to the government, the 30-day wait restarts.
To ensure you won't have to wait longer than a month to receive payment, be sure to include the following components in your invoice:
- Company name and address.
- Invoice date. It's important to date the government invoice as close to the mailing date as possible.
- Contract number, contract line item number, order number, and any other authorizations for services preformed or supplies delivered.
- Detailed description of services, including quantity, unit of measure, and unit price or any price alterations.
- Terms of contract payment and shipping. Include the shipment date and number.
- Name and address of the payment recipient. This must be the same person specified in the contract.
- Name of a person to be contacted in case the invoice is defective, along with his or her name, title, phone number and address.
- Any additional information the contract required, such as shipment evidence.
- While not required, it would be a good idea to assign an identification number to the invoice for reference and tracking purposes.
If you do not receive payment by the government within the 30 days, you will be eligible for an automatic interest penalty if you have met the following conditions:
- The correct billing office received the "proper" government invoice.
- An authorization of payment was processed or signed by the government and there were no disagreements over the contract outcome, such as quality, quantity or contractor compliance.
If you're working on a military contract, you can use the government's DD Form 250 instead of creating your own government invoice. Essentially, this form is a material inspection and receiving report (MIRR). Contact the office administering your military contract to get more details and assistance with the DD Form 250.
