State Accounting Fiscal Essentials . SAFE Policy Manual

Revised: MM/DD/YYYY

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Chapter / Book Title

Topic Title

 

 

Applicable or Related Code Sections

• ORC Section 126.30 - Interest on late payments for goods and services

• ORC 125.01(B) - Definition of invoice

• ORC 131.34 - Transfers between funds or between state agencies

 

Related Links

• Late Payment Calculator

 

 

Prompt Payment

A state agency making a purchase is responsible for ensuring prompt payment to their suppliers. An agency's responsibility to make prompt payment does not begin until the agency receives the goods or services free of defect and the state receives a proper invoice. Ohio Revised Code, section 125.01 (B) requires that an invoice contain:

1. An itemized listing showing delivery of the supplies or performance of the services described in the order; and
2. The date of the purchase or rendering of the service, or an itemization of the things done, material supplied, or labor furnished; and
3. The sum due pursuant to the contract or obligation.

An agency must validate an invoice is proper to be paid, therefore additional information may be required to allow for this validation. Examples of information that may be necessary are:

• Purchase order number(s)
• Contract number  
• Agency name
• Agency billing address
• Delivery location of goods or services  
• Supplier name  
• Supplier payment remittance address
• Unique invoice number
• The date that services were provided or that items were shipped.

Invoices missing criteria to allow for appropriate level of review should be returned to the supplier within 15 days of receipt of the invoice.

 

The date the state receives the proper invoice must be entered in the Invoice Received date field in OAKS FIN. The Invoice Date field can be used to enter the actual date shown on the supplier's invoice and is used by OAKS to drive the payment/discount date.

 

Improper Invoice

If the state receives a defective or improper invoice from a supplier, the state shall postpone payment and send written notice of the defect to the supplier including any information necessary for the supplier to correct the defect. If the state fails to provide such notice within fifteen days of the receipt of the defective invoice, the required payment date shall not be postponed. If proper notification is given to the supplier, payment shall be postponed until thirty days after the state agency receives a proper invoice.

 

A state agency is not authorized to alter supplier invoices for anything but removal of sales tax, excise tax, erroneous freight charges, past due balances or contract penalties.

 

Utilities regulated by Public Utility Commission (PUCO) may bill late payment charges based on the rates approved by PUCO. If a late payment to a utility causes the agency to lose a discount or pay an interest/late payment penalty, the additional cost must be coded to account 525054.

 

Supplier invoices should not be combined within a voucher in OAKS FIN. Each invoice should be entered independently and have its own corresponding voucher number. Combining invoices prevents OAKS FIN controls from automatically detecting duplicate payments. When vouchers are saved, OAKS FIN verifies that a voucher paid to the same supplier number with the same invoice number and invoice date has not already been entered or paid.

 

There may be situations in which an Agency receives an invoice that summarizes charges or activities and it is appropriate to process as one voucher. In these situations, the following guidelines must be met:

• Meet the requirements for a proper invoice;
• Contain a unique Invoice Number;
• Provide a description of services or itemization of charges; and
• Include any necessary backup documentation to substantiate the summarized invoice.

An Agency must never voucher a summarized invoice or statement that has charges from other independent invoices that have been previously received and had potential to have been previously processed. Agencies are responsible for implementing additional internal controls to prevent the duplication of payments.

 

Payment Date and Interest Calculation

Unless specifically stated otherwise in a contract or the ORC, the required payment date shall be thirty days after the state receives a proper invoice. If a state agency does not make the payment by the required payment date, the agency shall calculate the interest in accordance with ORC Section 126.30 and pay the supplier the interest calculated if the amount is greater than or equal to ten dollars. The amount due to a supplier may be calculated by using the Payment Calculator. Interest payments shall be coded to 529068. If interest is owed for a period covering portions of more than one calendar year, calculate the interest owed for the appropriate part of each year at the rate for that year.

 

Agencies are only authorized to pay interest in accordance with this policy using the late payment calculator, no agency is authorized to pay late payment or interest fees charged by suppliers other than fees charged by regulated utilities and Unemployment Compensation payments. Annually, OBM will request agencies justify any large, unusual or frequent interest paid to suppliers.

 

Internal payments made to state agencies (ISTV) must be paid within 30 days. However, if an agency does not make payment within 30 days, no interest is due. In accordance with ORC 131.34, agencies may contact OBM to request assistance in collecting the payment.

 

DAS general terms and conditions for discounts require the discount period be calculated from the date the state receives a proper invoice. OAKS FIN automatically calculates the discount based on the pay terms and the invoice date entered on the voucher. If a discount is available, OAKS FIN deducts the discount amount from the amount paid to the vendor. When the payment references a PO, the PO will be reduced by the full amount of the invoice but the agencies available balance for the appropriation will be reduced only by the amount of the payment.

 

Once a voucher is entered and saved the pay terms cannot be changed by agencies. Agencies may contact OBM.Helpdesk@obm.state.oh.us to request the voucher's payment date be changed. Agencies must provide the justification for the request including an explanation if making the request on behalf of the vendor. Once the request is processed, it will be evidenced by the change of pay date on the payment tab of the voucher.

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