February 21, 2012
February 21, 2012
7.9.1. PAYMENT TERMS
A. Approved Payment Terms (Texas Prompt Pay Act)
The University of Texas at Austin makes payments to vendors based on the Texas Prompt Payment Act, which states that payment is overdue on the 31st day after the latest date below:
- the date the university receives the goods under the contract.
- the date the performance of the service under the contract is completed.
- the date the university receives an invoice for the goods or service.
To read the law in its entirety, see the Texas Government Code, Title 10, General Government, Section 2251.021. Time for Payment by Governmental Entity.
The university refers to the payment terms of the Texas Prompt Payment Act as Net 30: Payment of the net (full) amount will be made within 30 days of receipt of the invoice or receipt of material or service, whichever is later.
B. Payment Term Exceptions
Occasionally, a vendor will offer an early payment discount to the university and the terms offered will be noted on the invoice. Accounts Payable will attempt to take advantage of the prompt payment discount terms when processing the invoice. Otherwise, the invoice will be paid according to the university’s standard Net 30 terms. One example of an alternate discount term is 2%10 Net 30, which means that a 2 percent cash discount is given to the university if the invoice is paid within 10 days after receipt; otherwise the net amount is due in 30 days.
Payment for goods and services is usually made after the actual receipt of goods or the completion of services. However, there may be times when prepayment is appropriate. For information on prepayment, see the Handbook of Business Procedures 9.1.4. Prepayments.