The Art of Collecting on Government Grants

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For the past few years, I have been working on learning the ways of government grants and how to get paid quickly when working with one. I always thought my time collecting from the Department of Defense, National Institute of Health, Veteran's Affairs, General Services Administration and many other government agencies gave me a head start in understanding the grant payment process. BOY, was I wrong! Grant payments are a dark hole, and once someone falls in, it is almost guaranteed they will never been seen again.

Every month for the past three years, I thought I was ready to share my growing knowledge of grant payments. And every month a new lesson was there for me to learn. Which brings me to my first lesson: every grant collection will be a new experience with new issues.

Most grants are billed and collected in the same process. We will be looking at the OMB A-110 as an example.

OMB Circular A-110: Uniform Administrative Requirements for Grants and Other Agreements with Institutions of Higher Education, Hospitals and Other Non-Profit Organizations.

The life cycle of a grant usually includes:

Grant post-award>expenditure processing>billing and collecting>close-out>financial report and close-out>completion or renewal of grant

As stated, usually a grant is set up in this type of life cycle. Grants in the process of completion can take on a life of their own and are usually as close to a definite as one can expect.

Subcontracts can be a part of grants. Make sure that you receive a copy of the agreement in case it is needed for past-payment issues.

Charges should be direct costs only and make sure that you are familiar with the unaccepted costs that go with the grant. The list of unaccepted costs can be found at:

Make sure that someone is reviewing the monthly charges from salary to direct costs. This will help eliminate unallowable costs from being further incurred.

Direct Costs: Costs which can be identified specifically with a particular sponsored project or that can be directly assigned to such activities relatively easily with a high degree of accuracy.

Examples of Direct Costs:

  • Salaries and Wages
  • Fringe Benefits
  • Travel
  • Lab Supplies
  • Subgrants and Subcontracts

Each agency has a policy statement that will include any conditions that are needed to fulfill the obligation of the grant. The policy statements need to be included with the grant for everyone to understand what is expected and what is not acceptable.

Don't wait for your collection department to work unpaid grants. Unpaid grants should be reviewed on a monthly basis and agency contact should begin immediately. One common issue is when personnel who grant invoice approval leave and the process of payment must begin all over again.

The close-out process must be done when it comes to grant payments.

  • A close-out is 60 days from end date.
  • Notify the grant contact that the grant is being closed-out before the end date.
  • Final review of charges must be made. (This is a much easier process if this is done on a monthly basis.)
  • Resolution of unused or overdraft funds.

Watch for grant end dates!

The key for a successful grant audit is to start preparing the first day of the acceptance.

Do You Know the Following Department of the Treasury Glossary Terms?

Authorized Payment Agent (APA) means any individual or entity that is appointed to be a representative payee or fiduciary under regulations of an agency making federal payments.

Automated Clearing House (ACH) Network means a nationwide payment and collection system which provides for the electronic distribution and settlement of funds.

Regulation E is promulgated by the Federal Reserve Board of Governors and regulates electronic funds access specifically in the areas of disclosure of information, consumer liability, error resolution, record retention and receipts at electronic terminals.

FAR Part 31—Contract Cost Principles and Procedures
Part 31 includes the pricing of contracts, subcontracts and modifications to contracts and subcontracts whenever cost analysis is performed.

Part 31.100 includes the need for advance agreements when subcontracts are included.
Part 31.200 includes contracts with commercial organizations.
Part 31.300 includes contracts with educational institutions.
Part 31.600 includes contracts with state, local and federally-recognized indian tribal governments.
Part 31.700 includes contracts with nonprofit organizations.

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