Section 5: Vendor Invoice Processing
This section addresses processing of vendor invoices and applies to payment for goods and services procured through purchase orders and not to grants procured through the Texas Department of Transportation (TxDOT) Traffic Operations Division-Traffic Safety Section’s (TRF-TSs) annual request for proposal process.Vendors include marketing firms and consultants who provide goods and services in support of the Texas Traffic Safety Program.
In processing invoices for purchase orders, TxDOT will follow steps necessary to comply with the 30-day Prompt Payment Law (Texas Government Code, Chapter 2251). These standard operating procedures were developed in order to comply with TxDOT’s policy to pay all vendors within the required 30-day time period.
The Prompt Payment Law
On September 1, 1999, the Texas Comptroller of Public Accounts implemented new payment requirements centered on the 30-day period for payment. The law states that payments must be made to vendors within 30 days from the latter of:
- the date the vendor completes its services
- the date the agency receives the goods under contract
- the date TxDOT receives the invoice for the goods or services.
When a state agency’s payment is defined as overdue on the 31st day, an automatic payment of interest is assessed to the vendor. The Comptroller must automatically calculate any interest that an agency owes a vendor for late payment of goods received and/or services performed and must include that interest payment with the principal payment to the vendor.
Payments must be made no sooner than 30 days. Therefore, in most cases, payments must be schedule to occurr on the 30th day.
Receiving and Date Stamping Vendor Invoices
The vendor is required to send all original invoices directly to the TxDOT Finance Division (FIN), Voucher Processing Section, to the TxDOT/FIN address specified on all purchase orders (POs). If the vendor does not comply with the invoice submittal procedures outlined in the PO, the TRF Traffic Safety Section (TS) program manager will need to contact the vendor and explain the required procedures.
According to procedures, TxDOT is only required to process an original invoice if received by FIN as outlined in the PO. If TRF (instead of FIN) receives the original invoice, it can be handled as a “convenience copy” and not processed until the original is submitted to FIN.
All invoices must be date stamped on the day they are initially received by TxDOT. Therefore, FIN will date stamp all original invoices. As long as the vendor mails or e-mails the invoice directly to FIN, the FIN date stamp will serve as the invoice’s receipt date and the beginning date of the 30-day prompt payment deadline. Vendors may also e-mail an invoice to FIN, and the e-mail date will serve as the receipt date for TxDOT.
If TxDOT fails to date stamp an invoice, FIN must use the invoice date to calculate the 30-day payment due date. The invoice date is usually three to five days earlier than the actual receipt date, so this greatly reduces the time TxDOT is entitled to review, approve, and make payment on an invoice.
FIN sorts the invoices by services and commodities, and the invoices are assigned to certain individuals in FIN for tracking purposes. The responsible party in FIN will send an e-mail to TRF containing the invoice and all attachments. The process where FIN date stamps and sends the invoice to TRF should take no more than two (2) days.
FIN e-mails all vendor invoices to the purchasing manager. The purchasing manager date stamps and logs all invoices into a tracking spreadsheet. Information entered into the spreadsheet includes vendor name, PO number, invoice number, invoice amount, date received by FIN, date received by TRF, and date sent to the TRF-TS program manager.
The purchasing manager will forward the originals to the aproppriate TRF-TS program manager for review and approval. The purchasing manager will include a date that the TRF-TS program manager should submit the approved invoices back to the purchasing manager. The purchasing manager’s process should take no longer than one (1) day.
TRF-TS Program Manager Review
The appropriate TRF-TS program manager is responsible for reviewing the invoice to ensure the following items are correct:
- all services were actually performed and/or all goods and supplies were received
- all services were performed and/or all goods and supplies were received within the appropriate time frame indicated on the invoice
- all unit costs, quantities, and total costs that TxDOT will pay from the invoices are correct and match the PO
- all attachments (i.e. for vendor’s detailed travel expenditures) are verified according to PO requirements.
NOTE: Some TRF-TS program managers may also require district personnel to review parts of the invoice. In these cases, the TRF-TS program manager should immediately fax the appropriate parts of the invoice to the district, with a due date when the district personnel should submit the approved invoice to the TRF-TS program manager.
After ensuring the invoice is correct, the TRF-TS program manager will sign the first page of the invoice to note that he/she has reviewed the invoice and it is now ready for payment. If the TRF-TS program manager discovers any errors in the invoice, it should be immediately handled as outlined in the subsection entitled “How to Handle a Mistake in an Invoice” below.
Along with the TRF-TS program manager’s signature, theTRF-TS program manager should also include the correct charge data on the invoice. The charge information should include the following:
- expenditure object
- work order number (if applicable).
If for some reason, a single invoice will be charged for more than one detail number, the TRF-TS program manager should specify on the first page of the invoice the exact amount to be charged to each detail number.
The TRF-TS program manager should submit the signed and approved invoice to the purchasing manager (inclusion of attachments is optional).
The TRF-TS program manager’s entire review process should take no more than ten (10) working days. Using the invoice tracking spreadsheet, if the purchasing manager notices the TRF-TS program manager’s due date has passed with no response, the purchasing manager should notify the TRF-TS program manager to ensure approval will be received in ample time for FIN to process the payment to the vendor within 30 days.
How to Handle a Mistake on an Invoice
Just as the vendor is required to submit their original invoice directly to FIN, any revised and corrected invoices should also be submitted to FIN. The same process will be followed (as stated in the “Receiving and Date Stamping Vendor Invoices” subsection) with any revised invoices, the newer receipt date will be used for the purposes of calculating the 30-day payment due date.
In summary, if the original invoice proves to be incorrect, the payment clock starts when a corrected invoice is received. After further review and/or discussion with the vendor, if the original invoice is determined to be correct, the clock starts on the date the invoice was first received by TxDOT. In other words, TxDOT does not get a reprieve on the payment due date for “debating” the vendor on questionable costs, if in fact the original invoice is eventually processed.
If for some reason the TRF-TRS program manager and vendor decide to manually revise the original invoice, lining through the incorrect charges and agreeing to pay a reduced amount on the invoice, the TRF-TS program manager should retain complete and thorough documentation of the agreed-upon revisions. This information would be best documented through e-mail instead of verbal conversations. All documentation/e-mails should be printed and filed with TRF’s copy of the approved invoice.
In the case that the vendor’s original invoice is manually revised, a new date should be assigned for the purposes of calculating the 30-day payment due date. TRF should forward all e-mail documentation to FIN and then work with FIN personnel in determining the appropriate due date.
Receipt Entry Into the Automated Purchasing System (APS)
The purchasing manager will use the charge information included on the top page of the invoice to perform the Direct Charge Receipt function in APS (reference APS procedure manuals on GSD’s Intranet website regarding how to perform the receipt function).
NOTE: For services, enter the last day of the service period (i.e. May 31, 2011) as the receipt date in APS.
Once the receipt is completed in APS, the purchasing manager will make a notation on the first page of the invoice that the receipt has been completed in APS.
The purchasing manager will notify FIN via e-mail that the invoice has been received in APS.
Once all notations have been made on the invoice, the purchasing manager will make a copy of the invoice and send it to the TRF-TS program manager. If the TRF-TS program manager submitted attachments with their approved invoice, the purchasing manager will send the attachments back to the TRF-TS program manager with the notated copy of the invoice.
The purchasing manager will retain a copy of the invoice with full notations in the purchasing/contract files. The purchasing manager is not required to retain the attachments.
There is no need for the purchasing manager to send the signed/approved invoice back to FIN because the receipt in APS serves as approval to pay.
Electronic Submittal of Invoices and Attached Documentation
All TxDOT POs state that vendors have the option to submit invoices to TxDOT electronically. TRF met with FIN to discuss how to make this work procedurally. Currently TRF is accepting electronic copies of all attachments to the invoice (i.e. travel records, time sheets, etc.) from vendors. The vendor may send the invoice with attachments electronically (via e-mail) to FIN. If the attachments are sent electonically directly to the TRF-TS program manager, the vendor is not required to submit attachments with the hard copy invoice mailed to FIN.
TRF-TS program managers should highly encourage vendors to utilize electronic submittal of invoices and attachments. This could expedite the TRF-TS program manager’s review process by at least three (3) days and eliminate unnecessary duplicates of hard-copy paperwork.
TRF will continue to work with FIN to develop a process where vendors may eventually submit all original invoices electronically to FIN.