A payment claim is a document in which the beneficiary accounts for the expenditure incurred and requests payment of the funding or its reimbursement. To prepare a grant settlement correctly, you need to gather a complete set of accounting documents confirming the costs incurred, draw up a statement of expenditure, describe the physical progress of the project and then submit the claim in the IT system specified in the grant agreement.
Timeliness, consistency with the project budget and complete annexes are the key conditions for the settlement to be accepted by the intermediate body or managing authority.
Below we present a practical guide to preparing a payment claim, the most common mistakes and the rules for settling eligible costs in projects financed from EU and national funds.
What is a payment claim and what is its purpose
A payment claim is a formal document submitted by the beneficiary to the institution providing support, the purpose of which is to account for expenditure incurred under the project and obtain payment of funds. It serves as the basic mechanism for checking that the project is being implemented correctly and that expenditure is consistent with the approved budget and the physical and financial schedule.
In practice, there are several types of payment claims:
- an advance payment claim – used to obtain funds before the expenditure is incurred,
- a reimbursement claim – submitted after costs have been paid from own funds,
- an advance settlement claim – documenting the use of funds received earlier,
- a reporting claim – submitted to report on project progress without payment of funds,
- a final claim – settling the entire project after its completion.
The type of claim submitted determines the scope of the required annexes and the method of settlement.
Key deadlines for submitting a payment claim
The deadlines for submitting payment claims are set out in the grant agreement and the guidelines of the relevant institution. In most programmes, the beneficiary is required to submit reporting claims at least once every three months, even if no eligible expenditure has been incurred in the given period.
The final payment claim is usually submitted within 30 days of the end of the project implementation period specified in the agreement. Failure to meet deadlines may result in the suspension of advance payments, the imposition of financial corrections or, in extreme cases, termination of the grant agreement.
Documents needed to prepare the settlement
Correct settlement of a grant requires gathering full documentation confirming that the expenditure was incurred and is eligible. The standard scope of documentation includes:
- VAT invoices, bills and other accounting documents of equivalent probative value,
- proof of payment (bank statements, transfer confirmations),
- acceptance reports for works, supplies or services,
- contracts with suppliers and contractors,
- documentation from procurement procedures (requests for quotation, offers, selection reports),
- a register of fixed assets where equipment has been purchased,
- timesheets and payrolls for salary costs,
- documentation confirming the promotion of the project in line with programme requirements.
All accounting documents should be properly described – on the document itself or in an annex – indicating the project number, source of financing, expenditure category and eligible amount.
Description of accounting documents
The description of an invoice is often an underestimated element of the settlement, and at the same time one of the most frequently questioned during audits. It should include at least:
- the project number and title,
- the name of the programme and measure,
- the budget item to which the expenditure relates,
- the net and gross amount of eligible expenditure,
- a note on the application of the competitiveness principle or the Public Procurement Law,
- the signature of the person responsible for the project.
Statement of expenditure – a key element of the claim
The statement of financial documents is the substantive core of the payment claim. Each invoice must be listed separately in the statement and assigned to the appropriate category of eligible costs in line with the approved project budget.
The statement includes the following information:
- the accounting document number,
- the date of issue and the date of payment,
- the name of the issuer,
- the item purchased,
- the net amount, VAT and gross amount,
- the amount of eligible expenditure,
- the amount of funding requested,
- the item number in the project budget.
The total expenditure shown in the statement may not exceed the amounts planned for the individual cost categories. If they are exceeded, changes must first be made to the grant agreement in the form of an annex or an approved amendment.
Physical progress of the project
Every payment claim, whether it concerns an advance payment, reimbursement or final settlement, must contain a description of physical progress. This part of the document should present in a measurable way:
- the tasks completed in the reporting period,
- the output and result indicators achieved,
- the degree of completion of the physical schedule,
- any deviations from the plan together with a justification,
- the activities planned for the next reporting period.
Indicators must be presented in relation to the target values set out in the grant application. Failure to achieve the indicators at the final level may result in a proportional reduction in funding or the need to repay part of the funds.
The most common mistakes in grant settlement
Audit practice shows that errors in grant settlements most often concern a few recurring areas:
- missing or incorrect descriptions of accounting documents,
- incorrect treatment of VAT (particularly for beneficiaries entitled to deduct it),
- failure to comply with the competitiveness principle for purchases above the thresholds set out in the guidelines,
- omission of information and promotion obligations,
- expenditure dates that do not fall within the eligibility period,
- no documentation of actual payment,
- exceeding the limits in individual cost categories without a prior annex,
- incorrect settlement of salary costs (e.g. missing timesheets or inconsistency with the contract).
The most common consequence of errors is part of the expenditure being deemed ineligible, which leads to a reduction in payment or the need to repay funds together with interest calculated as for tax arrears.
Eligibility of expenditure – general rules
Expenditure may be considered eligible if it jointly meets several conditions set out in the Guidelines on the eligibility of expenditure for 2021–2027 issued by the Ministry of Development Funds and Regional Policy. According to information published on the European Funds Portal expenditure should be:
- necessary to achieve the project objectives,
- reasonable and cost-effective,
- actually incurred within the eligibility period,
- documented in accordance with the requirements,
- compliant with State aid rules and national and EU law,
- consistent with the approved project budget.
Detailed eligibility rules may differ depending on the programme, so reference should always be made to the project selection rules and the grant agreement.
Submitting the claim in the IT system
Payment claims are submitted electronically via a dedicated IT system. In the 2021–2027 financial perspective, the basic tool is the CST2021 Central ICT System, within which settlements are carried out in the application SL2021 Projekty. For projects from the 2014–2020 perspective, the SL2014 system is used. Some national programmes use the institutions' own systems.
The procedure for submitting the claim includes:
- preparing the claim in the “Payment claims” module,
- completing the financial and physical sections,
- attaching scans of documents confirming the expenditure,
- sending the claim by an authorised person in accordance with the grant agreement (using an electronic signature, if required by the system or the agreement),
- monitoring the verification status and responding to any requests from the institution.
Project audits and grant settlement
Grant settlement does not end with the approval of the final payment claim. The beneficiary is obliged to maintain project durability – as a rule for 5 years from the final payment, and for SMEs for 3 years – and to keep the project documentation for audit purposes. Under Article 82 of Regulation (EU) 2021/1060 this period is, as a rule, 5 years from 31 December of the year in which the last payment to the beneficiary was made. The grant agreement or State aid rules may extend it.
Audits may be carried out by the intermediate body, the managing authority, the Supreme Audit Office, the National Revenue Administration and European Union bodies, including the European Court of Auditors. Irregularities identified during an audit may result in the imposition of a financial correction or a demand for the repayment of part of the funding.
Practical recommendations for beneficiaries
When settling a grant, it is worth following several principles drawn from project implementation practice:
- keeping separate accounting records for the project from the first day of its implementation,
- archiving documentation on an ongoing basis in paper and electronic form,
- verifying that each expenditure item is consistent with the project budget before it is incurred,
- conducting procurement procedures in accordance with the current guidelines,
- regularly updating the physical and financial schedule,
- consulting any doubts with the project officer at the institution,
- submitting payment claims well in advance of the contractual deadlines.
For projects of considerable value or with a complex financing structure, it is advisable to use grant advisory services, which include comprehensive support in preparing payment claims, verifying documentation and liaising with the institution.
Are you settling a project and would like to have your payment claim checked before submitting it? Please get in touch.Contact an expert
Author: Dariusz Kozakiewicz
EU funding expert