SECTION OVERVIEW AND POLICIES

New York State Finance Law §179-f requires the State to pay vendors promptly (within 30 days for most vendors, 15 days for qualified Small Business vendors). When the State fails to pay the vendor by the Net Due Date, the State may be required to make an interest payment to the vendor.

This section provides State agencies information regarding:

1. Prompt Payment Interest Eligibility.
2. The calculation of Prompt Payment Interest.

For additional information on Prompt Payment Interest, please refer to Chapter XIV, Section 13.A – Prompt Payment Interest Overview of this Guide.

Prompt Payment Interest Eligibility

SECTION OVERVIEW AND POLICIES

This section provides State Agencies with information regarding vendors’ eligibility for prompt payment interest.

Prompt Payment

State Finance Law (SFL) §179-f requires the State to pay vendors within 30 days for most vendors, and 15 days for qualified Small Business vendors. When the State fails to pay a vendor by the Net Due Date, the vendor may be entitled to interest. This includes payments to local governments for goods or services provided (e.g., water, sewer).

SFL §179-p states the following payment types or entities are not entitled to prompt payment interest:

Payments:

• for court judgements.
• for property under eminent domain procedure law.
• where OSC offsets all or part of the payment due.
• vendors receive as pass-through state funds.

Entities

• Federal government
• State agencies and their related entities
• local governments , including but not limited to, counties, cities, towns, villages, school districts, special districts and their related entities when receiving payment for state aid
• public authorities and public benefit corporations
• state employees working in their public employment capacity
• third party payment agreement contractors, including but not limited to, the fiscal agent or intermediary under Social Services Law, Section 367-b

Small Business Vendors

SFL §179-f includes requirements for qualified Small Business vendors, including requiring payment within 15 days of the receipt of an electronic invoice in the SFS. To qualify to receive payments within, or prompt payment interest after, 15 days, a vendor must:

- have a primary place of business in New York State,
- have a significant business presence in New York State,
- be independently owned and operated,
- not be dominant in its field,
- employ no more than 200 employees, and
- submit an invoice electronically into the SFS.

For additional information about the 15 day prompt payment requirements, State agencies can access https://nys-ogs.custhelp.com/app/answers/detail/a_id/2322 and select the 15 Day Pay Bill FAQs under Accounts Payable within the Agency Administrators drop down.

Process and Transaction Preparation:

Qualified Small Business Vendors

Eligible vendors are responsible for certifying themselves as qualified Small Business Vendors for payments within 15 days and must do so through the Online Vendor Portal in the SFS. For additional information on how to view this certification in the Statewide Vendor File, see Chapter X, Section 4.A – Vendor Certifications of this Guide.

Agencies should establish a process to assess the validity of these Small Business vendors’ certifications. If an Agency determines a self-certified Small Business vendor does not qualify, the vendor’s designation can be revoked by contacting the Vendor Management Unit at OSC at [email protected].

For an invoice to be eligible for prompt payment within 15 days, it must be submitted by the qualified Small Business vendor electronically either through the SFS or an electronic system designated by the Office of the State Comptroller. For more information on designating an electronic system, please refer to Chapter III, Section 9 – Provisions for 15 Day Prompt Payment Interest Eligibility. SFS will systematically generate vouchers for electronic invoices received into the eSettlements module and make the voucher available for agency approval. Vouchers submitted from a designated electronic system must provide the appropriate indication on the inbound voucher file. State agencies are required to pay vouchers within 15 days of the MIR date for electronic invoices, or interest may be paid to the qualified Small Business vendor.

To support the automation of the electronic invoice process, small businesses must receive payment electronically. Agencies should refer small businesses to the 15-Day Prompt Payments for Small Businesses section of the Office of the State Comptroller’s website (https://www.osc.state.ny.us/state-vendors/portal/15-day-prompt-payments-small-businesses) for more information on interest eligibility requirements, including enrolling in electronic payment.

Other Vendors

When vendors are established in the Statewide Vendor File, they are assigned an indicator that designates whether they are eligible to receive Prompt Payment interest. For more information, please refer to Chapter XII, Section 5.I - Prompt Payment Interest Calculations of this Guide.

Prompt Payment Interest Calculations

SECTION OVERVIEW AND POLICIES

New York State Finance Law (SFL) §179-f requires the State to pay vendors promptly (within 30 days for most vendors, 15 days for qualified Small Business vendors). When the State fails to pay the vendor by the Net Due Date, the vendor may be entitled to interest.

This section provides guidance and information to agencies regarding the Net Due Date and calculation of prompt payment interest.

Please see Section 5.I - Prompt Payment Interest Eligibility of this Chapter for additional guidance regarding to SFL §179-f, including information about qualified Small Business vendors and payment types or entities not entitled to prompt payment interest. Agencies should refer to Section 5.F – Adjusting the MIR Date of this Chapter for more information about Merchandise/Invoice Receipt (MIR) date.

Process and Transaction Preparation:

Net Due Date

To avoid payment of interest, the State must pay eligible vendors by the Net Due Date. Generally the Net Due Date is 30 calendar days, excluding legal holidays, after the MIR date. However, the following exceptions exist:

• For final payments on highway construction contracts, the Net Due Date is 75 calendar days, excluding holidays, after the MIR date.
• For payments to qualified Small Business vendors, the Net Due Date is 15 calendar days, excluding holidays, after the MIR date.

If the Net Due Date falls on a Saturday or Sunday, the Net Due Date becomes the next business day.

Prompt Payment Interest Eligibility Indicator

When vendors are established in the Statewide Vendor File, they are assigned an indicator that designates whether they are eligible to receive Prompt Payment interest.

When online agencies enter vouchers, the Late Charge Option field on the voucher defaults to the indicator from the vendor’s record in the Statewide Vendor File. To change the default value on a voucher, the agency must access the Late Charge hyperlink on the voucher and change the value in the Late Charge Option field.

Bulkload agencies must populate the field that determines interest eligibility (INTELIG) on the voucher.

Automated Prompt Payment Interest Calculation

When agencies process payments, the SFS automatically calculates interest during the pay cycle process and makes interest payments of at least $10.00 for online and bulkload vouchers. The SFS uses the distribution line (chart string) information on the voucher for the interest payment.

Manual Prompt Payment Interest Calculation:

Agencies must manually process interest for payments not processed through the SFS pay cycle (e.g., wire transfer or 1-day ACH). To pay the interest to vendors eligible for prompt payment interest, the agency must:

1. Determine if the payment date is greater than the net due date.
2. Calculate the interest due for a late payment. Agencies can use the Prompt Payment Interest Calculator tool for assistance. If the calculated interest due is less than $10.00, interest is not due to the vendor per State Finance Law, Section 179(f).
3. If the calculated interest due is $10.00 or more, the agency should process the interest payment using a separate voucher using one of the following account codes for prompt payment interest:
   1. 58401 – Prompt Payment Interest
   2. 60311 – Interest – Grants to Others
   3. 60740 – Interest on Late Payments – Capital Projects
      For more information regarding Account Codes, See Chapter IV – Accounting Codes, Uses and Descriptions of this Guide.

When entering the interest voucher into the SFS, agencies must reference the voucher that would have resulted in an interest payment had it been processed normally. For online agencies, enter the voucher number in the Related Voucher field on the Invoice Tab in SFS. Bulkload agencies must enter the voucher number in the comments field on the voucher.

Guide to Financial Operations

REV. 10/04/2023