|STATE OF CONNECTICUT|
THE STATE COMPTROLLER
55 ELM STREET
HARTFORD, CONNECTICUT 06106-1775
MEMORANDUM NO. 84-63
September 17, 1984
TO THE HEADS OF ALL STATE AGENCIES
|Attention:||Chief Fiscal and Administrative Officers and Business Managers|
|Subject:||Prompt Payment to Vendors by the State|
In compliance with the requirements of Public Act 84-243, An Act Concerning Grants to Municipalities for Loans to Business and Industry in conjunction with Municipal Development Projects and Prompt Payments to Vendors by the State (Sections 4, 5, and 6), the following accounting procedures become effective October 1, 1984:
1. Agency Responsibility
a. Section 4(a) provides that "...each state department and agency shall pay interest at the rate of one percent (1%) per month on amounts due on written contracts for public works, personal services, goods and services, equipment and travel, whenever such department or agency fails to make timely payment."
b. Section 4(b) further states "For the purpose of this section, payment shall be timely if:
(1) A check or warrant is mailed or delivered on the date specified in the applicable contract documents, or, if no date is specified, within forty-five days of receipt of a properly completed claim or receipt of goods and services, whichever is later: or
(2) For any amount that is required to be withheld under state or federal law, a check or warrant is mailed or delivered in the proper amount on the date the amount may be released under the applicable law."
Therefore, it is essential that a review of the internal operations of your agency be made to ensure that all payments for contractual obligations are being made on a timely basis within the specific guidelines as established by the Act and that no additional costs are incurred to the State.
2. Time Frame for Processing Claims
All claims, being processed for payment to Vendors, must be received by the Central Accounts Payable Division no later that fifteen (15) days prior to the date the payment is due as specified within the contract provided the goods have been received and the services rendered. The date of receipt of goods and/or services and the signature of the individual who received the goods and/or services must also be entered on Form CO-17. Failure to complete Form CO-17 properly will result in rejection of the payment list and in unnecessary delays.
3. Interest Charges for Late Payment
Reference is made to the following:
a. Section 6(a) "Any state agency required to pay late payment penalties under section 4 of this act shall pay the penalties from funds designated for administrative costs of the agency receiving the public works, personal services, goods and services, equipment or travel. The penalties shall not be paid from other funds of the State."
b. Section 6(b) "Any amount of an interest penalty which remains unpaid at the end of any thirty day period shall be added to the principal amount of the debt and, thereafter, interest penalties shall accrue on that amount."
c. Section 6(c) "In instances where a claim is filled out incorrectly or where there is any defect or impropriety in a claim submitted, the state department or agency shall contact the vendor within ten days. An error on the vendor's claim, if corrected within five business days of being so contacted and within the payment period as determined pursuant to section 4 of this act, shall not result in the vendor being paid after the expiration of the period for timely payment."
4. Vendor Billing Statement for Interest Charges
a. The vendor will submit interest charges on a separate invoice which should identify the original procurement document or reference the contract, etc.
b. Prior to processing this invoice for payment, the following analysis must be made:
(1) Retrieve the original source document.
(2) Verify the time frames for which the interest charge is being made by the vendor.
(3) Part of the verification process must include obtaining the date the check was mailed to the vendor.
(4) This information may be obtained from the Central Accounts Payable Division by submitting Form CO-860, Request for Vendor Check Information. Please indicate on Form CO-860 under the "Reason for Request" section that this request is in reference to interest charges on late payments and the date the check was mailed to the vendor is required and not the "check date", per se."
5. Commitment of Funds
a. Encumber the necessary funds required to absorb the interest expense from "funds designated for administrative costs" on Form CO-110, Requisition for Reservation of Funds, Reservation Number 5-28.
b. Prepare Form CO-96, Commitment List, and forward both copies to the Central Accounts Payable Division in accordance with established accounting procedures.
6. Processing Interest Payment
When the date the check was mailed has been verified by the Central Accounts Payable Division, process the vendor's request as follows:
(1) Prepare a Vendor's Invoice, Form CO-17, and indicate on the invoice that the payment represents interest on prior late payments; list the specific document and dates involved including the date the check was mailed and fully account for the late interest charges.
(2) Use 5-28 major/minor coding, Interest Expense for Late Payments to Vendors.
(3) Submit on separate payment list. Please note all documents contained on this type of payment list must be signed by agency head or deputy. No other signatures will be accepted.
(4) Process within thirty days of receipt of Vendor's statement.
a. Section 4 of this act shall not apply to the following:
(1) Interagency or intergovernmental transactions.
(2) Amounts payable to employees or prospective employees of state departments or agencies as reimbursement for expenses.
(3) Claims subject to good faith dispute, if before the date of timely payment, notice of the dispute is:
(a) Sent by certified mail;
(b) Personally delivered; or
(c) Sent in accordance with any procedure in the contract;
(4) Contracts entered into before the effective date of this act;
(5) Contracts related to highway or road construction, reconstruction or maintenance; or
(6) Claims, contracts or projects that are to be paid for exclusively with federal funds.
b. As used in subdivision (3) of subsection (a), "good faith dispute" means:
(1) A contention by the State that goods delivered or services rendered were:
(a) Of less quantity or quality than ordered or specified by contract;
(b) Faulty; or
(c) Installed improperly; or
(2) Any other reason giving cause for the withholding of payment by the State until such dispute is settled.
If you have any questions relative to these procedures, please contact the Central Accounts Payable Division at 566-3920.
J. EDWARD CALDWELL
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