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Contract Billing Policies

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One section of the accounting system procedures describes the policies and procedures relating to billing on contracts. Below is a sample of this section of the procedures from which you should tailor it to your situation.

Billing Frequency

Our contracts have restrictions on how often we can submit invoices. Typically we can invoice either two times per month or one time per month. Invoices submitted beyond the number allowed will be rejected by the Government and will delay receipt of payment. We invoice customers up to two times per month following each timesheet/payroll period.

To ensure we meet our contract requirements on billing frequency we use a Monthly Billing Control schedule. This schedule lists all the active projects down the right side and check boxes for mid-month and end of month billing.

When we receive a new project, it is to be added to the Control schedule. If we can only bill the project one time per month then the mid-month billing box is blacked out. If we can bill the contract two times per month then both boxes are left open. The far right column is for contract billing notes such as contract start and end dates when they fall within the billing month.

As invoices are created and submitted they are checked off in either the mid-month or month-end box as appropriate. If there was no time charged to a project and thus no invoice put NT in the box. If the charges for a project are small or for some other reason it will not be billed then enter HOLD in the box. Make any notes in the Notes column as needed.

The Control schedule is to be maintained with other general billing paperwork, separated by month.

Contract Withholding Provisions

Our contracts may contain various withholding provisions whereby we can only bill up to a limit prior to completion of a task or the Government may retain funds until completion of the project. Any such provision needs to be planned for and make sure we invoice properly for the provision. For example, many all of our contracts only allow us to bill up to 85% of the fixed fee. These provisions are detailed in each contract’s contract brief as well as the original contract.

To make sure we keep our invoices within these provisions we will include limits in the invoices. These limit calculations will be setup on the first invoice for a new project. Since subsequent invoices are modifications of the prior invoice the calculations will remain intact. If there is any retainage then it shall be listed separately on the invoice.

Contractual Unallowable Costs

Our contracts and FAR regulations have specific rules concerning allowed and unallowed expenses. Contracts will refer to these regulations and may have their own requirements. A contract brief is to be created to detail any contract specific requirements outside of the normal FAR’s.

General guidance on unallowed costs will be developed and utilized by accounting personnel as expenses are entered into the system.

All expenses are coded as allowed or unallowed when entered into the accounting system. Unallowed expenses are automatically grouped into a separate project for reporting. Accounting personnel are instructed to code an expense as unallowed when there is any question about it. That way it will be reviewed later by the [title].

Employees will have general training on what is allowed and unallowed once they are trained on the accounting system itself. All of new employee’s entries will be closely reviewed by the [title] and feedback given to the employee.

At the end of each quarter expenses will be reviewed by the [title] to confirm that unallowed expenses have been appropriately marked and excluded from allowed expenses. This review all will take place at year-end. Annually an outside party familiar with FARs will review the expenses and procedures to confirm that they are being applied in conformance with the regulations. An annual unallowed cost schedule will be developed listing these expenses and the appropriate FAR. This schedule is to make it easier to spot mis-allocated entries.

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