FAR Part 32: Contract Financing, Explained

FAR Part 32 is the section of the Federal Acquisition Regulation dealing with contract financing — the rules for how the government pays contractors and how contractors can finance the work in between. It's the rulebook behind progress payments, performance-based payments, prompt payment, and the assignment of claims.

For a small or growing contractor, the relevant parts of Part 32 are the ones that affect your cash: when and how you can get paid as work progresses, how fast the government must pay a proper invoice, and how you're allowed to finance your receivables.

On longer or larger contracts, FAR Part 32 allows progress payments — partial payments as you incur costs or hit milestones — so you're not carrying the entire contract cost until the end. The specifics depend on the contract type and clauses, but the goal is to ease the financing burden of performing the work.

Part 32 also implements the Prompt Payment Act, which sets the standard payment window (commonly 30 days from a proper invoice) and entitles you to interest if the government pays late. Together these provisions define the timeline you're working against.

FAR Subpart 32.8 implements the Assignment of Claims Act, which lets you assign your right to payment under a contract to a financing institution. This is the legal foundation for government invoice factoring and accounts-receivable financing.

In other words, the FAR itself anticipates and permits contractors financing their receivables. A specialized GovCon funding partner works within these rules — filing the required Notice of Assignment — so you can turn approved invoices into working capital compliantly.