Generally, payment must be made as close as possible to acceptance, but not later than the 30th day after receiving an invoice or a request for payment, whichever occurs later. Certain contracts may specify an actual payment date (such as the 15th of each month).
The due date for making construction progress payments, including payments for reaching milestones in a project, is generally 14 days after the designated billing office receives a proper invoice, a request for payment or as otherwise specified in the contract.
Payments to surface mail transportation suppliers are generally made at the conclusion of each month for which payment is due.
Contracting officers may establish payment terms less than net 30 days and net 14 days for construction contracts when it makes good business sense. Contracting officers and purchase/SCM teams should consider payment time frames during purchase planning; factors to consider include the nature of the requirement, differing industry standards, and financial impact on suppliers and the Postal Service. Purchase/SCM teams should consider using payment terms of less than 30 days or 14 days for construction when there is a potential for lower contract prices or to attract participation by small businesses in the purchase process. When considering alternate payment terms, purchase/SCM teams should consider the potential impact on contract cost and the ramifications an alternate payment cycle may have on suppliers and the Postal Service, such as its effects on cash flow and liquidity.
When the purchase/SCM team anticipates the use of payment terms less than net 30 days or 14 days for construction and a purchase plan is required, the business rationale for the decision must be included in the purchase plan. When a purchase plan is not required or when negotiations result in payment terms less than 30 days or 14 days for construction, (e.g., 2% 10 net 30), the contracting officer must include a business rationale in the award recommendation. This rationale must include a description as to why the payment terms are in the best interest of the Postal Service; these may include, but are not limited to, such things as expansion of opportunities for small businesses to compete, calculation of cost, and differing or unique industry/commodity payment standards. For certain commodities such as regulated utilities, payment terms other than net 30 days and net 14 days for construction contracts are required by federal, state or local regulations or ordinances. In such cases, a business rationale for the alternate payment time frame is not required, but the contract file should be documented with a short explanation or description of the controlling regulation or ordinance.
Contract terms may incorporate a discount for early payments. The discount amount is the difference between the early payment amount and the payment amount otherwise required by the contract. In order to receive the early payment discount, payment must be made on or before the discount date established in the contract terms; the discount amount may be represented as a fixed figure or as a percentage of the full payment amount. When a contract contains a discount provision, time will be computed from the date of the invoice or other request for payment, the date that supplies are delivered, or the date that services are performed, whichever is later. If there is no date on the invoice or other request for payment submitted by the supplier, the discount period will begin on the date a proper invoice or other request for payment is received by the Postal Service. Discounts should be negotiated whenever early payment is financially advantageous to the Postal Service.
