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The Prompt Payment Final Rule
The Prompt Payment Final rule requires executive departments and
federal government agencies to pay commercial obligations within
certain time periods, and to automatically pay interest penalties
when payments are late. This rule is subject to certain limitations,
including:
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The Prompt Payment rule requires vendors to submit EFT information
and a TIN as part of a proper invoice, unless agency procedures
provide otherwise. Late interest penalties do not apply if the
vendor fails to supply EFT information and the TIN as part of
a proper invoice, and failure to do so may delay payment.
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The Treasury EFT rule requires that most Federal payments be
made electronically, subject to certain limitations. The EFT
rule does not provide waivers for vendor payments. As a result,
agencies
may withhold payments to vendors until or unless EFT information
is submitted. If EFT information is not provided in the invoice,
the payment period does not begin, nor are agencies required
to pay late payment interest penalties, until a corrected invoice
containing
this information is received.
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The payment period does not begin [the clock does not start
on an invoice] until the date the invoice is received by the
designated
agency office. The Prompt Payment rule defines designated agency
office as the office designated by the purchase order, agreement,
or contract to first receive and review invoices. This office
may be different from the office issuing the payment. The clock
does
not start until the supplier delivers a proper invoice to the
proper agency office.
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Vendors are not required to offer discounts to Federal agencies,
and Federal agencies not required to accept discounts if offered
by a vendor. The Prompt Payment rule allows agencies to take
discounts if it is economically justified, and if acceptance
of goods or
services has occurred. If the discount is taken, payment is due
in accordance with the discount terms, but if there is no invoice
date on the invoice submitted by the vendor, the discount period
will begin on the date a proper invoice is received by the agency.
It is clear that the Prompt Payment rule does not guarantee that
federal agencies and entities will pay suppliers or contractors on
time. Most payment problems involving sales to the federal government are
caused by errors made by the supplier. Failure to understand the
Prompt Payment rule requirements is one of many errors that are often
made by suppliers that do not have experience and expertise in government
shipping, billing and collection. |
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