By jeffrey.waterman on Jul 31, 2012
On September 14, 2011, the Office of Management and Budget (OMB) issued Memorandum 11-31, "Accelerating Payments to Small Business for Goods and Services.” That memorandum established, “the Executive Branch policy that, to the full extent permitted by law, agencies shall make their payments to small business contractors as soon as practicable, with the goal of making payments within 15 days” or receipt of relevant documents. That said, this memorandum does not affect the application of the Prompt Pay Act’s late-payment interest penalty provisions.
Fortunately, there is a method to systematically satisfy this memorandum in EBS today.
Invoice Received Date: 01-MAY
Goods Accepted Date: 01-MAY
Invoice Due to be paid Date (per OMB memo you mention): 16-MAY
Date Interest should start accruing: 31-MAY
One method agencies can satisfy the guidance of the memorandum would be to record or carry forward from the PO the applicable Pay Terms. In the example, they would be 'Net 30'. By using the standard payment terms this allows the agency to start accruing interest on 31-MAY, if necessary. In addition, when the agency runs its 16-MAY pay, they should set the 'pay through' value to 31-MAY for small business payments. This will select all invoices which are due within the 15 day window. Users can also get more complex through the use of pay groups.
I hope this helps.
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