New York State has enacted Prompt Payment legislation which:
- For invoices received on or after 7/1/88, requires interest charges when payments are not made within 30 calendar days after receipt of the vendor invoice.
- Requires pro-rating of interest charges between agencies and OSC based on excessive processing time for each. Agencies are allowed 22 days, OSC 8 days, excluding holidays.
- Contains specific provisions which allow agencies and OSC more than 30 days, if necessary, to ensure both the quality of goods and services received and the propriety of the payment.
- In order to implement the legislation, agencies are required to indicate 'Interest Eligibility' and 'Merchandise/Invoice Received (MIR) Date' on each payment processed through the Central Accounting System. (MIR Date is generally the date on which both the goods/services and a proper invoice have been received.)
Please read this bulletin carefully to prevent vouchers submitted from rejecting and to ensure that they contain correct interest-related information.
The following sections explain:
- How to determine Interest Eligibility of payments
- How to determine Merchandise/Invoice Received Date
- Forms preparation requirements
- Requirements for voucher entry/correction by agencies
- Other Information
|A. How to Determine Interest Eligibility:
Payments are eligible or ineligible for interest as indicated in the examples on Exhibit A and described in the following guidelines:
- ELIGIBLE payments include those:
- From joint custody funds only (those in the joint custody of the State Comptroller and the Commissioner of Taxation and Finance).
- To any person, partnership, corporation, public utility or association which sells goods or services or leases equipment or property to the State.
NOTE: Because public utilities are eligible for interest under the Prompt Payment legislation, invoices received from public utilities will not be subject to late payment penalties provided for in PSC regulations.
- INELIGIBLE payments include those
- From sole-custody funds (those outside the State Treasury such as petty cash, agency commissary, patients or inmates funds).
- To Federal, State, and Local governmental entities, and government-related entities (e.g. authorities, Correctional Industries, Centralized Services, school districts, municipal hospitals).
- To State employees performing services in their public employment capacity (e.g. public employee travel and overtime meal allowances).
- To contractors of third-party payment agreements (e.g. the MMIS fiscal agent).
- For purchases of property under the eminent domain law.
- Payments withheld in total or part, due to a lien, attachment or other legal process.
- Exhibit A lists more examples of eligible and ineligible payments
|B. How to Determine MIR Date:
Merchandise/Invoice Received (MIR) Date is generally the date on which the agency receives goods/services or a proper invoice, whichever is later.
NOTE: A proper invoice is one which (1) provides accurate prices, quantities and descriptions of goods/services delivered and (2) is in a form and contains supporting documentation as the agency and OSC may reasonably require.
If payment is not made within 30 days of MIR Date, interest will be due. However, MIR Date must be adjusted under the conditions described in the following table to ensure the quality of the goods and services received and the propriety of the payment.
||THEN THE MIR DATE IS...
|1. The vendor delivers an invoice somewhere other than the payment office designated by the agency,
1. The date the designated office receives the invoice.
NOTE: Agencies must designate payment offices on the purchase order or contract when the billing address differs from the shipping address.
|2. The goods/services delivered are defective, or the invoice is defective, or there are suspected improprieties of any kind,
2. Increased by the number of days it takes to correct the defect or impropriety.
NOTE: Agencies are responsible for notifying vendors of such defects/improprieties within 15 calendar days of receiving the invoice. If vendors are not notified in 15 days, the 'increased MIR Date' is then reduced by the number of calendar days taken to notify the vendor in excess of 15.
FOR EXAMPLE: if a defective invoice is received on 4/1, the vendor is notified on 4/3 (within 15 days), and the defect is corrected on 4/5, then the MIR Date is 4/5. However, if a defective invoice is received on 4/1, the vendor is notified on 4/21 (5 days late), and the defect is corrected on 4/23, then the MIR Date is 4/18 (4/23 - 5 days).
3. An inspection period or audit is specifically required by statute or contract provision,
|3. Increased up to the number of calendar days allowed for the inspection or audit.
4. An invoice must be examined by the Federal Government prior to payment,
|4. Increased by the number of calendar days required for the examination.
|5. The applicable appropriation has yet to be enacted (passed and signed),
5. Increased by the number of calendar days between receipt of the invoice and enactment of the legislation.
6. Legislation or a contract provides that payment will be paid on a predetermined date without having to submit an invoice,
|6. The predetermined date less 30 calendar days.
7. OSC determines that there is reasonable cause to believe that payment may not properly be due, in whole or in part,
|7. Increased by the number of calendar days taken to resolve the matter. (OSC will make these adjustments to MIR Date.)
|8. The payment is not eligible for interest and is not initiated by an invoice,
8. The date that best represents the beginning of the payment cycle so the system can monitor payment processing time.
FOR EXAMPLE: Crime Victims' Compensation awards are based on an award decision by the Crime Victim's Board. The date of the award decision may best represent the start of the payment cycle and can be entered as the MIR date.
|C. Forms Preparation Requirements:
||Prompt payment system changes affect preparation of Batch Transmittals, Vouchers and Payee and Invoice Continuations.
- Batch Transmittals - Agencies must not use 'X' prefix batch numbers. The system will be assigning 'X' prefix batch numbers to interest vouchers printed by the accounting system.
- Vouchers and Contract Payment Requests - Two new fields, Interest Eligible and MIR Date, must be completed on all vouchers and Contract Payment Requests.
- Voucher forms must have the following fields filled in.
- Interest Eligible - Enter 'N' for no, 'Y' for yes.
NOTE: A voucher cannot include both eligible and ineligible payees/invoices.
- Merch/Inv Rec'd Date - Enter MIR Date.
- Payment Date - Must not exceed MIR Date in any payment or invoice records by more than 30 days.
NOTE: Continue to determine Payment Date according to the guidelines in Section 7.0100 of the Encumbrance and Expenditure Manual. For commercial payments, Payment Date is generally 30 days after MIR Date unless a cash discount is offered.
- Cost Center(s) - If your agency keys vouchers, enter a cost center charging State funds on the first charge line; the first cost center keyed will be charged with interest if any is due. In the event that Federal funds are charged with interest, the agency must transfer the expenditures to the appropriate State fund/cost center.
|D. Voucher Entry/Correct by Agencies:
Errors with self-explanatory messages will appear on Batch Control Lists if any of the voucher fields is omitted or keyed incorrectly. Errors will also occur if 'X' batch prefixes are used or if Payment Date exceeds MIR Date by more than 30 days.
|E. Other Information
- Contracts - The Prompt Payment legislation provides that no agreement entered into after 7/1/88 can contain any provision requiring the payment of interest in a manner inconsistent with this legislation. In addition, the legislation allows agencies to require in a contract an inspection period, before payment, to ensure the quality of the goods/services delivered. Such inspection periods extend MIR Date as explained in the table of 'Adjustments to MIR Date', and should be included in appropriate contracts.
- Date-Stamp Invoices - Agencies must indicate on invoices, preferably by date-stamping, the date the invoice is received by the designated payment office. This will provide a basis for answering vendor questions and auditing MIR Date.
- Payment File Input - All payment files sent to OSC must have the Interest Eligible and MIR Date filled in.
||Direct questions on this bulletin to the Accounting Information Center at (518) 473-1170.