Prompt Payment — Overview of Requirements
The interest rate the state pays on a late payment due to a vendor under the state’s prompt payment law is calculated on an annual basis. The interest calculation is one percentage point higher than the prime rate published in the Wall Street Journal on the first business day of July.
The prime rate on July 1, 2014, was 3.25 percent. For fiscal 2015, the rate of 4.25 percent must be used on any payment that becomes late between Sept. 1, 2014, and Aug. 31, 2015.
State agencies must apply this rate to late payments made from all funds, including local funds. You can view the interest rate in the Uniform Statewide Accounting System (USAS) on the Late Payment Interest Rate (D98) Profile.
Note: Even if a payment is late during two different fiscal years, only one rate will be used in the calculation of interest. The rate used is always based on the fiscal year in which the payment becomes late.
Historical Interest Rates
- Money owed to a vendor.
- Prompt payment law
- Chapter 2251, Government Code.
- State agency
- A board, commission, department, office or other agency in the executive branch of state government created by the constitution or a statute of this state, including an institution of higher education as defined by Texas Education Code Section 61.003.
- The Legislature or a legislative agency.
- The Supreme Court, the Court of Criminal Appeals, a court of appeals, a state judicial agency or the State Bar of Texas.
- A person who supplies goods or a service to a state agency or another person directed by the agency. The term does not include a state agency, except for Texas Correctional Industries. The term includes an officer or employee of a state agency when acting in a private capacity to supply goods or a service.
Texas Government Code Section 2251.025 (b)