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Glenn Hegar  ·  Texas Comptroller of Public Accounts

Prompt Payment — Overview of Requirements
Interest Liability, Computation and Payment

A payment by a state agency to a vendor for goods or services is overdue by the 31st day after the later of:

  • The date the agency receives the goods and/or services in accordance with the contract, and
  • The date the agency receives a correct invoice for the goods and/or services.

A state agency is liable for any interest that accrues on an overdue payment under the prompt payment law. The interest must be paid at the same time the principal is paid. Interest starts accruing on the date the payment becomes overdue.

Please see Interest Rate for the current interest rate for late payments.

The interest rate the state pays on a late payment to a vendor under the state’s prompt payment law is calculated on an annual basis. The interest calculation is one percentage point higher than the prime rate published in The Wall Street Journal on the first business day of July.

The Comptroller’s office may:

  • Require a state agency to submit any information necessary to determine compliance with the prompt payment law, or
  • Require an agency to change its accounting systems or procedures in accordance with the law.

Definitions

Goods
Includes supplies, materials or equipment.
Payment
Money owed to a vendor.
Prompt payment law
Chapter 2251, Government Code.
Service
Includes gas and water utility service.
See also: Gas Utilities and Water Utilities
State agency
  • A board, commission, department, office or other agency in the executive branch of state government that is created by the constitution or a statute of this state, including an institution of higher education.
  • 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.

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).

Sources [+]

Texas Government Code Sections 2251.025–2251.026.

Documentation Requirements [+]

  1. If required by the Comptroller’s office, the agency must state or explain:
    1. How the dispute, if any, between the agency and the vendor was resolved.
    2. The current document number of the purchase voucher previously submitted to pay the principal amount owed to the vendor.
    3. The number and date of the warrant issued according to that voucher.
  2. If required by the Comptroller’s office, the agency must show how the interest was calculated according to the formula discussed in this section.
  3. Comptroller object 7806 must be used.
Glenn Hegar
Texas Comptroller of Public Accounts
Questions? Contact statewide.accounting@cpa.texas.gov
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