Texas Prompt Payment Act
Government Code Ch. 2251
The State of Texas Prompt Payment Act, Texas Government Code Chapter 2251, requires that for any contract executed after August 31, 1987, a state agency's payment is due by the 30th calendar day after the latest of the following:
- The day the agency received the goods;
- The day the services were completed by the vendor for the agency; or
- The day the agency received the invoice for the goods or services.
What does this mean?
- Interest due on late payments to vendors will be automatically calculated and included with the payment.
- Payments for goods and services must be paid no later than 30 days after receipt of goods/services or receipt of a completed invoice.
How can departments help reduce our prompt pay interest payments?
- Departments must promptly submit electronic invoices via iShopUTRGV when invoices are received directly from the vendor.
- Departments must promptly create a quantity receipt/cost receipt to notify Accounts Payable immediately when goods/services have been received directly from the vendor.
Interest Payment Policy
If UTRGV does not mail or electronically transmit a payment to a vendor or the vendor's financial institution by the applicable due date, UTRGV is liable to the vendor for interest in compliance with the following provisions:
- Beginning on the day after the payment is due, interest accrues on the unpaid balance at the rate of 6.00% annually, effective 09/01/2018. The interest ceases to accrue on the date UTRGV mails or electronically transmits the payment to the vendor or the vendor's financial institution.
- Interest will automatically be included to the vendor for all late payments. This applies to state and local funds, but local accounts will only pay interest if it is over $5.00.
- All invoices must document the date these were first received by UTRGV. The goods/services received date must be documented on the appropriate receiving document.
- The state of Texas schedules payments to vendors on state funds because they want to maximize the time that funds are held by the State Treasury. Payments will not be released until just before the payment becomes due.
Reminders
- UTRGV must accurately document the date that it first receives an invoice. This is true regardless of any mailing instructions given to the vendor through a purchasing agreement or any other means.
- Under the Prompt Payment Law, UTRGV may not pay late fees, penalties, finance charges or any other compensation.
- Vendors may not waive their right to automated prompt payment interest. Vendors who do not wish to receive automated prompt payment interest may return the interest.
- Payments due on weekends or holidays must be distributed by mail or electronically before the weekend or the holiday.