Final payments

A final payment is the payment made in satisfaction of a final invoice. The CanadaBuys Supply Manual glossary defines it this way, and it adds that the payment completes the monetary settlement of the contract in accordance with the contract's conditions. The definition is published in the CanadaBuys Supply Manual glossary.

The plural, final payments, refers to these closing payments across contracts. Final payments are different from progress or milestone payments, which are made before the final settlement and do not themselves constitute the final payment. The term belongs to contract administration and contract close-out, where it marks the point at which the money side of a contract is finished.

How final payment follows the final invoice

The definition ties final payment directly to the final invoice, which is the invoice whose payment completes the contract's monetary settlement. A final payment normally follows completion or acceptance of the contractual deliverables, verification of the final invoice and the required approvals, and settlement of any outstanding financial matters.

One of those approvals is certification under section 34 of the Financial Administration Act. This confirms that the goods or services were received satisfactorily before payment is authorized. The exact invoice format, certification, payment timing and supporting documents depend on the particular solicitation and the resulting contract.

Final payment as a close-out activity

Government of Canada records guidance for acquisition services lists approval of final payments as a contract close-out activity. The same guidance names the records that sit alongside it: a final payment claim certified under section 34, a contractor cost submission, and verification of the total time charged. It also associates close-out with the return of contract financial security. The full list appears in the Library and Archives Canada acquisition services guidance.

In practice, final payment is not an isolated event. It is one step in a sequence that includes final acceptance of the deliverables, verification of the supplier's charges and the closing of the contract's financial and administrative activities.

Record retention and overpayments after final payment

Final payment starts a clock in some PSPC arrangements. The supply arrangement for temporary help services requires the contractor to retain records for seven years after final payment, or until outstanding claims and disputes are settled, whichever is later. The ProServices supply arrangement carries comparable provisions.

The temporary help services arrangement also provides that overpayments identified through an examination are claimed by Canada and must be repaid immediately by the contractor. Receiving final payment therefore does not end a supplier's exposure to examination of its billing.

Final payments in defence and Foreign Military Sales contracts

Canada's defence procurement process places final payments within final contract close-out, together with financial reconciliation, applicable audits, and the disposition or transfer of Crown-owned property. The Office of Procurement Ombudsman describes this in Canada's Defence Procurement System for Major Projects.

United States Foreign Military Sales administered by PSPC work differently. After delivery is completed and final costs are determined, PSPC initiates account closing and seeks finalization of the accounts. The final accounting can result in a final payment by Canada or a refund to Canada, as set out on the CanadaBuys page on United States Foreign Military Sales.

What final payment means for suppliers

Suppliers bidding on Canadian public contracts should plan for close-out from the start. The sources support these obligations:

• Submit the final invoice or final payment claim the contract requires.
• Provide any required cost submission and supporting records.
• Keep time charges and other billed amounts verifiable.
• Resolve outstanding claims, disputes, overpayments and other financial adjustments.
• Retain contract records for the period the contract specifies, which in some PSPC arrangements is seven years after final payment or until claims and disputes are settled, whichever is later.
• Repay any overpayment identified through an authorized examination.

Read the payment, invoicing and record-keeping clauses of each solicitation closely, because the specific requirements are set by the resulting contract.