New York State Finance Law §179- f requires the State to pay vendors promptly (within 30 days of the Merchandise/Invoice Received (MIR) date 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 is called Prompt Payment Interest (PPI) or Late Payment charges.

A number of factors are considered to calculate the PPI on a payment. Please see Chapter XII, Section 5.I - Prompt Payment Interest Calculations for more details.

If a voucher payment is submitted that requires interest to be paid, the interest is paid to the vendor at the same time the voucher is paid. The chartstring from the voucher is used for the interest payment along with account code 59103 (prompt payment interest clearing). Interest will originally be charged to the fund on the voucher even if it is an Exempt Fund (Fund 25000-29999, 30450-30499, 31350-31449, 61100-61299).

The Statewide Financial System then generates a General Ledger Journal Entry (Journal ID beginning in 'LP') to reclassify the charge from the clearing account code 59103, to the proper appropriation and interest account based on the account code on the original payment charge line:

• 58401 – Prompt Payment Interest for State Operations account codes
• 60311 – Interest – Grants to Others for Aid to Localities account codes
• 60740 – Interest on Late payment – Capital Projects for Capital Projects account codes

For any Exempt funds, the interest charges will be reclassified to an agency-provided default chartstring.

For additional information on PPI Eligibility and Interest Calculations, see Chapter XII, Section 5.I – Prompt Payment Interest.

Guide to Financial Operations

REV. 12/07/2018