Payment by Electronic Funds Transfer Under FAR 52.232-33
On federal construction projects, getting paid requires more than an approved pay application. Under the standard payment clause prescribed in FAR 32.1110(a)(1), the federal government pays contractors through electronic funds transfer (EFT) using account details drawn straight from your profile. Understanding the mandatory requirements of FAR 52.232-33 Payment by Electronic Funds Transfer-System for Award Management ensures cash flows directly into your company accounts without administrative holds or improper invoice rejections.
Checklist Item 1: Confirm Active SAM Banking Data Before Invoicing
The government relies exclusively on the contractor EFT data maintained in the System for Award Management (SAM). When business banking details change, the contractor holds sole responsibility for entering updated routing and account numbers directly into the system. If banking details in SAM are wrong or outdated, the contracting agency is legally permitted to freeze payments.
- Verify that your bank routing number and account number match current company accounts before submitting any billing.
- Ensure your profile reflects your official business entity rather than an unauthorized third party, as outlined in our SAM.gov entity registration guide.
- Check that your accounting department tracks when banking updates are completed in SAM before releasing payment applications.
Under FAR 52.232-33, if your EFT profile contains incorrect data, the contracting office does not have to make payment until accurate information is entered. Furthermore, any invoice or contract financing request submitted while your information is incorrect is deemed not to be a proper invoice for prompt payment purposes. Prompt payment rules concerning notice of an improper invoice and interest penalty accrual delays will apply.
Checklist Item 2: Review the 30-Day Window and Erroneous Transfer Liability
Transfer errors carry significant financial risk depending on whose records caused the failure. FAR 52.232-33 divides liability based on whether the government or the contractor introduced the faulty information:
- Government Error: If an uncompleted or erroneous transfer takes place because the government entered or transmitted your SAM data incorrectly, the agency remains responsible for issuing a correct payment, paying any prompt payment penalty due, and recovering the misdirected funds.
- Contractor Error: If an uncompleted or erroneous transfer occurs because your EFT information was incorrect, or because you revised your EFT information within 30 days of the government releasing the payment transaction instruction to the Federal Reserve System, liability shifts to you.
When the contractor causes the error and the funds are no longer under the control of the payment office, the government is legally deemed to have completed payment. In that scenario, your firm is solely responsible for recovering the erroneously directed funds from the receiving financial institution. If the funds remain under the control of the payment office, the government halts the release and suspends payment until accurate data is submitted.
Checklist Item 3: Track Payment Mechanisms and Valid Settlement Dates
Federal agencies process electronic transfers through one of two primary payment mechanisms: the Automated Clearing House (ACH) network or the Fedwire Transfer System. Federal payments routed via the ACH network are subject to the rules of the National Automated Clearing House Association as well as federal regulations in 31 CFR Part 210.
To determine whether the agency has met prompt payment requirements, examine the transaction settlement date. A payment is formally deemed timely if the date specified for settlement in the EFT payment instruction sent to the Federal Reserve System falls on or before the contract prompt payment due date, provided that specified date is valid under Federal Reserve System rules.
Checklist Item 4: Verify Assignment of Claims and Third-Party Rules
If your construction business assigns contract proceeds to a financial institution, strict regulatory controls apply. Review your financing agreements against these standards:
- Ensure any financing institution recognized under an assignment of claims pursuant to subpart 32.8 registers separately in SAM, as detailed in our review of FAR 52.232-23 assignment of claims rules.
- Require that the assignee receives payment by EFT under the exact provisions of FAR 52.232-33.
- Confirm that payment goes only to the contractor or to a properly recognized financial institution; payment to any other ultimate recipient is prohibited.
If SAM data lists an ultimate recipient other than the contractor without a proper assignment of claims acceptable to the government, that data is classified as incorrect EFT information, triggering immediate payment suspension. Additionally, the government assumes no liability for errors caused by changes made to EFT data by the contractor's financial agent.
Checklist Item 5: Follow Non-EFT Fallback Procedures
While electronic transfer is the standard method for all contract payments, system outages or transmission issues occasionally arise. If the government cannot release a payment through EFT, the clause requires the contractor to agree to one of two paths:
- Accept payment by paper check or another mutually agreeable method.
- Request that the government extend the payment due date until the agency is capable of executing an EFT transaction.
When the contracting office issues payment by check under this exception, the payment information is mailed directly to the remittance address recorded in SAM. The payment office will also transmit available payment information that can be formatted as of the release date to the Federal Reserve System. While you may request specific delivery formats from the payment office's available options, the government retains authority to select the delivery format and method most convenient to its operations.
Sources
FAR 52.232-33 Payment by Electronic Funds Transfer-System for Award Management (Acquisition.GOV)
Published November 9, 2026. No affiliate links on this page. Facts come from the sources linked above; check them for updates.