Accounts Payable Advisory No. 50

Accounts Payable Advisory
Office of Operations
Bureau of State Expenditures
Advisory Name
Early Payment Discounts
Date Issued
04/05/2018
Date Last Updated
04/05/2018

Subject:

Obtaining early payment discounts from vendors.

Reference:

Guide to Financial Operations (GFO) Chapter XII, Section 5.F.4 – Selecting the Appropriate Payment Terms

Guidance:

An early payment discount is an incentive (in the form of a reduction of the invoice amount) offered by a vendor to an agency for making a payment before it is due. Every agency should have a process in place to ensure accounts payable staff take the maximum discount rate offered by a vendor whenever a discount is available.

In the SFS, discount terms can be established by vendors at the location level, or by agencies at the contract, purchase order, or voucher level and will default in the SFS in this order. For more information on selecting the appropriate payment terms to maximize early payment discounts, please refer to the GFO, Chapter XII, Section 5.F.4 – Selecting the Appropriate Payment Terms.

Note: Bulkload agencies should submit vouchers to the SFS at the gross amount of the invoice, along with the Invoice Received Date and discount terms to enable the SFS to calculate the discount.