When a reseller sells your product to a federal agency, two separate payments happen, and they run on two separate sets of terms. The agency pays the reseller. The reseller pays you. Most manufacturer frustration comes from treating those as one transaction.
This article walks the money path, shows the three places it stalls, and lists what to agree with a reseller before the first order ships. It does not teach how to invoice the government. That is the reseller's job, and it is covered elsewhere. For the bigger picture of why manufacturers use this channel, start with selling to the government through a reseller.
The money path in four steps
The reseller holds the contract, so the reseller is the contractor of record. The agency has no payment relationship with you unless you are named in the contract.
- The reseller buys from you. You ship to the agency's address on the reseller's order, or to the reseller, depending on what you agreed.
- The agency receives and accepts the goods. Acceptance is the government's formal act of saying the delivery matches the contract. It is a separate event from delivery.
- The reseller invoices the agency. This happens through whatever system or address the contract names.
- The agency pays the reseller, and the reseller pays you. Your payment date comes from your agreement with the reseller, not from the contract.
That last point is the one people miss. The contract between the agency and the reseller does not give you rights, and the payment protections in it run to the contractor, not to its suppliers. Your protection is whatever is written between you and the reseller.
How the agency's payment clock works
Federal payment timing is set by the Prompt Payment rules. The implementing regulation is 5 CFR 1315.4. Where the contract does not set another date, payment is generally due 30 days after the agency receives a proper invoice. The standard payment clause for supply contracts, FAR 52.232-25, puts the due date at the later of 30 days after the billing office receives a proper invoice or 30 days after the government accepts the goods.
Three details matter to a manufacturer:
- The clock starts on a proper invoice. The clause lists what a proper invoice contains, including the contract or order number, line-item descriptions with quantities and prices, and shipping and payment terms. An invoice missing those items is not proper, and the agency can send it back. The agency is expected to return a defective invoice within seven days of receipt, naming the defects.
- Acceptance can move the date. If acceptance happens after the invoice is received, the 30 days run from acceptance. The rules also treat acceptance as occurring on the seventh day after delivery in some situations, unless the contract says otherwise.
- The contract can differ. Some contracts set other terms, and some agencies add their own procedures. The contract in front of the reseller is what counts. Payment rules change as part of the ongoing FAR rewrite, so check the current text rather than relying on a figure from an article, including this one.
Thirty days is a planning number, not a promise. A first-time agency, a new payment system or one defect can add weeks.
Where payment stalls
Almost every delayed payment traces to one of three problems. None is about the agency refusing to pay.
Invoice defects
A wrong order number, a line item that does not match the pricing schedule, a missing required document, or an invoice sent to the wrong office will stop the clock. Each correction cycle costs days, and the reseller usually finds out when the due date passes. If your packing slip, part numbers or quantities differ from what the reseller invoiced, you have contributed to the defect. Send the reseller shipping documents that match its order line by line.
Acceptance not recorded
The agency cannot pay for goods it has not accepted. A shipment can sit delivered but unaccepted because the receiving office has not signed the receiving report, because the person who ordered is on leave, or because the paperwork went to the wrong inbox. Delivery proof helps, but a signed receiving record is what moves things. This is why good drop-ship documentation matters, and why we treat receiving and acceptance as part of the sale, not an afterthought.
Partial deliveries
If part of an order ships and part is backordered, the reseller needs to know whether the contract allows partial delivery and partial payment at the line level. If it does not, a shipment of nine items out of ten may not be payable until the tenth arrives. A backorder at your end can then hold up payment for the whole order, including the lines the agency already has in hand. Read more on how this works in partial shipments on government orders.
What to agree with a reseller before the first order
Put these in writing before a quote goes out. Fixing them after an invoice is late is much harder.
Payment terms between you and the reseller
Decide whether you are paid on a fixed schedule after shipment or only after the agency pays the reseller. Both exist, and both are legitimate if written down. A fixed schedule shifts the wait to the reseller. "Pay when paid" shifts it to you. If your terms depend on the agency paying, define the trigger (payment received, or acceptance recorded) and a maximum wait. Whatever you pick, state it before the quote, not at invoice time. The numbers are yours and the reseller's to set.
Drop-ship documentation
State what you will send with every shipment and every shipment notice:
- A packing slip that shows the reseller's order number and line numbers, not just your own part numbers.
- Tracking numbers sent the day of shipment.
- Delivery confirmation, ideally a signed receiving copy.
- The country of origin and any authorization or compliance paperwork the order requires.
The reseller needs these to invoice cleanly and to chase acceptance. See drop shipping to a federal agency for how the delivery side works.
Who carries freight claims
Settle in advance who files and who bears the cost when goods arrive damaged or go missing. Under many government orders, the contract states where title and risk pass. If that point is the agency's dock, the seller side carries the loss until then, and you and the reseller need to decide who pays and who files with the carrier. Do not leave this to the day a crushed pallet shows up.
Returns, rejections and replacements
If the agency rejects a delivery, the reseller owes a replacement or a correction, and the invoice may be on hold in the meantime. Agree who ships the replacement, who pays return freight, and how the held payment is handled.
Backorders and partial lead times
Commit to realistic lead times, and agree that the reseller hears about a backorder when you know, not when the delivery date passes. A reseller can often get the contracting officer's agreement to a revised date. It rarely can once the date is gone.
What a reseller should owe you
Expect the reseller to confirm every order in writing, send you the contract's delivery address and any special instructions, tell you when the agency accepts, and pay as agreed. If the reseller is a small business and the order flows through a prime contractor, you may also want to know whether accelerated payment rules for small business subcontractors apply to anyone in the chain.
How Lunula Supply handles it
We act as the contractor of record. We confirm each order line by line in writing, check the contract's partial-delivery rules at the line level, and keep a running order report per award with partials, backorders and tracking. We invoice after delivery through the system the contract names, and we keep one contact for you from order through warranty. We raise mismatches on day one rather than at invoice time.
If you want to sell through a reseller and have questions about the process, talk to us or see what we supply.
Frequently asked questions
Does the government pay the manufacturer directly when a reseller sells its product?
No. The agency's contract is with the reseller, so the agency pays the reseller as contractor of record. The reseller then pays the manufacturer under the terms the two agreed. The manufacturer has no payment claim on the agency unless it is a party to the contract.
How long does the government take to pay a reseller?
Under the Prompt Payment rules, payment is generally due 30 days after the agency receives a proper invoice or accepts the goods, depending on the clause. A defective invoice or unrecorded acceptance can add time. Check the contract and the current text of 5 CFR 1315.4 and FAR 52.232-25.
Should a manufacturer accept pay when paid terms?
It is a business decision, and either structure works if it is written down before the first order. If you accept it, define what triggers your payment and set a maximum wait. If you cannot carry that wait, ask for a fixed payment schedule instead.
Who is responsible if a shipment is damaged on its way to the agency?
That depends on where the contract passes title and risk, and on what you and the reseller agreed. Settle who files the claim and who bears the loss before the first shipment.
General information, not legal advice. References were checked against acquisition.gov and ecfr.gov on the publish date. Your contract and your agreement with the reseller control.