FAR 32.906—Making payments.
Plain-English Summary
FAR 32.906 explains how the Government actually makes contract payments once an invoice is due. It covers the timing of invoice payments, the authority to pay early in limited circumstances, how payment offices must handle checks and electronic funds transfer (EFT) payments, what happens when due dates fall on weekends or legal holidays, how to correct payment timing when a proper invoice was wrongly rejected, how contracting officers should structure contracts to allow payment for partial deliveries or partial performance, how contractor invoice numbers must be used in payment records and remittance advice, and how prompt-payment discounts are handled. In practice, this section is about making sure the Government pays on time, pays correctly, and preserves the contractor’s rights to interest or discounts when applicable. It also ties payment processing to proper invoice receipt, acceptance of partial work, and accurate recordkeeping, which are all essential to avoiding disputes, late-payment interest, and administrative errors.
Key Rules
No payment earlier than seven days
The Government generally may not pay an invoice earlier than 7 days before the contract due date. Earlier payment is allowed only if the agency head makes a case-by-case determination or determines that accelerated payment methods are necessary.
Payment office timing rules
The designated payment office must mail checks on the same day they are dated and, for EFT payments, must set a settlement date on or before the established due date at a Federal Reserve Bank. If the due date falls on a Saturday, Sunday, or legal holiday when Government offices are closed, payment may be made on the next working day without late-payment interest.
Correcting erroneous invoice rejections
If the designated billing office wrongly rejects a proper invoice and the contractor resubmits it, the payment system must use the original receipt date of the proper invoice to calculate the correct due date and any interest penalties owed. This prevents the Government from benefiting from its own mistaken rejection.
Partial deliveries should be payable
When the nature of the work permits, contracting officers must structure statements of work and pricing so contractors can deliver and be paid for discrete portions of work as they are completed and accepted. Unless the contract specifically prohibits it, the Payments clause allows payment for accepted partial deliveries of supplies or partial performance of services when contract terms support pricing the work.
Invoice number must identify payment
Each payment or remittance advice must include the contractor’s invoice number, along with any Government or contract information used to describe the payment. This supports traceability, reconciliation, and dispute resolution.
Prompt-payment discounts must be honored
When a prompt-payment discount is taken, the payment office must pay as close as possible to, but no later than, the end of the discount period. The discount period runs from the date of the contractor’s proper invoice, or from the date the billing office receives the invoice if the contractor did not date it and the agency annotated the receipt date.
Responsibilities
Agency Head
May authorize earlier-than-normal invoice payment on a case-by-case basis or determine that accelerated payment methods are necessary.
Designated Payment Office
Must issue checks the same day they are dated, set EFT settlement dates on or before the due date, apply weekend/holiday payment timing rules, correct payment records when a proper invoice was wrongly rejected, include the contractor invoice number on payments and remittance advice, and ensure prompt-payment discounts are taken within the discount period.
Contracting Officer
Must, where the work permits, structure statements of work and pricing to allow discrete partial deliveries or partial performance to be delivered, accepted, and paid as work is completed.
Designated Billing Office
Must properly receive and process invoices, annotate the receipt date when required, and avoid erroneous rejection of proper invoices because that can affect due dates and interest calculations.
Contractor
Must submit proper invoices, identify prompt-payment discount terms when offered, and use invoice numbering that supports payment tracking and reconciliation.
Practical Implications
This section is a payment-timing rule set, so small administrative errors can create real financial consequences, especially late-payment interest or lost discounts.
Contracting officers should think about payment structure early; if work can be broken into accepted increments, the contract should be written to support partial billing and payment.
Billing offices and payment offices must coordinate closely: a wrong invoice rejection or missing receipt date can distort the due date and trigger avoidable interest liability.
Contractors should make sure invoices are proper, dated, and clearly numbered, because those details affect when the payment clock starts and whether discounts are calculated correctly.
Weekend and holiday rules prevent unnecessary late-payment penalties, but they do not excuse poor invoice handling or failure to process payments promptly on the next working day.
Official Regulatory Text
(a) General . The Government will not make invoice payments earlier than 7 days prior to the due dates specified in the contract unless the agency head determines- (1) To make earlier payment on a case-by-case basis; or (2) That the use of accelerated payment methods is necessary. See 32.903 (a)(5), but see 32.009-1 (a). (b) Payment office . The designated payment office- (1) Will mail checks on the same day they are dated; (2) For payments made by EFT, will specify a date on or before the established due date for settlement of the payment at a Federal Reserve Bank; (3) When the due date falls on a Saturday, Sunday, or legal holiday when Government offices are closed, may make payment on the following working day without incurring a late payment interest penalty. (4) When it is determined that the designated billing office erroneously rejected a proper invoice and upon resubmission of the invoice, will enter in the payment system the original date the invoice was received by the designated billing office for the purpose of calculating the correct payment due date and any interest penalties that may be due. (c) Partial deliveries. (1) Contracting officers must, where the nature of the work permits, write contract statements of work and pricing arrangements that allow contractors to deliver and receive invoice payments for discrete portions of the work as soon as completed and found acceptable by the Government (see 32.102 (d)). (2) Unless specifically prohibited by the contract, the clause at 52.232-1 , Payments, provides that the contractor is entitled to payment for accepted partial deliveries of supplies or partial performance of services that comply with all applicable contract requirements and for which prices can be calculated from the contract terms. (d) Contractor identifier . Each payment or remittance advice will use the contractor invoice number in addition to any Government or contract information in describing any payment made. (e) Discounts . When a discount for prompt payment is taken, the designated payment office will make payment to the contractor as close as possible to, but not later than, the end of the discount period. The discount period is specified by the contractor and is calculated from the date of the contractor’s proper invoice. If the contractor has not placed a date on the invoice, the due date is calculated from the date the designated billing office receives a proper invoice, provided the agency annotates such invoice with the date of receipt at the time of receipt. When the discount date falls on a Saturday, Sunday, or legal holiday when Government offices are closed, the designated payment office may make payment on the following working day and take a discount. Payment terms are specified in the clause at 52.232-8 , Discounts for Prompt Payment.