LATE PAYMENT PENALTIES - 8474
Government Code chapter 4.5, sections 927-927.13, also known as the California Prompt Payment Act (the Act), requires agencies/departments to automatically calculate and pay late payment penalties if they fail to make payments by the date required in the Act for the following:
- Properly submitted, undisputed invoices.
- Grant claims for victim services or prevention programs.
- Refunds or other undisputed payments due to individuals.
Unless otherwise specified in the contract or grant, the payment due date required in the Act is 45 calendar days after receipt of a properly submitted, undisputed invoice. In the case of refunds, the payment due date is 45 calendar days after notification of the refund to the payee or other payments due to individuals.
Payment means any form of the act of paying, including, but not limited to, the issuance of a warrant or a registered warrant by the State Controller's Office (SCO), or the issuance of a revolving fund check by an agency/department. Late payment penalties shall not be paid when payees elect to return registered warrants to the state.
The responsibility for paying penalties are as follows:
- Agency/Department – The correct claim is not submitted to the SCO within 30 calendar days and payment is not issued within 45 calendar days.
- Department of FISCal – The FI$Cal system delays the delivery of a correct claim from the agency/department to the SCO, preventing the SCO from making the payment within 15 calendar days and payment is not issued within 45 calendar days.
- SCO – The payment is not issued within 15 calendar days of receipt of a correct claim and payment is not issued within 45 days.
On an exception basis, agencies/departments may avoid late payment penalties by making payments through the revolving fund or utilizing the SCO’s claim schedule expedite service.
The Department of General Services will not approve contracts with invoice payment terms exceeding 45 days.