The Prompt Payment Act requires State agencies who acquire goods and services, or conduct business through contractual agreements with nongovernmental and privately-owned businesses, to pay by the "required" payment due date for delivered goods and services.
- A State Agency is any authority, board, department, institution, or any other unit of State government.
- The required payment due date is established by the terms of the contract; or if a contract is not in existence, thirty calendar days after the receipt of a proper invoice, or thirty days after the receipt of goods or services, whichever is later.
Additionally, the Prompt Payment Act provides for the following:
- Promotes timely vendor payments;
- Improves vendor relationships;
- Promotes competition;
- Reduces the cost of goods and services provided to the Commonwealth;
- Facilitates sound cash management; and,
- Increases the investment potential for the Department of the Treasury (DOT).
The Code of Virginia provides that interest shall accrue on all amounts owed by a State agency to non-governmental or privately-owned businesses which remain unpaid for seven days following the required payment due date.
Commonly Encountered Problems Contributing to Departmental Late Payments
|Vendor's invoice not annotated with receipt date||Using the vendor's invoice date shortens the 30 day prompt payment period||Departments must annotate vendor invoices with receipt|
|Invoices held for dispute not documented||Without any indication of the problems, AP must use the vendor's invoice date or departmental receipt date||Departments must document invoice and/or receiving problems and clearly indicate the date of resolution|
|Vouchers received with multiple invoices||Delays AP processing, increases likelihood of keying errors||Departments must include only one invoice per voucher|
|No approving signature on voucher||AP must return invoice to department, creating processing delays||All vouchers must be signed before sending to AP|
|Vouchers received without correct PO#||AP must research prior to processing, creating processing delays||Validate PO# prior to forwarding to AP|
|Vouchers received without correct documentation||Vouchers must be sent back to dept.||Ensure proper backup is attached|
|Endowment invoices being sent to A/P with wrong coversheet||Delays process||Ensure Endowment voucher is correctly processed|
|Vouchers received in AP without the vendor's ID numbers||AP must research prior to processing creating processing delays||Provide the vendor's correct ID number on all vouchers|
|Vouchers received in AP with insufficient processing lead time||Vouchers will be late||Vouchers should be submitted to AP within one week of their receipt|