The purpose of this bulletin is to highlight key points of the Prompt Payment Law, explain legislative changes and assist agencies in trying to reduce interest charges.

Interest is required to be calculated on eligible payments that are not paid within 30 calendar days (22 for agencies, 8 for OSC), excluding legal holidays.

The agency is responsible for notifying the vendors of any defects or improprieties in the goods or services or the invoice, within fifteen days of receipt.

Eligible payments are those:

1. From joint custody funds only (those in the joint custody of the State Comptroller and the Commissioner of Taxation and Finance).
2. To any person, partnership, corporation, public utility or association that sells goods or services or leases equipment or property to the State.

Ineligible payments are those:

1. From sole-custody funds (those outside the State Treasury such as petty cash, agency commissary, patients or inmates funds).
2. To Federal, State, and Local government entities, and government-related entities(e.g. authorities, Correctional Industries, Centralized Services, school districts, municipal hospitals).
3. To State employees performing services in their public employment capacity(e.g. public employee travel).
4. To contractors of third party payment agreement(e.g. the MMIS fiscal agent).
5. For purchases of property under the eminent domain law.
6. Payments withheld in total or part, due to a lien, attachment or other legal process.

1. Normal vendor payments - Generally the date the agency receives goods or services or a proper invoice, whichever is later.
2. Contract payments with specified payment dates - Contracts that require prepayments on a specified day, usually the first of the month, such as leases or contracts with Not-for-Profits.

The MIR dates are established as 30 days before the required payment date or the date the invoice requesting payment is received, whichever is later.(The actual payment date on these transactions should be 5 to 7 days before the required payment date in the contract to allow for mail time; and the liability date should be the beginning date of service to allow the system to process the payment.)

3. When the payment is not eligible for interest and is not initiated by an invoice. The MIR date is the date that best represents the beginning of the payment cycle.(e.g.Crime Victim's Compensation awards are based on an award decision by the Crime Victim's Board. The date of the award decision may best represents the start of the payment cycle and can be entered as the MIR date.)

Adjustments to MIR Date

1. If the vendor delivers an invoice to a location other than the payment office designated by the agency. The MIR date then becomes the date the designated payment office receives the invoice.(Agencies must designate payment offices on the purchase order or contract).
2. The goods or services are defective, or the invoice is defective, or there are suspected improprieties of any kind. The MIR date is increased by the number of days it takes to correct the defect or impropriety.(Agencies are responsible for notifying vendors of such defects or improprieties within 15 calendar days of receiving the invoice. If venders are not notified in 15 days, the 'increased MIR date' is then reduced by the number of calendar days taken to notify the vender in excess of 15) Notifications should be made in writing in case there is a request for interest at a later date.
3. When an inspection period or audit is specifically required by statute or contract provision. The MIR date is increased by the number of calendar days allowed for the inspection or audit.
4. When an invoice must be examined by the Federal Government prior to payment. The MIR date is increased by the number of calendar days required for the examination.
5. When the applicable appropriation has yet to be enacted. The MIR date is increased by the number of calendar days between receipt of the invoice and the enactment of the legislation. Where an agency has language to pay prior year liabilities from new year appropriations or re-appropriations, the MIR date for these liabilities is not adjusted. Since at the time the liability was incurred, there was an existing appropriation (although it proved to be insufficient).
6. Legislation or a contract provides that payment will be made on a predetermined date without having to submit an invoice. The MIR date is the predetermined payment date less 30 calendar days.
7. OSC determines that there is reasonable cause to believe that the payment may not properly be due in whole or in part. The MIR date is increased by the number of calendar days taken to resolve the matter. (OSC will make these adjustments to the MIR date).
8. If OSC approval is required for a contract or contract amendment. The MIR date cannot precede the OSC approval date. There is no adjustment to MIR dates for encumbrance only transactions or for contracts under $10,000 (e.g. T-Contracts).

The DPO is the office or site where the agency instructs the vendor to mail or deliver their invoice.

1. Each agency must identify a DPO to which a proper invoice is to be sent by the contractor in the contract or purchase order. If the agency does not identify a DPO to a vendor the agencies time will start when the invoice is received at any office or work site of the agency.
2. Agencies must record on every invoice the date the invoice was received in the DPO.

Since municipalities are specifically exempted from the prompt payment law, they are allowed to charge the same interest and penalties to the State that they charge other customers. Their invoices should be processed in accordance with their payment terms to avoid any interest and penalties to the state agency.

No contract should contain any provisions requiring the payment of interest inconsistent with the Prompt Payment Law. Also, any provision that waives the right to the payment of interest is void.

Agencies should be using the Invoice Continuation Form (AC2373) for multiple invoices whenever possible. Interest is then calculated on each individual invoice using the individual MIR dates. If these forms are not used, agencies are charged interest on the total of the payment using the earliest MIR date which could result in interest being paid on an invoice that was not late.

Agencies must notify venders immediately when any invoice is being held up because it is lacking information needed from the vender. OSC is no longer required to notify venders when a voucher is rejected and

returned to the agency. As part of the legislation that was passed to delete this requirement, agencies were made responsible for the notification if information from the vender is required. By expediting notification, agencies will be stopping their time from running and may be avoiding additional interest.

It is the agencies responsibility to monitor payments to insure they are received and processed by the due date. Reports are provided daily to enable agencies to perform this task.

1. VOU065 is the Daily Warrant which shows all payments paid per agency. This report should be used to insure all vouchers submitted have been processed.
2. VOU632 is a daily report that shows all vouchers within 8 days of incurring interest, that have not been received by OSC.

All vouchers must be mailed to the following address:

Office of the State Comptroller
Bureau of State Expenditures
Audit Services Unit
110 State Street, 10th Floor
Albany N.Y. 12236

OSC time does not start until the vouchers are logged in by that unit.

It is also the agencies responsibility to insure that the interest eligible field and the MIR date field are correct. All OSC prompt payment processing reports are sorted by MIR date. Incorrect data input by the agency may cause processing delays that ultimately result in additional prompt payment interest. Any additional interest caused by agency errors, will be the responsibility of the agency.