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eXpendit

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Prompt Payment – Overview of Requirements
Disputes Between State Agencies and Vendors

A state agency that considers an invoice from a vendor to be incorrect must notify the vendor no later than the 21st calendar day after the date the agency receives the invoice. Agencies must include in the notice a detailed statement of the amount of the invoice which is disputed. The agency may withhold from payments required no more than 110 percent of the disputed amount.

The requirements described in this section may not apply if the invoice is not mailed to the agency in strict compliance with the instructions (if any) on the purchase order relating to the payment.

If a dispute between a state agency and a vendor is resolved in the vendor's favor, the agency is liable to the vendor for interest on all invoices for which the vendor has not received payment. This interest must be calculated from the original due date of the payment as if no dispute ever existed.

If a dispute between a state agency and a vendor is resolved in the agency's favor, the vendor that submitted the original invoice must submit a corrected invoice to the agency. Interest starts accruing if the corrected invoice is not paid by the appropriate date.

If there is a dispute with the invoice, the vendor must be notified by email or telephone within 21 calendar days of receipt of the invoice.

Source [+]

Texas Government Code Section 2251.042 via HB 1476, 87th Leg. R.S. 2021.

Documentation Requirements [+]

Agencies should document all relevant information regarding vendor disputes:

  • Nature/reason for the dispute/discrepancy.
  • Dates of the dispute/discrepancy.
  • Details of the communication with the vendor about the dispute/discrepancy, including phone numbers and contact names.
  • Dispute/discrepancy resolution and in whose favor it was resolved.

Note: Remember to have the vendor submit a corrected invoice for all disputes resolved in favor of the agency.

Definitions

Payment
Money owed to a vendor.
State agency
  • A board, commission, department, office or other agency in the executive branch of state government created by the constitution or a statute of this state, including an institution of higher education as defined by Texas Education Code Section 61.003.
  • The Legislature or a legislative agency.
  • The Supreme Court, the Court of Criminal Appeals, a court of appeals, a state judicial agency or the State Bar of Texas.
Vendor
A person who supplies goods or a service to a state agency or another person directed by the agency. The term does not include a state agency, except for Texas Correctional Industries. The term includes an officer or employee of a state agency when acting in a private capacity to supply goods or a service.