Frequently Asked Questions

OMB Directive M-15-19 (2015) stated that by the end of 2018, federal agencies would need to transition to electronic invoicing for appropriate federal procurements.

According to 31 U.S.C. § 3901(a) (4) and 31 C.F.R. § 1315.4(b), if the invoice receipt date is annotated on the invoice, the invoice is deemed "received" on the later of the receipt date or 7 days after delivery of the goods or services [assuming: 1) no earlier acceptance occurred; and 2) the contract does not specify a longer acceptance period].

If the receipt date is not annotated on the invoice, the invoice is deemed "received" on the invoice date.

If there is no invoice, and the contract specifies that the delivery ticket may serve as the invoice, the invoice is deemed "received" on the delivery date.

If an invoice does not have all the information that the agency requires, the invoice is "improper." (See 1315.4)

When an invoice is determined to be improper, the agency shall return the invoice to the vendor as soon as practicable after receipt, but no later than 7 days after receipt (refer also to 1315.4(g)(4) regarding vendor notification and determining the payment due date.)

The agency is to identify all defects that will prevent payment, specify all reasons why the invoice is improper and why it is being returned. The notification to the vendor shall include a request for a corrected invoice, to be clearly marked as such.

The vendor must supply the information. The payment period starts when the agency receives a proper invoice that includes all required information. So, no late payment interest is due until the end of the payment period after the agency receives the fixed and now proper invoice.

If the agency pays by EFT, it must have the vendor's Taxpayer Identification Number (TIN) and the vendor's EFT information.

Even if the agency has that information already (for example, in the contract), the agency may require the information to be on each invoice. If the agency requires the information on each invoice and the vendor does not supply it, the invoice is not "proper." The agency returns the invoice for the vendor to fix.

When an invoice is determined to be improper, the agency shall return the invoice to the vendor as soon as practicable after receipt, but no later than 7 days after receipt (refer also to 1315.4(g)(4) regarding vendor notification and determining the payment due date.)

The agency is to identify all defects that will prevent payment, specify all reasons why the invoice is improper and why it is being returned. The notification to the vendor shall include a request for a corrected invoice, to be clearly marked as such.

The vendor must supply the information. The payment period starts when the agency receives a proper invoice that includes all required information. So, no late payment interest is due until the end of the payment period after the agency receives the fixed and now proper invoice.

A payment is due on whichever of these four conditions applies:

• The date specified in the contract
• In accordance with discount terms. When the vendor offer a discount and the agency accepts the terms
• Accelerated Payment. When the conditions for accelerated payments apply
  (See 31 C.F.R. § 1315.5)
• 30 days after the agency has received a proper invoice
• When calculating the payment due date, "day" means a calendar day including weekends and federal holidays.
• When the payment due date, including a discount due date, falls on a weekend or federal holiday, the payment is due on the following business day.

No. Vendors may offer a discount to federal agencies, but they are not required to do so.

No. Agencies may take an offered discount if it is economically justified and if the agency has accepted the goods or services. To see if the discount is economically justified, use the discount calculator at https://fiscal.treasury.gov/prompt-payment/calculator.html.

If the vendor submits a proper and valid invoice, the date of the invoice starts the discount period.

If the invoice is proper and valid but does not have an invoice date, the discount period starts on the date the agency received the invoice.

If the agency takes the discount, it must pay according to the discount terms.

If the agency does not take the discount, it must pay within 30 days of receiving a proper invoice, unless the agency uses an accelerated payment.

If the agency’s payment is rejected because the EFT information is not correct, it is an improper invoice. The agency has 7 days to inform the vendor of the problem. (See 31 C.F.R. §1315.4 and 1315.9)

Yes.

The Prompt Payment law and regulations make no distinction between a utility and any other business.

However, utilities may have a published tariff that sets a payment due date and late payment interest penalty for all customers. Unless a federal agency has a formal contract with the utility company that specifies a payment due date or a payment interest that is different from the published tariff, the agency must pay according to the published tariff.

Thus, the due dates and interest provisions of the Prompt Payment law and regulations apply to utility payments only if there is neither a published tariff covering due dates and interest nor a formal contract that explicitly covers due dates and interest.

See the weekend and holiday guidelines.

Yes, the agency may notify the recipient of the amount of the interest penalty, the number of days late and the rate used in the addenda to the ACH payment.

Under 5 CFR 1315.10(b)(3), the “invoice number or other agreed upon transaction reference number assigned by the vendor should be included in the notice to assist the vendor in reconciling the payment. Additionally, it is optional as to whether or not an agency includes the contract number in the notice to the vendor.”

Providing notification in an ACH addenda record provides sufficient notice in writing and it shall be considered to be made on the “date shown” on the addenda record.

The vendor should consult with legal counsel to determine remedies under the Prompt Payment Act (31 U.S.C. § 3901 et following) and other applicable laws.

No. However, under a construction contract, an agency may withhold payment to a prime vendor if it learns that the prime vendor has failed to pay subcontractors in accordance with the terms of the contract.

If you are a subcontractor, you should look to your contract with the prime vendor to see if it contains "flow-down" provisions regarding the Prompt Payment Act (PPA). You should seek advice from your legal office or talk to the Contracting Officer at the agency.

No. However, agencies must pay other agencies electronically. They must also include advance billing and other payment terms in Interagency Agreements to ensure timely payments.

Yes. However, the applicable law is not the Prompt Payment Act.

The Federal Travel Regulation (41 CFR Parts 301-51, 52, 54, 70, 76) covers that issue. It requires agencies to reimburse an employee within 30 days after the employee submits a proper travel voucher to the approving official. Late payments on employee travel are subject to interest at the rate in effect for Prompt Payments.

Yes. The rule defines government-wide commercial purchase cards as "internationally-accepted purchase cards available to all Federal agencies under a General Services Administration (GSA) contract for the purpose of making simplified acquisitions of up to the threshold set by the Federal Acquisition Regulation (FAR) or for travel expenses or payment, for purchases of fuel, or other purposes as authorized by the contract." For more information (See 5 CFR Part 1315.2(x)).

Maybe. You must figure out whether the government benefits more by taking the rebate (paying early) or by earning interest (keeping the money until the bill is due).

Enter:

• the total amount the agency owes
• the maximum discount offered
• the basis points offered (This is in your agency's contract with the card issuer.)

Excel then shows you what the government will save if you pay as early as possible or as late as possible – at the due date

If paying early will save more money than paying at the due date, you should accept the rebate and pay early. If paying at the due date will save more money than paying early, you should wait and pay as close to the due date as possible.

The spreadsheet includes an example. DOWNLOAD REBATE SPREADSHEET

The formula will assist you in determining if the government will earn interest by holding on to the funds is more or less than saving by paying early.

With the formula, you will determine if it benefits the government to earns interest when holding on to the funds is more or less than what the government saves by paying early.

Use the following formula to calculate the best time to pay your agency's credit card bill.

• (CVF/360)*100

To use the formula, you need two pieces of information:

• The basis points the card issuer offer. You will get from your agency's contract with the card issuer.
• The government's Current Value of Funds Rate (CVFR).

Compare the results of the formula to the card issuer's basis points:

• If it is LESS than the card issuer's basis points, pay as early as possible.
• If it is MORE than the card issuer's basis points, pay as late as possible.

Agency X has a contract with a card issuer that gives them 1.5 basis points. Every day the agency delays paying they lose 1.5 basis points in savings. The 1.5 basis points equals a maximum discount rate of 1.06 percent.

Using the maximum discount rate of 1.06% and the CVFR is 6%.

• To use the formula, convert 6% to the decimal .06/
• (.06/360)*100
• Dividing .06 by 360, we get 0.00016666667
• Multiplying that result by 100, we get 0.016666667
• Rounding that number to 0.0167, we have the result of 1.67 basis points for the government.
• Comparing 1.67 (government's basis points) to 1.5 (card issuer's basis points), we see that the government is earning more in interest each day than it would save by paying early. Therefore, Agency X should hold on to the money as long as possible. It should pay as close to the credit card bill's due date as possible.