FMX Home
Glenn Hegar  ·  Texas Comptroller of Public Accounts

Prompt Payment — Overview of Requirements
How to Calculate Interest

Fiscal Management provides two versions of a calculator for prompt payment interest:

Example

This is an example of how to calculate interest under the prompt payment law. In this example, the following assumptions apply:

  • A state agency signs a contract with a vendor on Sept. 10, to purchase goods from the vendor.
  • The goods are received on Sept. 24.
  • The agency receives the vendor’s invoice on Oct. 6.
  • The distribution date for the payment is Dec. 9.
  • The amount of the agency’s payment is $500.00.
  • The Comptroller’s office is responsible for issuing a warrant or initiating an electronic funds transfer to pay the principal amount owed by the agency.
  1. Determine the due date for the payment. Start counting the 30 days beginning on the day after the agency receives the invoice. In this example, the due date is Nov. 5.
  2. Next, determine how many days the payment is late. Start counting on the day after the due date and end counting on the payment’s distribution date. In this example, the payment is late by 34 days.
  3. Now use the following formula to determine the amount of interest due:
(# of days late / 365) x (applicable prompt payment interest rate) x (amount of payment) = (interest due).

Definitions

Distribution date
  • If no payment law prohibits the Comptroller's office from issuing a warrant, the date the Comptroller’s office makes the warrant available: (1) for mailing directly to its payee under the State Purchasing and General Services Act, Texas Government Code Section 2155.382(c); or (2) to the state agency that requested issuance of the warrant.
  • If no payment law prohibits the Comptroller’s office from initiating an EFT, the date the Comptroller’s office initiates the EFT.
  • If a payment law prohibits the Comptroller’s office from issuing a warrant, the date the Comptroller’s office would have made the warrant available, in the absence of the payment law: (1) for mailing directly to its payee under the State Purchasing and General Services Act, Texas Government Code Section 2155.382(c); or (2) to the state agency that requested issuance of the warrant.
  • If a payment law prohibits the Comptroller’s office from initiating an EFT, the date the Comptroller’s office would have made the warrant prepared under Texas Government Code Section 403.0552(b) available in the absence of the payment law: (1) for mailing directly to its payee under the State Purchasing and General Services Act, Texas Government Code Section 2155.382(c); or (2) to the state agency that requested issuance of the warrant.
EFT
An electronic funds transfer.
Goods
Includes supplies, materials or equipment.
Payment
Money owed to a vendor.
Payment law
  • Texas Education Code Section 57.48
  • Texas Education Code Section 57.482
  • Texas Family Code Section 231.007
  • Texas Government Code Section 403.055
  • Texas Government Code Section 2107.008
  • Any similar statute.
Prompt payment law
Chapter 2251, Government Code.

Source for definitions [+]

Texas Government Code Section 2251.001(1)–(2), (4)–(5), (7)–(8), (10); Code Construction Act, Texas Government Code Section 311.005(2).

Glenn Hegar
Texas Comptroller of Public Accounts
Questions? Contact statewide.accounting@cpa.texas.gov
Comptroller.Texas.Gov | FMX
FMX Sitemap | Contact FM
Accessibility Policy | Privacy and Security Policy