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Section 7: Non-Payroll Disbursements

Texas Prompt Payment Law

Effective Date:

08/30/10

Approved By:

Lenora Chapman, Associate Vice President, Financial Affairs

Last Revised On:

05/19/16

For Assistance Contact:

Assistant Vice President, Financial Affairs and Controller
Assistant Controller
Disbursements & Travel Services

PURPOSE/SCOPE

This guideline provides guidance for complying with the Texas Prompt Payment Law and requirements for documenting and resolving disputed invoices.

AUTHORITY


UNIVERSITY GUIDELINES

Table of Contents

A. 30-Day Payment Requirement

The Prompt Payment Law (Texas Government Code Chapter 2251) stipulates that payment is due for goods or services 30 days from the date goods/services are completed, or a correct invoice is received, whichever is later. A payment is considered overdue beginning on the 31st day.

Disbursements & Travel Services (DTS) receives mail twice daily and date stamps all invoices with the date received.  If a department receives a vendor’s invoice directly, the department must date stamp the invoice when received, and send or deliver it to DTS as soon as possible.  It is important to date stamp the invoice when it is received, as payment is due 30 days from this date regardless of whether the invoice is received by DTS or another department. 

A payment is considered to be mailed when postmarked or electronically transmitted. Because state agencies are required to schedule vendor payments so that the state receives the maximum benefit, payments are scheduled as close to the due date as possible within the 30-day requirement.  If the 30th day is on a weekend or a University of Texas at San Antonio (UTSA) or state holiday, the payment date is adjusted so that the payment is postmarked or electronically transmitted within the 30-day requirement.

Although payments to vendors are generally not processed before they are due, payments may be processed earlier than the standard 30-day processing time when:

  • An early payment discount is available per terms of the purchase order, or as stated on the invoice;
  • A contract requires pre-payment before goods or services are received;
  • An earlier payment date is required for a sponsored project; or
  • The early payment is required to comply with accounting principles at fiscal year-end.

Any other exceptions must show benefit to UTSA and be pre-approved in writing by the Director of DTS, Assistant Controller or Assistant Vice President, Financial Affairs/Controller (AVPFA/Controller).

B. Interest Calculation

Interest is due to a vendor when the payment is overdue according to the Prompt Payment Law (the 31st day), except when:

  • There is a bona fide dispute with the vendor;
  • The invoice was not mailed or sent to the address that appears on a UTSA purchase order;
  • The terms of a federal grant, contract, regulation or statue prevent the state agency from making a timely payment with federal funds; or
  • The invoice is for payment to another Texas state agency (except for Texas Correctional Industries).

Interest for an overdue payment is calculated in accordance with the Prompt Payment Law with guidance provided at the Texas State Comptroller’s website. The State Comptroller determines the interest rate on an annual basis, the rate is updated in UTSA’s financial accounting system, and interest is automatically calculated when applicable.

Interest accrual begins on the date the payment becomes overdue, and stops accruing on the date the payment is postmarked or electronically transmitted.  The interest must be paid at the same time the principal is paid.
Interest is not accrued or paid if the amount is less than or equal to $5.

See Vendor Hold for rules regarding interest accrual/payment to vendors on hold with the state.


C. Vendor Hold

A hold is placed on a vendor by the State Comptroller’s Office or a state agency if a vendor:

  • Owes a debt to the state;
  • Is delinquent in payment of certain taxes collected by the state;
  • Is delinquent in repaying certain student loans; or
  • Is delinquent in payment of certain types of child support.

The Texas Identification Number System (TINS), a system maintained by the State Comptroller’s Office, is used for vendor hold verification.

DTS is required to verify a vendor’s hold status through TINS for all payments over $500. If a vendor has a hold, DTS notifies the vendor by mail that a hold has been placed on the vendor’s TIN by a state agency. The vendor must contact either the State Comptroller’s Office or the state agency placing the hold to resolve the situation and have the hold released. The vendor must notify UTSA when the hold has been released by the State Comptroller’s Office or state agency before any checks can be released.

A late payment to a vendor on hold accrues interest through the “distribution date” (the date the Comptroller’s Office would have made a warrant available for mailing to the payee or pickup by the paying state agency if the vendor had not been on hold).  The payment, including interest through the distribution date, is processed, but the warrant is held until the vendor is released from hold. Interest does not accrue during the period the warrant is held.

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D. Disputed Shipments or Invoices

If there is a dispute with an invoice or shipment, the vendor must be notified by email or telephone within 21 days of receipt of the invoice.

The disputing department and/or DTS are required to document all relevant information on a Vendor Dispute form. The form requires:

  • Nature/reason for the dispute;
  • Date(s) of the dispute;
  • Details of communication with the vendor regarding the dispute, including phone numbers and contact names; and
  • Dispute resolution and in whose favor it was resolved.

A corrected invoice must be submitted by the vendor for all disputes resolved in favor of UTSA.
If the dispute is resolved in favor of the vendor, the overdue payment is eligible for interest which is calculated from the original due date.

NOTE: When the department is responsible for disputing the invoice or shipment, the department must send the completed forms and related payment documentation to DTS.


DEFINITIONS

Term Description

Interest Rate

The interest rate for late payments to vendors is the rate in effect on September 1st of the fiscal year in which the payment becomes overdue.

This rate is one percentage point higher than the prime rate published in the Wall Street Journal on the first business day of July.

Invoice

"Invoice" in the context of the Prompt Payment Law means a vendor's request or demand for payment. A statement which does not include a request or demand for payment is not an invoice.

Vendor

Under the Prompt Payment Law, a vendor:

• Is a person who supplies goods or services to a governmental entity (including a state agency) or another person directed by the entity.

• Includes an officer or employee of a state agency when acting in a private capacity to supply goods or services.

• Does not include a state agency, except for Texas Correctional Industries.

 

REFERENCES/LINKS

RELATED FORMS/WORKSHEETS


REVISION HISTORY

Date Description

05/19/16

Update to all sections of operational guideline to follow current standards of practice.

05/01/14

Updated DEFINE information for transition to PeopleSoft.

10/05/10

Changed section number from 2.6.8 to 2.6.1.

08/30/10

Published guideline.


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