FAR 32.902—Definitions.
Plain-English Summary
FAR 32.902 provides the core definitions used in Subpart 32.9, which governs prompt payment and related invoice-payment timing rules in federal contracting. This section defines four key terms: "discount for prompt payment," "mixed invoice," "payment date," and "settlement date" for electronic funds transfer (EFT). These definitions matter because they determine when a payment is considered made, how to measure whether the Government paid on time, and how to apply any offered prompt-payment discount. In practice, the definitions help contracting officers, finance offices, and contractors calculate due dates, discount periods, and late-payment consequences consistently. They also clarify that payment timing can differ depending on whether the Government pays by check or EFT, and that invoices containing multiple items with different due dates require special handling. Although brief, this section is foundational for administering invoice payments correctly and avoiding disputes over timeliness, discounts, and interest.
Key Rules
Prompt-payment discount defined
A discount for prompt payment is an invoice payment reduction offered by the contractor if the Government pays before the due date. The definition makes clear that the discount is tied to early payment, not simply to invoice submission or acceptance.
Mixed invoices require care
A mixed invoice is one that includes items with different payment due dates. This matters because different line items on the same invoice may not all be payable on the same schedule, so payment processing must account for each due date separately.
Check payment date is the check date
For payments made by check, the payment date is the date printed on the check. This date is used to determine when payment occurred for purposes of prompt payment administration.
EFT payment date is settlement date
For electronic funds transfer, the payment date is the settlement date rather than the date the transfer is initiated. This means the controlling date is when the contractor’s financial institution receives credit.
Settlement date is bank credit date
Settlement date means the date the EFT payment is credited to the contractor’s financial institution. This definition is important because it establishes the exact point at which EFT payment is considered made under the subpart.
Responsibilities
Contracting Officer
Ensure contract administration aligns with the prompt-payment framework and that payment terms, discounts, and invoice structures are understood and applied consistently. When issues arise, use these definitions to interpret whether payment timing and discount eligibility were properly handled.
Payment Office / Finance Office
Use the correct payment date standard depending on the payment method, apply prompt-payment discounts only when the conditions are met, and process mixed invoices in a way that respects differing due dates. The office must rely on the check date for check payments and the EFT settlement date for electronic payments.
Contractor
If offering a prompt-payment discount, clearly state the discount terms on the invoice or in accordance with the contract and understand that the discount applies only to payment before the due date. Contractors should also recognize that EFT payments are considered made when credited to their financial institution, not when initiated by the Government.
Agency
Maintain payment systems and procedures that correctly identify invoice types, due dates, and payment dates, and ensure internal controls support accurate prompt-payment administration. Agencies should also train personnel on the distinction between check dates and EFT settlement dates.
Practical Implications
The most common practical issue is confusion over when payment is legally considered made, especially for EFTs; the settlement date controls, not the date the Government sends the transfer.
Mixed invoices can create processing errors if staff treat all line items as having the same due date. Each item must be tracked according to its own payment schedule.
Prompt-payment discounts should be applied only when the contractor actually offered a discount for early payment and the Government pays before the due date.
For contractors, the definition of settlement date can affect cash-flow tracking and any dispute over late payment or discount eligibility.
For contracting and finance personnel, these definitions are the baseline for calculating prompt-payment compliance, so inaccurate invoice coding or payment-date recording can lead to improper discounts, late-payment claims, or audit findings.
Official Regulatory Text
As used in this subpart- Discount for prompt payment means an invoice payment reduction offered by the contractor for payment prior to the due date. Mixed invoice means an invoice that contains items with different payment due dates. Payment date means the date on which a check for payment is dated or, for an electronic funds transfer (EFT), the settlement date. Settlement date , as it applies to electronic funds transfer, means the date on which an electronic funds transfer payment is credited to the contractor’s financial institution.