Prompt Payment Act

The State of Texas Prompt Payment Act, Texas Government Code, Chapter 2251, stipulates 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?

• Late payments will automatically have interest calculated and included with the payment.
• Payments for goods and services must be paid no later than 30 days after the latter of (1) the receipt of goods/services or (2) receipt of a completed invoice.

How can departments help reduce our prompt pay interest payments?

• Departments must establish procedures to document when invoices are received directly from the vendor.  An automated date stamp on the invoice is the preferred method.
• Departments must establish procedures to immediately complete the SAP Z_MIGO transaction when goods are received directly from the vendor.
• Departments must approve invoices and document service dates accurately and timely.