FIACCT 05-06_00 Payments – Payment discounts and late fees overview

Effective: July 1, 1994
Revised: July 1, 2015
Reviewed: July 1, 2015

Purpose

This policy defines the policy of the Division of Finance regarding (1) the taking of discounts on purchases of materials, services, etc. offered to the State of Utah by vendors, and (2) the payment of late fees on invoices from vendors.

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Policy

All billings/invoices received from vendors for goods or services received by the State that offer discounts will be processed in such a manner as to ensure the State receives the discounts. All discounts will be taken. Also, vendor invoices will be processed in such a manner as to ensure the State does not incur any late fees.

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Background

Several vendors that do business with the State offer standard discounts for timely payment of invoices. Also, some vendors negotiate discounts with the State for other reasons, i.e. volume buying, new product sale, etc. In every instance that we are aware of it is to the advantage of the State to take the discounts. If the product or service is acquired by the State, there are methods and systems established that will give every agency in State government the opportunity to take the discount.

In the Discount Type Master Table, various vendor discount types are defined. The table defines the percentage of the discount and the number of days within which payment must be made for the discount to be taken. In the vendor’s terms, the number of days is usually the time between when the invoice was sent and payment is received. In FINET, the number of days is the time between the payment’s transaction date and the date the check is printed. This is important because if the number of days until payment is not properly determined the discount will be taken in error.

The discount type code is a field on the payment document. You can specify a different discount type on each payment line. When the cash disbursements process is run for the payment, the discount will be taken if the number of days condition is met. The discount taken is printed on the check stub.

If late fees are incurred, the agency should contact the vendor and attempt to get the late fees waived. If the vendor refuses to waive the late fees, then the conversation with the vendor should be documented and included with the supporting documentation for the payment.