Commerce Business Systems (CBS) Achieving Excellence in Financial Management NOAA Finance Workshop...

Commerce Business Systems (CBS)

Achieving Excellence inFinancial Management

NOAA Finance Workshop NOAA Finance Workshop

PresentationPresentation

Prompt Payment PerformancePrompt Payment Performance

April 29, 2008April 29, 2008

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Prompt Payment Act; Final Prompt Payment Act; Final RuleRule

hppt://fms.treas.gov/prompt/regulation.htmlhppt://fms.treas.gov/prompt/regulation.html

RequiresRequires Federal Agencies to pay interest penalties to Federal Agencies to pay interest penalties to

vendors subject to the Prompt Payment Act vendors subject to the Prompt Payment Act when invoices are not paid on a timely basis when invoices are not paid on a timely basis

Generally an invoice payment is due 30 days Generally an invoice payment is due 30 days after the start of the payment periodafter the start of the payment period

» The payment period begins on the later of (1.) The payment period begins on the later of (1.) The date a proper invoice is received and date The date a proper invoice is received and date stamped or (2.) The seventh day after the date of stamped or (2.) The seventh day after the date of delivery or performance of service is completeddelivery or performance of service is completed

» If the invoice is not date stamped, the payment If the invoice is not date stamped, the payment period begins on the date the vendor puts on the period begins on the date the vendor puts on the invoiceinvoice

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Prompt Payment Act; Final RulePrompt Payment Act; Final Rulehttp://fms.treas.gov/prompt/calculations.htmlhttp://fms.treas.gov/prompt/calculations.html

Late Interest Penalty CalculationLate Interest Penalty Calculation Prompt Pay Interest is calculated from the Prompt Pay Interest is calculated from the

day after payment was due until the day day after payment was due until the day payment is made. The interest rate in effect payment is made. The interest rate in effect on the day after the payment due date is on the day after the payment due date is used to calculate the interest penalty.used to calculate the interest penalty.

The following formula can be used to The following formula can be used to determine daily interest:determine daily interest:

P(r/360*d)P(r/360*d)P is the amount of principal or invoice amount; P is the amount of principal or invoice amount; R equals the Prompt Payment interest rate; and R equals the Prompt Payment interest rate; and D equals the number of days for which interest is D equals the number of days for which interest is

being calculated. being calculated. For Example: For Example: $1,500 $1,500

(.065/360*10) = $2.71(.065/360*10) = $2.71

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OMB Performance MetricsOMB Performance MetricsInterest PenaltiesInterest Penalties

OMB Performance Metrics – Prompt Payment Interest Penalties OMB Performance Metrics – Prompt Payment Interest Penalties Measures the amount of interest penalties paid on late invoices relative Measures the amount of interest penalties paid on late invoices relative

to total dollars paid in accordance with the PPA to total dollars paid in accordance with the PPA

Number of Invoices Paid on TimeNumber of Invoices Paid on Time» Green (fully successful) >=98% Green (fully successful) >=98% » Yellow (minimally successful) >=97% -- <98%Yellow (minimally successful) >=97% -- <98%» Red (unsuccessful) <97%Red (unsuccessful) <97%

Dollar Value of Interest Penalties Paid Relative to Total Dollars PaidDollar Value of Interest Penalties Paid Relative to Total Dollars PaidGreen (fully successful) <=0.02%Green (fully successful) <=0.02%Yellow (minimally successful) >0.02% -- <=0.03%Yellow (minimally successful) >0.02% -- <=0.03%Red (unsuccessful) >0.03%Red (unsuccessful) >0.03%

NOAA’s Average Performance in FY 2007NOAA’s Average Performance in FY 2007» Number of Invoices Paid on Time – 97.7% (Minimally Successful)Number of Invoices Paid on Time – 97.7% (Minimally Successful)» Interest Paid Relative to Total Dollars Paid -- .03% (minimally successful)Interest Paid Relative to Total Dollars Paid -- .03% (minimally successful)» Late Payment Interest Penalties NOAA PaidLate Payment Interest Penalties NOAA Paid

FY 2008 - $207,944 FY 2008 - $207,944 FY 2007 – $388,240FY 2007 – $388,240FY 2006 – $295,484FY 2006 – $295,484FY 2005 --$369,934FY 2005 --$369,934

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Late Payment Interest Late Payment Interest ReasonsReasons

Late Reasons Late Reasons Generally the delay of payments are due to :Generally the delay of payments are due to :

» Delay in Finance’s receipt of the invoiceDelay in Finance’s receipt of the invoice» Delay in Finance’s receipt of the receiving reportDelay in Finance’s receipt of the receiving report» Delay in Finance’s receipt of the PO/Contract ModDelay in Finance’s receipt of the PO/Contract Mod» Delay due to invalid ACCS/Funds Availability Delay due to invalid ACCS/Funds Availability

Specifically the delay of payments are due to:Specifically the delay of payments are due to:» No mail date stamp on the invoiceNo mail date stamp on the invoice» Goods being inspected/sitting at the receiving Goods being inspected/sitting at the receiving

locationlocation» Certifier not available (on leave, training class etc.)Certifier not available (on leave, training class etc.)» Not able to obtain all signatures from multiple task Not able to obtain all signatures from multiple task

monitorsmonitors

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Steps To Improve or Better Steps To Improve or Better Manage Manage

For interest penalty greater than $500, Finance For interest penalty greater than $500, Finance is identifying individuals responsible for the is identifying individuals responsible for the delay.delay.

» Notification is given on the interest penalty fee Notification is given on the interest penalty fee » Inquiries are made as to the specific reason for Inquiries are made as to the specific reason for

the delay.the delay.» Guidance is provided on corrective action Guidance is provided on corrective action

required to prevent future late payment required to prevent future late payment penalties.penalties.

Finance has put into place a new report to Finance has put into place a new report to manage the amount of penalties paid and to manage the amount of penalties paid and to highlight potential trouble spots where highlight potential trouble spots where remedial action is required. remedial action is required.

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New Reports to Help Manage New Reports to Help Manage Prompt Pay Interest Penalties Prompt Pay Interest Penalties

Two new reports were added to the NOAA DW in Two new reports were added to the NOAA DW in November which will provide you with information on November which will provide you with information on the amount, dollar value, and reason for late interest the amount, dollar value, and reason for late interest penalties assessed during a specified periodpenalties assessed during a specified period The reports are:The reports are:

» AP501D – Prompt Payment Interest Penalty Detail AP501D – Prompt Payment Interest Penalty Detail Report by FMC - Provides detailed information by Report by FMC - Provides detailed information by Line Office/FMC for invoices subject to the Line Office/FMC for invoices subject to the Prompt Payment act that have been paid late and Prompt Payment act that have been paid late and incurred interest penalties.incurred interest penalties.

» AP502D - Prompt Payment Interest Penalty AP502D - Prompt Payment Interest Penalty Summary Report by FMC - Provides summary Summary Report by FMC - Provides summary information by Line Office/FMC on the number, information by Line Office/FMC on the number, dollar amount and percentage of invoices paid dollar amount and percentage of invoices paid late during a specified period late during a specified period

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AP502D Prompt Pay Summary AP502D Prompt Pay Summary Report Report Sample Sample

The Launch Screen – The Launch Screen – Defaults to Users “Home” Bureau CodeDefaults to Users “Home” Bureau Code Users can select 1 specific Org 1 Code or “ALL”Users can select 1 specific Org 1 Code or “ALL” After selecting Org 1 Code users can select 1 specific Org2 Code for that Org 1 code After selecting Org 1 Code users can select 1 specific Org2 Code for that Org 1 code

or “ALL” Org 2 Codes within an Org 1or “ALL” Org 2 Codes within an Org 1 Users can select a specified “From” or Beginning Date and a specified through or Users can select a specified “From” or Beginning Date and a specified through or

Ending DateEnding Date

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AP502D Prompt Pay Summary AP502D Prompt Pay Summary Report Report

Launch Screen Sample Launch Screen Sample

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AP502D Prompt Pay Report AP502D Prompt Pay Report Sample Sample

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AP501D Prompt Pay Detail AP501D Prompt Pay Detail ReportReportSample Sample

The Launch Screen – The Launch Screen – Defaults to Users “Home” Bureau CodeDefaults to Users “Home” Bureau Code Users can select 1 specific Org 1 Code or “ALL”Users can select 1 specific Org 1 Code or “ALL” After selecting Org 1 Code users can select 1 specific Org2 Code for that Org 1 code After selecting Org 1 Code users can select 1 specific Org2 Code for that Org 1 code

or “ALL” Org 2 Codes within an Org 1or “ALL” Org 2 Codes within an Org 1 Users can select a specified “From” or Beginning Date and a specified through or Users can select a specified “From” or Beginning Date and a specified through or

Ending DateEnding Date

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AP501D Prompt Pay Detail AP501D Prompt Pay Detail ReportReportSample Sample

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AP501D Prompt Pay Report AP501D Prompt Pay Report Sample Sample

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