Most common billing mistakes contractors make
By Marcelle Green
Contractors, particularly those who are new to government work and are working for a Department of Defense (DoD) agency, often face delays when submitting vouchers for payment.
There are two common reasons why delays happen: the clerk processing the vouchers has a very different agenda from the contractor, and mistakes on the vouchers resulting in those vouchers being returned to the contractor for correction.
Contractors have to remember that the clerk who first processes vouchers has different priorities from the contractor:
- The clerical person responsible for processing vouchers doesn’t usually care whether the contractor gets paid or not. The clerk's goal is to process the paperwork if it’s correct, and kick it back if it isn’t.
- The clerk processing those bills isn’t very knowledgeable beyond the narrow scope of his or her job. The clerk won’t think, “Oh, the bill says this, but it must mean that.” A contractor who designates a cost incorrectly will have the invoice rejected, not corrected.
What are the mistakes that lead to delays and rejection? Following are the 10 most common mistakes contractors make, according to a former employee of the Defense Contract Audit Agency (DCAA) who was responsible for reviewing public vouchers from contractors:
- Using the wrong Department of Defense Activity Address Code (DoDACC). This six-digit number identifies a unit, activity, or organization that has the authority to requisition and/or receive material. When a bill is submitted using the wrong code, it goes to the wrong office, and the DCAA office will reject the bill. Double-check with the contracting officer that the correct code is being used before submitting the first bill.
- Submitting vouchers out of numerical sequence.
- Billing indirect costs based on provisional billing rates that have not had prior DCAA approval.
- Using outdated billing rates, for example, applying last year's rates to this year's costs.
- Failing to submit a request, along with supporting documentation, for new interim billing rates or for temporary adjustment rates. Final billing rates are used after the DCAA completes its audit of your incurred cost submission and there has been a formal rate agreement.
- Mathematical errors, such as: last cumulative plus new charges do not equal new cumulative; backing into the total funded amount rather than showing the actual incurred cost and subtracting the amount in excess of the funding limit; or rate times base does not equal the amount shown on the public voucher.
- Billing costs in excess of the funded amount of the contract.
- Billing fee in excess of contractual limitations (some contracts cap fee at 85 percent until final billing).
- Not billing by Contract Line Item Numbers/Sub Line Item Numbers (CLIN/SLIN) when the contract is costed and funded by CLIN/SLIN.
- Submitting incomplete, incorrect, or inadequate detail to support the public voucher.
Correct billing is the contractor’s responsibility, not the government’s. Don’t let these common billing errors lead to delays or rejection.
About the author:
Marcelle Green is the marketing and PR director for VBP OutSourcing, a Maryland-based professional accounting and marketing firm servicing the growing needs of DoD federal contractors. For more information, call (410) 590-5000 or visit http://www.vbpoutsourcing.com.
Voice of the Editor
Results from a recent AICPA survey disclosed the two top priorities for CPA firms as they plan for the future: bringing in new business and finding talent. Our goal at Sift Media is to help our readers deal with the issues most important to them. One way in which we are doing this is through the launch of our new recruitment/placement service, Going Concern Jobs. Check it out today for your talent needs.
This Week on AccountingWEB
Brian Fox, CPA, founder and CMO of Confirmation.com, explains how the company's electronic audit confirmation service helped the FBI uncover a $6 million fraud scheme.
Russ Wilson of Moss Adams talks with us about the firm's collaboration with WWU in educating and developing talented accounting and business professionals.
Plante Moran CPAs Gordon Krater, Alicia Sturtevant, and Susan Perline spoke with AccountingWEB about the firm's Women in Leadership initiative.
Jeff Thomson, CMA, president and CEO of the IMA, talks with us about the 2013 jobs market for accounting professionals.