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 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.
Receiving and Date Stamping Vendor Invoices
According to the TxDOT Purchase Order language, vendor invoices should be mailed or e-mailed to the Finance Division’s (FIN) Voucher Processing Section. If the vendor sends the invoice via e-mail, it is recommended that they “carbon copy” the TRF Purchasing Manager or the TRF-TS Program Manager in the e-mail, to expedite the review process. The following will serve as the invoice’s “receipt date” and the beginning of the 30-day prompt payment deadline:
- If the vendor mails a hard copy invoice to FIN, the first TxDOT date stamp on the hard copy invoice is the “receipt date.”
- If the vendor submits the invoice electronically, preferably by sending an e-mail to FIN INVOICES, but on rare occasions TRF may receive an e-mail directly from the vendor, the date on the e-mail is the “receipt date.”
If TxDOT fails to date stamp an invoice, FIN must use the vendor’s 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 reduces the time TxDOT is entitled to review, approve, and make payment on an invoice.
If the vendor submits their invoice via e-mail to FIN INVOICES, one of the following two steps will occur:
- If the TRF Purchasing Manager or TRF-TS Program Manager is copied on the vendor e-mail to FIN INVOICES, FIN personnel will not send a separate e-mail to TRF to start the invoice review process.
- If the TRF Purchasing Manager or TRF-TS Program Manager is not copied on the e-mail to FIN INVOICES, FIN will sort 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 to include the vendor invoice plus all attachments.
This process, where FIN e-mails the invoice or date stamps and sends the hard copy invoice to TRF, should take no more than two working days.
FIN e-mails all vendor invoices to the TRF Purchasing Manager. The TRF Purchasing Manager date stamps and logs all services invoices into a tracking spreadsheet. Information entered into the spreadsheet includes vendor name, PO number, invoice number, dates of services rendered, invoice amount, date received by FIN, date received by TRF, and date sent to the TRF-TS Program Manager.
The TRF Purchasing Manager will forward the originals to the appropriate TRF-TS Program Manager for review and approval. The TRF Purchasing Manager will include a date that the TRF-TS Program Manager should submit the approved invoices back to the TRF Purchasing Manager. The TRF Purchasing Manager’s process should take no longer than two working days.
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 Traffic Safety Specialists (TSSs) to review parts of the invoice. In these cases, the TRF-TS Program Manager should immediately email the appropriate parts of the invoice to the TSS, with a due date when the TSS 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.
Some TRF-TS Program Managers may need to identify chartfields (charge information) on the invoice as part of their approval process. The chartfield should include the following:
- Appropriation Year
- PC Business Unit
If a single invoice will be charged to more than one chartfield, 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 TRF Purchasing Manager (inclusion of attachments is optional).
The TRF-TS Program Manager’s entire review process should take no more than 10 calendar days.
How to Handle an Invoice Discrepancy
Government Code § 2251.042 requires a government entity to notify a vendor of an error in an invoice submitted for payment by the vendor no later than the 21st day after the date the entity receives the invoice. This means that the TRF-TS Program Manager should not wait until the last possible day to review the vendor’s invoice packet. As soon as the TRF-TS Program Manager has identified an error, he/she should notify the vendor and request they submit a corrected 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, and 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” with the vendor on questionable costs, if in fact the original invoice is eventually processed.
If, for some reason, the TRF-TS 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 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.
FIN will not typically pay a partial invoice to a vendor, so all receipt discrepancies must be resolved in a timely manner to avoid late penalty charges.
Receipt Entry Into the Enterprise Resource Planning (ERP)/Oracle PeopleSoft (OPS) System
The TRF Purchasing Manager will use the approved invoice to perform the receipt function in OPS.
NOTE: For services, enter the last day of the service period (i.e. July 31, 2015) as the receipt date in OPS.
Once the receipt is completed in OPS, the TRF Purchasing Manager will make a notation on the first page of the invoice that the receipt has been completed and include the completion date.
The TRF Purchasing Manager will notify FIN via the notify function in OPS that the receipt has been completed and the invoice is ready for payment processing.
The TRF 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 TRF Purchasing Manager to send the signed/approved invoice back to FIN because the receipt in OPS serves as approval to pay.
Verification of Payments Made to Vendor
The TRF Management Support Section’s Resource Management Analyst will verify payments have been made to the vendors in the appropriate time frames, utilizing the Uniform Statewide Accounting System (USAS) access.