Subject:

Electronic Payments (ACH) for Agency Specific Contracts

Guidance:

Agencies are encouraged to add language to their contracts requiring their vendors to receive ACH for contract payments. Vendors who agree to accept ACH increase the Prompt Payment benefit by ensuring that funds are paid directly to their designated bank accounts, thus eliminating the delay of check clearance policies and traditional mail lead time.

Some additional benefits of ACH are:

• An efficient and secure method of payment;
• A more cost effective process than sending a check; and
• Elimination of the possibility of lost and/or returned checks.

Please note, all centralized contracts dated June 2014 or later contain Appendix B, which requires agencies to pay vendors electronically (ACH). Therefore, payments being made against purchases from these centralized contracts must be made via ACH.

References:

• Guide to Financial Operations - X.4.D Location
• Accounts Payable Advisory #44, Contracts Requiring Electronic Payments