It’s another end of a government fiscal quarter, which starts a number of reporting clocks for government contractors, including for the General Services Administration’s industrial funding fee (IFF) on Schedule sales. GSA schedule holders must report their contract sales within 30 calendar days of each quarter’s close with payment of fee owed. Many finance and contracts teams dread this task, but assessing the end-to-end process can surface easily implemented opportunities to ease unnecessary pain. Keeping current, complete documentation of the IFF tracking and payment process is also helpful during contractor assistance visits and IG audits.

Before a team begins any business process reengineering task, they should ask themselves how painful are existing processes and how much transition pain are they willing to tolerate? If a contractor — or worse, GSA — discovers significant, unexplainable discrepancies in schedule revenue reported and IFF paid, if such discrepancies have resulted in a negative score on a GSA report card, or in case of a GSA audit, it may be time to engage a contracts consultant. (Full disclosure, I run such a consultancy, Chaedrol LLC.)

More likely, IFF-calculation pain stems from incomplete data spread across the organization necessitating manual processes, such as requesting and reconciling disparate financial and project reports and validating data against systems of record, which leaves little time for IFF payment and its requisite approval. While robotic process automation may one day eradicate any human role in an IFF calculation and payment, even small process adjustments can drastically improve the process for the humans currently involved.

Streamline within your span of control

Government contractors with small federal practices buried in huge corporate bureaucracies may find IFF calculation fastest using copies of invoices, rather than accounting system reports, because those are readily available to the team. Other contractors may need to pull multiple project reports or adjust accrual-based reporting to cash (per GSAR 552.238-80, contractors may elect to pay the IFF on either a cash or accrual basis, another potential pain point).

Start by fully documenting the process. Who does what? Where are the dependencies, etc.? Simply identifying all stakeholders, processes, and systems can surface improvement opportunities and provides a baseline for analysis. Also, by maintaining detailed, up-to-date process documentation on reporting procedures, contractors protect themselves against negative audit findings and build in defensibility. While people make mistakes, the complete procedures indicate the company’s intent to comply.

Contractors have a short 30 days from the close of each quarter to the IFF deadline, so evaluate each phase of the process documentation to identify opportunities to automate and streamline. Beware, however, automations that create dependencies on other departments or people who may not be available when needed. For example, a finance report automatically generated on the fifth of the month with all invoiced schedule sales both serves as a reminder the IFF needs to be paid and jumpstarts the process. A report that runs unreliably sometime around the fifth and occasionally must be requested from a specialist in finance and accounting does neither.

Adding approvals to regular contract reporting also increases the risk of reporting failures and delays, particularly because paying the IFF is usually the last step in the process. Sometimes delegating payment approval for the IFF only to lower level staff can help assure contract compliance.

Where possible, choose simplicity

The IFF is owed only on schedule items; that means, contractors need not collect and pay the fee on non-schedule other direct costs (ODCs) and travel. Some contractors insist on backing out this revenue to save on (the unnecessarily paid) funding fee. Since the advent of order-level materials, which have largely supplanted ODCs when schedule orders require ancillary items, I urge such contractors to evaluate IFF savings against the additional calculations and backup required; rarely is it worth it. Paying on a cash-basis to avoid “financing” the IFF may also be more trouble than it’s worth.

Don’t let perfect be the enemy of good enough. For example, all invoices may be collected and stored as separate files in a folder consider appending invoice metadata, such as totals to the file names; then, totals of all invoices can be easily calculated from the file list and a folder’s totals can even be added to the folder’s name. For this to be effective, however, each calculation must be validated, and there must be traceability and accountability for errors, and this should be described in the process documentation.

Scripting or software tools can automate file naming, but must be weighed against its maintenance, troubleshooting, and other support costs. Home-grown scripts often lack the rigor of robust error handling; when they fail, end users are usually stuck while the issue is escalated. Four contracts, with three months in each reporting period, represents 12 invoices. Is automating 12 invoices each quarter worth time, expense and risk? How about 120? The answer is organization specific.

Cross-check everything

While timeliness is important, accuracy is paramount. All totals must be cross-checked against the system of record, and any discrepancies investigated and resolved. If investigating a discrepancy will cause the reporting deadline to pass, contractors should notify their contracting officer and report and pay an estimated IFF. When totals fail cross-checks and validations, whether such checks be automatic or manual, contractors are alerted to potential systemic problems they ignore at their peril. Outside professional assistance is likely required.

Complex, automated reporting and compliance systems are often overkill. The best solution is repeatable, deliberately designed with built-in cross-checks for accuracy, and fully understood by stakeholders, quirks and all.

Jason Bakke is a director at Chaedrol LLC, a SBA-certified 8(a) small business that helps federal buyers and sellers navigate acquisition complexity to build win-win relationships while meeting mission requirements. An acquisition practitioner and writer, Jason harmonizes statue, regulation and common law to reduce friction in the system.