PROMPT PAYMENT ACT (PPA)

PROMPT PAYMENT ACT (PPA)
L E A R N T O D B Y I G S H 1 9 2 Title: Implement Provisions of the Prompt Payment Act NOTE: Incorporate the political, military, economic, social, information, infrastructure, and physical environment and time (PMESII&PT) into each lesson and classroom work as appropriate. Instructor will illustrate them with appropriate examples from the Current Operating Environment (COE) as it pertains to the lesson. Motivator: Over the years the Army has lost millions of dollars in missed discounts and interest penalty payments. You can help the Army reduce these costs drastically by applying the things you will learn in this lesson to your job. PROMPT PAYMENT ACT (PPA) VG-1

Terminal Learning Objective
Action: Conditions: Standard: Implement Provisions of the Prompt Payment Act on Accounts Payable documents. Given DFAS-IN Regulation 37-1, DFAS-IN Manual FY, and various accounts payable payment packets. Show slide #2 Terminal Learning Objective Safety Requirements: This lesson does not contain a practical exercise that involves equipment, chemicals, or potential hazards. State if there are none. Risk Assessment Level: Low Environmental Considerations: It is the responsibility of all Soldiers and DA civilians to protect the environment from damage. None Evaluation: This lesson will be evaluated in PFN# ADD44106, Accounts Payable Test. The student must achieve an 80% or higher score to pass. International students must achieve a 70% or higher score to pass. Instructional Lead-in: To ensure every vendor is paid properly and promptly, the DoD initiated policies and procedures that govern the SF 44s and the IMPAC Card for micropurchases. This lesson will focus on the streamlined business practices that DoD has lined out for all services including the Department of the Army. Understanding the provisions of the prompt payment act is crucial to your success in accounts payable. One Team! One Mission! Compute Payment Due Dates and Interest Penalty Payments without error IAW applicable regulations. VG-2

Prompt Payment Act (PPA)
According to the Prompt Payment Act, Public Law 97-177, dated 21 May 1982 (amended 1988) the Government will pay an interest penalty to all non-Federal Government business firms, incl. state and local governments for all late payments. If not otherwise stated in the contract, the payment due date is 30 days after the receipt of an proper invoice or acceptance of goods whichever is later. Show slide #3-4 Determine Payment Due Dates. 1. Learning Step / Activity 1. Determine Payment Due Dates. Method of Instruction: Conference / Discussion Instructor to Student Ratio: 1:14 Time of Instruction: 2 hrs 25 mins Media: -None- NOTE: Method of instruction and instructor to student ratio will vary, depending on whether the lesson is taught in residence, by an instructor, or used as an individual student self-paced product. Refer to VG # 3 - 4, Prompt Payment Act. Note: Refer to page 18 in the 702 a. THE PROMPT PAYMENT ACT. (1) HISTORY. According to the Prompt Payment Act, Public Law , dated 21 May 1982 (ammended 1988) the Government will pay an interest penalty to all non-Federal Government business firms, incl. state and local governments for all late payments. If not otherwise stated in the contract, the payment due date is 30 days after the receipt of a proper invoice or acceptance of goods whichever is later. (2) REQUIRED DOCUMENTS. For a routine payment to be made the accounts payable office must receive three documents; (1) a contract, (2) a receiving report, and (3) a vendor’s invoice. Until all documents are received we cannot process the payment. Let’s say that we receive the contract in Jan 95; the vendor’s invoice in Jan 95; but the receiving report does not get to our office until Apr 95; when can we begin to prepare the payment voucher? NOTE: Allow students to answer. We have to wait until April 95. The vendor may have delivered the goods or service in January, but is not paid until sometime in April. This used to be very typical of most payments, however the vendors are represented by members of congress just like we are, and they generally have more contact with their representatives than we do; so vendor’s complained about receiving late payments without getting any interest. This led to the passage of the prompt payment act (PPA). One extremely important provision of the PPA is the provision for payment of interest penalty. (2) INTEREST PENALTIES. All payments that are subject to the PPA must be made by a certain date, (referred to as the Payment Due Date (PDD)). Payments made after the PDD are late and interest penalty calculations must be made, any interest amount greater than $1.00 will be paid. One other important date in computing interest penalty is the or expected check payment due date (ECPD). This is the date when disbursing can make the payment. This will be the date that we use as our cut off date for computing interest. For purposes of this lesson, if this date is not given then we will use today’s date. VG-3

Three Documents are Required to make a legal payment!!
Payments Three Documents are Required to make a legal payment!! Contracts DD Form 1155, Copy 1 SF 33 SF 44 Receiving Report DD Form 250 DD Form 1155, copy 8 SF 44 Invoice Note: Refer students to page 3-4 in the 702 We need three documents to make a legal payment. What are those three documents? –Contract, Receiving Report, Invoice What are some examples of each? –Contract (1155, 33), RR(250, 1155), Invoice We have not discussed the SF 44 however the students will learn about this in the last lesson. They will need to be able to identify that it is a contract, r/r, and invoice all in one. Check on Learning– What is another word for Contract?? Procurement Document VG-4

IF THE PDD FALLS ON A NON-BUSINESS DAY THE NEXT BUSINESS DAY WILL BE THE CORRECT PAYMENT DUE DATE (PDD) ie. 25 Dec, next business day will be the 27 Dec. Note: Refer to page 18 in the 702 Stress to students the importance of watching calendars in the PEs and the Test. If a payment date falls on a Saturday, then the payment date will change to Monday. Major holidays can also shift the payment due date to the next working business day. (3) CASH MANAGEMENT. There can only be one correct payment due date for each payment. It is up to the voucher examiner to determine if it will be the Discount Payment Due Date (DPDD), or the Net 30 payment due date (PDD). It is important that we make the payment as close as possible to the payment due date, but no earlier than 8 days prior, and no later than the actual date. The first Payment Due Date is the net 30 PDD, so called because most nets are set at 30 days. The next PDD is the Discount Payment due date, so called because it is based on the due date for discounts. b. DETERMINING THE CORRECT PAYMENT DUE DATE. (1) If a payment due date is specified on a contract, then that date is your payment due date. (2) If there is no date specified and a discount is not offered, or cannot be taken, then the payment due date is calculated as follows: VG-5

No early payments (8 or more days prior to the Payment Due Date) are made unless authorized by the Director of DFAS. If a cost effective discount is offered, the PDD is the last date of the discount period. THERE IS ONLY ONE CORRECT PAYMENT DUE DATE (PDD)! Refer to page 18 in the 702 The government earns interest off the money in the treasury. We do not pay bills early b/c it could cost the government money. Later the students will learn the discount conversion formula to help explain this further. There is only one correct payment due date!! VG-6

Interest Penalty = Discounts - PAYMENT DUE DATE WORKSHEET + 30 DAYS=
TODAY’S DATE PAYMENT DUE DATE WORKSHEET BILLING OFFICE TERMS #1 CONTRACT #2 INVOICE DISCOUNT PAYMENT DUE DATE (DPDD) + DAYS = DATED LATER DATE RECEIVED (in billing office) (of invoice rec’d block or earlier date block) TERMS #3 RECEIVING REPORT C.A.D. + 30 DAYS= ROG + 7 = Payment Due Date (PDD) AOG EARLIER DATE (if given) (of CAD or AOG) Interest Penalty Daily Percentage Julian Date Factor Interest Rate Principle Interest Amt ECPD X X = -PDD The payment due date worksheet should be passed out to the students to identify the blocks as they are explained. We use the payment due date worksheet to help find the correct due date for the payment, any interest that may be owed, or the total amount due if we take a discount. The first block is todays date. This is important to identify if you can take the discount or if the payment is late. You will also use it as the ECPD (Expected Check Payment Date unless otherwise given) The red blocks identify the information that you need to obtain from the contract. The green blocks identify the information that you will pull from the invoice The yellow blocks identify the information that you will need from the invoice. -Constructive vs. actual acceptance: According to the government a receiving activity has a maximum of 7 calendar days to inspect and accept goods or services after the date of delivery. If the receiving activity puts a date of acceptance on the receiving report, this is called the actual acceptance date or AOG, as we referred to when discussing the posting of the bills register card. Constructive acceptance is determined by adding 7 days to the date of delivery (ROG). The students will familiarize themselves with the PDD Wksht as this lesson is completed. X X = = Total Days Late X = X TOTAL INTEREST X = X = Discounts Step 1: Principle X Discount % = Discount Amount Step 2: Principle - = Cost to Govt Discount Amount VG-7

IMPORTANT TERMS ECPD = Expected Check Payment Date (date Disbursing will send payment out. AOG = Acceptance of Goods Date (Receiving Report) ROG = Receipt of Goods Date (Receiving Report) CAD = Constructive Acceptance Date (ROG + 7) BILLING OFFICE = Office to which invoices are submitted (Contract) These are some common terms that the students will need to be familiar with. ECPD: Will always be todays date in the scenario unless a date is given for ECPD. We use today’s date, b/c we are assuming if we realize we are making a late payment, we will make it as soon as possible to avoid any further interest penalties. Some PEs will give a date for the ECPD that is different than the current date, so be mindful to the instructions. We discussed the AOG, ROG, and CAD in the flow of documents powerpoint. What form do we get these dates? DD Form 250, DD Form 1155, copy 8 Billing Office- This was also previously discussed. We need to identify which billing office, so that we can use the correct date stamp when calculating due dates. Billing Office will be found on the contract. VG-8

1 VG-9 ORDER FOR SUPPLIES OR SERVICES Refer to page 15 in the 702
(Contractor must submit four copies of invoice.) 9. CONTRACTOR 39. DATE RECEIVED (YYMMMDD) Form Approved OMB No Expires Dec 31, 1993 26. QUANTITY IN COLUMN 20 HAS BEEN This delivery order is issued on another Government agency or in accordance with and subject to terms and conditions of above numbered contract. 3. DATE OF ORDER 23. AMOUNT MARK ALL PACKAGES AND PAPERS WITH CONTRACT OR ORDER NUMBER 14. SHIP TO Public reporting burden for this collection of information is estimated to average 1 hour per response, including the time for reviewing instructions, searching existing data sources, gathering and maintaining the data needed, and completing and reviewing the collection of information. Send comments regarding this burden estimate or any other aspect of this collection of information, including suggestions for reducing this burden, to Department of Defense, Washington Headquarters Services, Directorate for Information Operations and Reports, 1215 Jefferson Davis Highway, Suite 1204, Arlington, VA , and to the Office of Management and Budget, Paperwork Reduction Project ( ), Washington, DC PLEASE DO NOT RETURN YOUR FORM TO EITHER OF THESE ADDRESSES. SEND YOUR COMPLETED FORM TO THE PROCUREMENT OFFICIAL IDENTIFIED IN ITEM 6. 6. ISSUED BY CODE 7. ADMINISTERED BY (If other than 6) 8. DELIVERY FOB DEST OTHER (See Schedule if other) FACILITY CODE NAME AND ADDRESS 11. MARK IF BUSINESS IS SMALL SMALL DISAD- VANTAGED WOMEN-OWNE 15. PAYMENT WILL BE MADE BY 16. TYPE OF ORDER DELIVERY PURCHASE Reference your furnish the following on terms specified ACCEPTANCE. THE CONTRACTOR HEREBY ACCEPTS THE OFFER REPRESENTED BY THE NUMBERED PURCHASE ORDER AS IT MAY PREVIOUSLY HAVE BEEN OR IS NOW MODIFIED, SUBJECT TO ALL OF THE TERMS AND CONDITIONS SET FORTH, AND AGREES TO PERFORM THE SAME. If this box is marked, supplier must sign Acceptance and return the following number of copies: NAME OF CONTRACTOR SIGNATURE TYPED NAME AND TITLE DATE SIGNED (YYMMDD) 20. QUANTITY * If quantity accepted by the Government is same as quantity ordered, indicate by X. If different, enter actual quantity accepted below quantity ordered and encircle. 24. UNITED STATES OF AMERICA BY: 25. TOTAL 29. DIFFERENC ES 30. INITIALS INSPECTED RECEIVED ACCEPTED, AND CONFORMS TO THE CONTRACT EXCEPT AS NOTED DATE SIGNATURE OF AUTHORIZED GOVERNMENT REPRESENTATIVE 27. SHIP. NO. PARTIAL FINAL 31. PAYMENT COMPLETE 36. I certify this account is correct and proper for payment. SIGNATURE AND TITLE OF CERTIFYING OFFICER DD FORM 1155, APR 93 PREVIOUS EDITION MAY BE USED. CONTRACTING/ORDERING OFFICER USAPPC V1.00 ACCEPTED* 18. ITEM NO. 19. SCHEDULE OF SUPPLIES/SERVICE 21. UNIT 22. UNIT PRICE ORDERED/ A.N . Cannady GS 12 $163.00 28. D.O. VOUCHER NO. 32. PAID BY 23d FM Co Fort Stewart GA 31314 DSSN: 6348 33. AMOUNT VERIFIED CORRECT FOR 34. CHECK NUMBER 35. BILL OF LADING NO. 42. S/R VOUCHER NO. 38. RECEIVED BY (Print) 41. S/R ACCOUNT NUMBER 38. RECEIVED AT 40. TOTAL CONTAINERS 12. DISCOUNT TERMS NET 30 13. MAIL INVOICES TO See Items 6 POST HOSPITAL BUILDING 163 FORT STEWART, GA 31314 FIELD SITE ATTN: ACCOUNTS PAYABLE 17. ACCOUNTING AND APPROPRIATION DATA/LOCAL USE 21* CZ W91HOS* /HBBA S09076 001 Repair of Hospital heating and blowing system //////RECEIVED IN /////// /////ACCOUNTS PAYABLE////// ///////////// 27 DEC ///// //////PAYMENT DUE DATE///// 1 job PAGE 1 OF 1. CONTRACT/PURCH ORDER NO. DAFI01-**-M-1589 2. DELIVERY ORDER NO. 0009 4. REQUISITION/PURCH REQUEST NO. PRC 2404 5. PRIORITY Director, Purchasing and Contracting (DOC) HQS, 1/91st MECH INF Fort Stewart , GA 31314 CONSTRUCTION OR US 129 W. 22ND STREET GLENNVILLE, GA 30427 10. DELIVER TO FOB POINT BY (Date) **DEC23 Refer to page 15 in the 702 We are now going to calculate a payment due date. The first step is to look at the contract and pull the necessary information for the payment due date worksheet. We will need the billing office and any discount terms given. This is a copy 1, so we know that it is a contract. We refer to block 13 to see who receives the invoices, it references block 6. The DOC is our billing office. Next, we need to see if any discounts are offered. You will look in block 12 for discounts. There are no discounts offered. 1 VG-9

(of invoice rcc’d block or earlier date block)
CONTRACT RECEIVING REPORT INVOICE TODAY’S DATE BILLING OFFICE TERMS + DAYS = DISCOUNT PAYMENT DUE DATE (DPDD) ROG AOG (if given) + 7 = EARLIER DATE (of CAD or AOG) LATER DATE (of invoice rcc’d block or earlier date block) + 30 DAYS= DATED Interest Penalty PAYMENT DUE DATE WORKSHEET ECPD -PDD Julian Date = DAYS LATE DAILY PERCENTAGE FACTOR INTEREST RATE PRINCIPLE INTEREST AMT Discounts Step 1: Principle X Discount % = Discount Amount Step 2: Principle - Discount Amount = Cost to Govt = TOTAL INTEREST Payment Due Date (PDD) C.A.D. #1 #2 #3 4 JAN ** DOC NET 30 . , RECEIVED (in billing office) Refer to page 15 in the 702 For this scenario, we are given that today's date is Jan 4. So far we have the contract. What information did we find on the contract? Billing Office and Discount Terms. We found the billing office in block 6 from advice in block 13. The billing office is the Director, Purchasin, and Contracting (DOC). We will list the DOC in the billing office box outlined in red on the slide. We found the discount terms in block 12. There are no discount terms, so it defaults to NET 30. We will list this in the terms box outlined in red as well. NET 30 means that the bill is due in 30 days in accordance with the Prompt Payment Act. Next we will look at the Invoice. VG-10

Thank You For Your Order! Refer to page 17 in the 702
CONSTRUCTION OR US 129 WEST 22ND STREET GLENNVILLE, GA SOLD TO: UNITED STATES ARMY HQS, 1/91ST MECH. INF. ATTN: ACCOUNTS PAYABLE FORT STEWART, GA 31314 NUMBER: NA INVOICE December ** DATE: ORDER NA DATE:: ORDER DAFI01-**-M-1589 NUMBER: INVOICE NUMBER MUST APPEAR ON ALL P.O., PACKING SLIPS & PACKAGES CUSTOMER NO: GOVT C ITEM DESCRIPTION QUANTITY UNIT PRICE AMOUNT Thank You For Your Order! NOTE: All documents are date stamped when received. The vendor’s format may vary from this example, however, regardless of the format, the same basic Information must be displayed RPH REPAIR OF HOSPITAL JOB $ $163.00 HEATING AND BLOWER SYSTEM Received in FIELD SITE ACCOUNTS PAYABLE 2 JAN ** Received in DOC DEC ** TOTAL DUE: $163.00 TERMS 2/15 Refer to page 17 in the 702 First we want to look at the invoice date. This is the date that the vendor listed on the invoice. Second we will look at the date stamps. Which date stamp do we use? We need the date stamp from the billing office. You may need to refer back to the contract for this information. The contract states that the DOC will receive the invoices. So we will use the date stamp of the DOC. The DOC date stamp is for DEC 30. Last, we need to look if the vendor offered any additional discounts on the invoice. If the vendor offers different terms or additional discount terms, we can legally use them. We will need to compare to see what discount is the best advantage and then use that one. This invoice offers a discount of 2/15. We will need to include this on our PDD Wksht. Lets add this informationn to the payment due date worksheet. VG-11

CONTRACT RECEIVING REPORT INVOICE TODAY’S DATE BILLING OFFICE TERMS + DAYS = DISCOUNT PAYMENT DUE DATE (DPDD) ROG AOG (if given) + 7 = EARLIER DATE (of CAD or AOG) LATER DATE (of invoice rcc’d block or earlier date block) + 30 DAYS= DATED Interest Penalty PAYMENT DUE DATE WORKSHEET ECPD -PDD Julian Date = DAYS LATE DAILY PERCENTAGE FACTOR INTEREST RATE PRINCIPLE INTEREST AMT Discounts Step 1: Principle X Discount % = Discount Amount Step 2: Principle - Discount Amount = Cost to Govt = TOTAL INTEREST Payment Due Date (PDD) C.A.D. #1 #2 #3 4 JAN ** DOC NET 30 29 DEC ** 30 DEC ** 2/15 .15 13 JAN. . RECEIVED (in billing office) 163.00 .2% .3.26 3.26 159.74 Refer to page 17 in the 702 The Worksheet asks for the dated invoice date first. This is the vendors date. The vendor dated the invoice DEC 29. Next we need the received date. This is the date received in the billing office. We need to use the DOC date stamp, this gives us a date of DEC 30. The Terms block under Invoice gives us the option to add additional terms offered on the invoice. The invoice offered terms of 2% in 15 days. We will list that in the terms block under invoice. We will now want to compute the discount due date. The discount has terms of 15 days, we will add 15 days to the vendors date on the invoice. This gives us a date of 13 JAN Compare the discount due date to the current date, JAN 13 vs. JAN 4. Do we still have time to take the discount? Yes, we can take the discount. This gives us a payment due date of 13 JAN. Now that we have the due date and we are taking a discount, we need to compute the amount of the payment. The principle is The discount is 2%. So we take the principle times the discount rate. That gives us a discount of $3.26. We take the principle amount 163 and subtract the discount amount 3.26 which gives us a total owed of as cost to the government. Now let’s consider that we were not able to take the discount. Let’s finish computing the payment due date worksheet to find what the NET 30 due date would have been. VG-12

ORDER FOR SUPPLIES OR SERVICES
(Contractor must submit four copies of invoice.) 9. CONTRACTOR 39. DATE RECEIVED (YYMMMDD) Form Approved OMB No Expires Dec 31, 1993 26. QUANTITY IN COLUMN 20 HAS BEEN This delivery order is issued on another Government agency or in accordance with and subject to terms and conditions of above numbered contract. 3. DATE OF ORDER 23. AMOUNT MARK ALL PACKAGES AND PAPERS WITH CONTRACT OR ORDER NUMBER 14. SHIP TO Public reporting burden for this collection of information is estimated to average 1 hour per response, including the time for reviewing instructions, searching existing data sources, gathering and maintaining the data needed, and completing and reviewing the collection of information. Send comments regarding this burden estimate or any other aspect of this collection of information, including suggestions for reducing this burden, to Department of Defense, Washington Headquarters Services, Directorate for Information Operations and Reports, 1215 Jefferson Davis Highway, Suite 1204, Arlington, VA , and to the Office of Management and Budget, Paperwork Reduction Project ( ), Washington, DC PLEASE DO NOT RETURN YOUR FORM TO EITHER OF THESE ADDRESSES. SEND YOUR COMPLETED FORM TO THE PROCUREMENT OFFICIAL IDENTIFIED IN ITEM 6. 6. ISSUED BY CODE 7. ADMINISTERED BY (If other than 6) 8. DELIVERY FOB DEST OTHER (See Schedule if other) FACILITY CODE NAME AND ADDRESS 11. MARK IF BUSINESS IS SMALL SMALL DISAD- VANTAGED WOMEN-OWNED 15. PAYMENT WILL BE MADE BY 16. TYPE OF ORDER DELIVERY PURCHASE Reference your furnish the following on terms specified ACCEPTANCE. THE CONTRACTOR HEREBY ACCEPTS THE OFFER REPRESENTED BY THE NUMBERED PURCHASE ORDER AS IT MAY PREVIOUSLY HAVE BEEN OR IS NOW MODIFIED, SUBJECT TO ALL OF THE TERMS AND CONDITIONS SET FORTH, AND AGREES TO PERFORM THE SAME. If this box is marked, supplier must sign Acceptance and return the following number of copies: NAME OF CONTRACTOR SIGNATURE TYPED NAME AND TITLE DATE SIGNED (YYMMDD) 20. QUANTITY * If quantity accepted by the Government is same as quantity ordered, indicate by X. If different, enter actual quantity accepted below quantity ordered and encircle. 24. UNITED STATES OF AMERICA BY: 25. TOTAL 29. DIFFERENC ES 30. INITIALS INSPECTED RECEIVED ACCEPTED, AND CONFORMS TO THE CONTRACT EXCEPT AS NOTED DATE SIGNATURE OF AUTHORIZED GOVERNMENT REPRESENTATIVE 27. SHIP. NO. PARTIAL FINAL 31. PAYMENT COMPLETE 36. I certify this account is correct and proper for payment. SIGNATURE AND TITLE OF CERTIFYING OFFICER DD FORM 1155, APR 93 PREVIOUS EDITION MAY BE USED. CONTRACTING/ORDERING OFFICER USAPPC V1.00 ACCEPTED* 18. ITEM NO. 19. SCHEDULE OF SUPPLIES/SERVICE 21. UNIT 22. UNIT PRICE ORDERED/ A.N. CANNADY GS 12 $163.00 1729-** 28. D.O. VOUCHER NO. 32. PAID BY 33. AMOUNT VERIFIED CORRECT FOR 34. CHECK NUMBER 35. BILL OF LADING NO. 42. S/R VOUCHER NO. 38. RECEIVED BY (Print) Jerry Burch 41. S/R ACCOUNT NUMBER 38. RECEIVED AT Bldg 163 40. TOTAL CONTAINERS 12. DISCOUNT TERMS NET 30 13. MAIL INVOICES TO See Item 6 POST HOSPITAL BUILDING 163 FORT STEWART, GA FIELD SITE ATTN: ACCOUNTS PAYABLE 17. ACCOUNTING AND APPROPRIATION DATA/LOCAL USE 21* CZ W91HOS* /HBBA S09076 0001 Repair of Hospital heating and blowing system /////RECEIVED IN FIELD SITE\\\\\ /////ACCOUNTS PAYABLE\\\\\\ /////30 DEC **\\\\\\\ 1 job PAGE 1 OF 1. CONTRACT/PURCH ORDER NO. DAFI01-**-M-1589 2. DELIVERY ORDER NO. 0009 4. REQUISITION/PURCH REQUEST NO. PRC 2404 5. PRIORITY DIRECTOR, PURCHASING AND CONTRACTING (DOC) HQS, 1/91ST MECH INF CONSTRUCTION OR US 129 W. 22ND STREET GLENNVILLE, GA 10. DELIVER TO FOB POINT BY (Date) **DEC23 **0101 A N Cannady /S/ 29 Dec ** **DEC29  Refer to page 16 in the 702 This is a DD Form 1155, Copy 8. Since it is a copy 8, we know that it is a receiving report. Also if we could not locate what copy of the DD Form 1155 it was, we could look for dates. If the dates are filled out in block 26 and/or 39, then it would be considered a receiving report as well. Next we want to look at the blocks that are filled out. Do we have two dates? Does block 26 and 39 both contain a date? They both contain a date. Since we have two dates, which block is the ROG? The ROG is in block 39. Which block is the AOG? Block 26. We now have the information we need to complete the receiving report information on the payment due date worksheet. 8 VG-13

CONTRACT RECEIVING REPORT INVOICE TODAY’S DATE BILLING OFFICE TERMS + DAYS = DISCOUNT PAYMENT DUE DATE (DPDD) ROG AOG (if given) + 7 = EARLIER DATE (of CAD or AOG) LATER DATE (of invoice rcc’d block or earlier date block) + 30 DAYS= DATED Interest Penalty PAYMENT DUE DATE WORKSHEET ECPD -PDD Julian Date = DAYS LATE DAILY PERCENTAGE FACTOR INTEREST RATE PRINCIPLE INTEREST AMT Discounts Step 1: Principle X Discount % = Discount Amount Step 2: Principle - Discount Amount = Cost to Govt = TOTAL INTEREST Payment Due Date (PDD) C.A.D. #1 #2 #3 4 JAN ** DOC NET 30 DEC 29. DEC 30 2/15 . DDEC 29. .4JAN 5 DEC 29 RECEIVED (in billing office) Refer to page 16 in the 702 We will now complete the receiving report section of the payment due date worksheet. The first block asks for the ROG. The ROG is in block 39 with a date of DEC 29. We will then add 7 days to get our Constructive Acceptance Date (CAD) of JAN 4 Next we will need to fill out the AOG. The AOG is in block 26 with a date of DEC 29. We will compare the CAD to the AOG and take the earlier date. The earlier date is the AOG of DEC 29 VG-14

TODAY’S DATE BILLING OFFICE CONTRACT TERMS + DAYS = DISCOUNT PAYMENT DUE DATE (DPDD) RECEIVING REPORT ROG AOG (if given) + 7 = EARLIER DATE (of CAD or AOG) LATER DATE (of invoice rcc’d block or earlier date block) + 30 DAYS= INVOICE DATED Interest Penalty PAYMENT DUE DATE WORKSHEET ECPD -PDD Julian Date = DAYS LATE DAILY PERCENTAGE FACTOR INTEREST RATE PRINCIPLE INTEREST AMT Discounts Step 1: Principle X Discount % = Discount Amount Step 2: Principle - Discount Amount = Cost to Govt = TOTAL INTEREST Payment Due Date (PDD) C.A.D. #1 #2 #3 4 JAN ** DOC NET 30 29 DEC ** 30 DEC ** . 5 JAN ** RECEIVED (in billing office) 29 JAN ** NET 30 DAY PAYMENT THE JULIAN DATES 30 DEC = 364 + 30 29 JAN** We have filled out all the information that we need from the documents. It is now time to compute the payment due date. You will need to compare the Received Invoice date with the Earlier Receiving report date. So the dates we are looking at are 30 DEC vs 29 DEC. We take the later of the two dates. The date we carry forward is 30 DEC. Add 30 days to the later date to find the payment due date. DEC 30 plus 30 days is JAN 29. The payment due date is JAN 29 if the terms were NET 30. The slide also references Julian dates in the orange block. Have students refer to page 22 in the 702. The Julian dates are dates for the total calendar year. It makes it easy to add the dates without making mistakes for months that have different number of days. It is very important to use the Julian dates when you are looking at interest penalties. VG-15

EFFECTIVE ANNUAL INTEREST RATE (EAIR)
A percentage number derived from the DISCOUNT CONVERSION FORMULA. This percentage is compared with the current Treasury rate to determine if a discount is cost effective. Refer to page 23 in the 702. Effective Annual Interest Rate is a percentage number derived from the discount conversion formula. We gain interest on money that sits in the treasury at an annual published treasury rate. You can find this rate on its.gov, it is published daily. We compare if taking the discount saves more money than we would make on the interest gained for those days. We also use the formula to compare discounts. Sometimes a vendor will offer additional terms on the invoice that differ from the contract. We have to decide which is the better discount. VG-16

Discount Conversion Formula
Discount Percentage 100% Less(-) Discount Percentage X Days in Year(360) Time in Days To Due Date(30) Less Days in Discount Period = Effective Annual Interest Rate Refer to page 23 in the 702 This is the discount conversion formula. Please keep in mind that for this formula, you will use 360 for the total days in a year. VG-17

Discount Conversion Formula (Cont)
STEP 1: .01 X 360 30-10 .01 X 360 STEP 2: .99 20 STEP 3: X Refer to page 23 in the 702 Determine if the discount is cost effective. To determine whether or not a discount is cost effective, we will compare the discount as an annual percentage to the value of funds to the treasury. For this situation the discount is 1/10. We work the formula and determine the EAIR is 18%. We compare this to the treasury rate of 9%(given in the scenario). 18 is greater than the value of the treasury, so we will want to take the discount. If more than one set of discount terms are offered then determine which set is more advantageous to the government. It is illegal to take a discount if the Discount Payment due date is already gone. Check on Learning: If the contract offers a discount of 4% in 10 days and the invoice offers 3.5% in 15 days, the better terms is not immediately apparent, so we must do a cost effectiveness exercise. 18 = OR 18% EFFECTIVE ANNUAL INTEREST RATE VG-18

.04/ (X) 360/30-10 .04/.96 (X) 360/20 .0416 (X) 18 = or 75% .035/ (X) 360/30-15 .035/.965 (X) 360/15 .0362 (X) 24 = .868 or 87% Check on Learning: Compare the discount 4/10 and 3.5/15 to see which is more advantageous. We have to complete the formula for both discounts. The discount with the greatest value is the most advantageous to the government. Which discount would be more advanatageous? 3.5/15

NOTE: Students will need another PDD Wksht
12. In compliance with the above, the undersigned agrees, if this offer is accepted within calendar days (60 calendar days unless a different period is inserted by the offeror) from the date for receipt of offers specified above, to furnish any or all items upon which prices are offered at the price set opposite each item, delivered at the designated point(s), within the time specified in the schedule. HARDWARE SUPPLIES R US 3030 CANNADY AVE. PEMBROKE, GA 31321 10 CALENDAR DAYS % 10 U.S.C. 2304(c) ( ) 22. AUTHORITY FOR USING OTHER THAN FULL AND OPEN COMPETITION: PAGE OF 1 4. TYPE OF SOLICITATION SEALED BID (IFB) NEGOTIATED (RFP) SOLICITATION, OFFER AND AWARD 1. THIS CONTRACT IS A RATED ORDER UNDER DPAS (15 CFR 350) RATING 2. CONTRACT NO. DAFI01-**-C-4195 3. SOLICITATION NO. DAFI01-**-B-0025 5. DATE ISSUED 25 AUG ** 6. REQUISITION/PURCHASE NO. PRC6250 7. ISSUED BY DIRECTOR CONTRACTING AND PROCUREMENT 1/91ST MECH INF FORT STEWART, GA 31314 CODE 8. ADDRESS OFFER TO (If other than Item 7) PROCUREMENT DIVISION BLDG 600, RM 7 PAGES copies for furnishing the supplies or services in the Schedule will be received at the place specified in BLDG 600 NOTE: In sealed bid solicitations "offer" and "offeror" mean "bid" and "bidder". SOLICITATION 7 10. FOR INFORMATION CALL: A. NAME JAMES A. ALEXANDER B. TELEPHONE NO. (Include area code) (NO COLLECT CALLS) (803) 11. TABLE OF CONTENTS SEC. DESCRIPTION PAGE(S) PART I - THE SCHEDULE PART II CONTRACT CLAUSES I 2 PART III - LIST OF DOCUMENTS, EXHIBITS AND OTHER ATTACH. PART IV REPRESENTATIONS AND INSTRUCTIONS J LIST OF ATTACHMENTS K REPRESENTATIONS, CERTIFICATIONS AND OTHER STATEMENTS OF OFFERORS 1-2 L INSTRS., CONDS., AND NOTICES TO OFFERORS M EVALUATION FACTORS FOR AWARD OFFER (Must be fully completed by offeror) NOTE: Item 12 does not apply if the solicitation includes the provisions at , Minimum Bid Acceptance Period. 13. DISCOUNT FOR PROMPT PAYMENT (See Section I, Clause No ) 20 CALENDAR DAYS 30 CALENDAR DAYS CALENDAR DAYS 14. ACKNOWLEDGMENT OF AMENDMENTS (The offeror acknowledges receipt of amendments to the SOLICITATION for offerors and related documents numbered and dated: AMENDMENT NO. DATE NAME AND ADDRESS OF OFFEROR FACILITY 16. NAME AND TITLE OF PERSON AUTHORIZED TO SIGN (Type or print) BRIAN P. NEGRON PRESIDENT (X) A B C D E F G H SOLICITATION/CONTRACT FORM SUPPLIES OR SERVICES AND PRICES/COST DESCRIPTION/SPECS./WORK STATEMENT PACKAGING AND MARKING INSPECTION AND ACCEPTANCE DELIVERIES OR PERFORMANCE CONTRACT ADMINISTRATION DATA SPECIAL CONTRACT REQUIREMENTS 9. Sealed offers in original and Item 8, or if handcarried, in the depository located in until 2:00 PM (Hour) local time 2 OCT** (Date) CAUTION - LATE Submissions, Modifications, and Withdrawals: Section L, Provision No or All offers are subject to all terms and conditions contained in this solicitation. 15B. TELEPHONE NO. (Include area code) (555) 15C. CHECK IF REMITTANCE ADDRESS IS DIFFERENT FROM ABOVE - ENTER SUCH ADDRESS IN SCHEDULE. 17. SIGNATURE /S/ 18. OFFER DATE 20 SEP ** AWARD (To be completed by Government) 19. ACCEPTED AS TO ITEMS NUMBERED 0001 20. AMOUNT $36,000.00 21. ACCOUNTING AND APPROPRIATION 21* Z0-26EB W91DPW* /MJDF 23. SUBMIT INVOICES TO ADDRESS SHOWN IN (4 copies unless otherwise specified) ITEM 25 24. ADMINISTERED BY ///////RECEIVED IN FIELD SITE\\\\ ///ACCOUNTS PAYABLE\\\ /////16 OCT **\\\\ 25. PAYMENT WILL BE MADE BY FIELD SITE ATTN: ACCOUNTS PAYABLE 26. NAME OF CONTRACTING OFFICER GARY W. MC COY 27. UNITED STATES OF AMERICA (Signature of Contracting Officer) 28. AWARD DATE 31 AUG ** IMPORTANT Award will be made on this Form, or on Standard Form 26, or by other authorized official written notice. STANDARD FORM 33 (Rev. 4-85) Prescribed by GSA FAR (48 CFR) (c) NSN PREVIOUS EDITION NOT USABLE 10 U.S.C. 253(c) ( 15A. PerFORM (DLA) 5 NET Refer to page 9 in the 702 NOTE: Students will need another PDD Wksht This form is a SF 33. This is another contract/procurement document. We will need to compute the payment due date. What information do we need from the contract? Billing Office and Discount Terms Block 23 references which block is to receive the invoices. It directs us to block 25. We find the Field Site listed in block 25, therefore they are the billing office. Discount terms are listed in block 13. They are listed differently on this contract than on the DD Form The row is horizontal with blocks that say 10 calendars, 20, 30, etc 5% is listed in the 10 calendar day block, this means the discount is 5/10. The word net is found in the 30 block. The payment due date will be net 30 days if we cannot take the discount. We are now ready to add the information to the PDD Wksht. VG-20

TODAY’S DATE BILLING OFFICE CONTRACT TERMS + DAYS = DISCOUNT PAYMENT DUE DATE (DPDD) RECEIVING REPORT ROG AOG (if given) + 7 = EARLIER DATE (of CAD or AOG) LATER DATE (of invoice rcc’d block or earlier date block) + 30 DAYS= INVOICE DATED Interest Penalty PAYMENT DUE DATE WORKSHEET ECPD -PDD Julian Date = DAYS LATE DAILY PERCENTAGE FACTOR INTEREST RATE PRINCIPLE INTEREST AMT Discounts Step 1: Principle X Discount % = Discount Amount Step 2: Principle - Discount Amount = Cost to Govt = TOTAL INTEREST Payment Due Date (PDD) C.A.D. #1 #2 #3 18 OCT ** Field Site 5% 10N30 . , RECEIVED (in billing office) Refer to page 8 in the 702 NOTE: For this scenario todays date is OCT 18 We will now list the billing office and terms on the payment due date worksheet. You will see them in the red highlighted boxes. Now we need to fill out the invoice information VG-21

Thank You For Your Order! Refer to page 12 in the 702
HARDWARES SUPPLIES R US 3030 CANNADY AVENUE PEMBROKE, GEORGIA SOLD TO: UNITED STATES ARMY HQS, 1/91ST MECH. INF. ATTN: ACCOUNTS PAYABLE FORT STEWART, GA 31314 NUMBER: 377 INVOICE October ** DATE: ORDER September ** DATE:: ORDER DAFI01-**-C-4195 NUMBER: INVOICE NUMBER MUST APPEAR ON ALL P.O., PACKING SLIPS & PACKAGES CUSTOMER NO: USA11298 SHIP TO: DIR, PUBLIC WORKS BLDG. 400 SALESPERSON: C. Atkins TERMS: 2/15, 5/10, N/ FOB: DESTINATION DATE SHIPPED: Oct.** SHIP VIA: Semi Trailer OTHER: ITEM DESCRIPTION QUANTITY UNIT PRICE AMOUNT Thank You For Your Order! NOTE: All documents are date stamped when received. The vendor’s format may vary from this example, however, regardless of the format, the same basic Information must be displayed MERCHANDISE: FREIGHT: OTHER: TOTAL DUE: Concrete Ready Mix cubic yards $ $1,500.00 Received in FIELD SITE ACCOUNTS PAYABLE 13 Oct ** $1,500.00 -0- Refer to page 12 in the 702 What information do we need from the invoice to complete the PDD Wksht? Invoice Date, Discount Terms, Billing Office Date Stamp. Now we will add the information to the PDD Wksht. VG-22

TODAY’S DATE BILLING OFFICE CONTRACT TERMS + DAYS = DISCOUNT PAYMENT DUE DATE (DPDD) RECEIVING REPORT ROG AOG (if given) + 7 = EARLIER DATE (of CAD or AOG) LATER DATE (of invoice rcc’d block or earlier date block) + 30 DAYS= INVOICE DATED Interest Penalty PAYMENT DUE DATE WORKSHEET ECPD -PDD Julian Date = DAYS LATE DAILY PERCENTAGE FACTOR INTEREST RATE PRINCIPLE INTEREST AMT Discounts Step 1: Principle X Discount % = Discount Amount Step 2: Principle - Discount Amount = Cost to Govt = TOTAL INTEREST Payment Due Date (PDD) C.A.D. #1 #2 #3 18 OCT ** Field Site 5% 10N30 10 OCT ** 13 OCT ** 2/15 . RECEIVED (in billing office) Refer to page 12 in the 702 The Vendors date is 10 OCT The billing office (Field Site) date stamp is for 13 OCT Are there any additional terms offered on the invoice? Yes 2/15 We now have two different discount options to choose from. 2/15 and 5/10. Check on Learning: Have students compute which is the better discount using the discount conversion formula 2/15=49% and 5/10=95%. The better discount is 5/10. VG-23

TODAY’S DATE BILLING OFFICE CONTRACT TERMS RECEIVING REPORT ROG AOG (if given) + 7 = EARLIER DATE (of CAD or AOG) LATER DATE (of invoice rcc’d block or earlier date block) + 30 DAYS= Interest Penalty PAYMENT DUE DATE WORKSHEET ECPD -PDD Julian Date = DAYS LATE DAILY PERCENTAGE FACTOR INTEREST RATE PRINCIPLE INTEREST AMT Discounts Step 1: Principle X Discount % = Discount Amount Step 2: Principle - Discount Amount = Cost to Govt = TOTAL INTEREST Payment Due Date (PDD) C.A.D. #1 #2 #3 18 OCT ** Field Site 5% 10N30 . .05. .75.00 75.00 + DAYS = DISCOUNT PAYMENT DUE DATE (DPDD) INVOICE DATED 10 OCT ** 13 OCT ** 2/15 10 20 OCT ** RECEIVED (in billing office) Refer to page 12 in the 702 We determined that the 5/10 is the better discount. So to find our payment due date we will add ten days to the vendors invoice date. This gives us a date of 20 OCT. According to today’s date, can we take the discount? Yes Our Payment due date would be 20 OCT. Now we need to find the cost to the government. We will take the principle by the discount percentage to give us a discount of $75. We subtract this from the principle and the cost to the government is Let’s assume we were not able to take the discount, lets finish computing and find the net 30 payment due date. We will now look at the receiving report. VG-24

We will now add the dates to the PDD Wksht.
MATERIAL INSPECTION AND RECEIVING REPORT 23. CONTRACTOR USE ONLY OOO1 CONCRETE READY MIX, STANDARD //////RECEIVED IN FIELD SITE\\\\\ //////ACCOUNTS PAYABLE\\\ ///////18 OCT **\\\\\\\\\\\\\\\ 1,500.00 150.00 7. PAGE * If quantity received by the Government is the same as quantity shipped, indicate by ( 4. B/L 20. AMOUNT 18. UNIT cu yd 16. STOCK/PART NO. DESCRIPTION (Indicate number of shipping containers - type of container - container number.) A. ORIGIN 15. ITEM Public reporting burden for this collection of information is estimated to average 30 minutes per response, including the time for reviewing instructions, searching existing data sources, gathering and maintaining the data needed, and completing and reviewing the collection of information. Send comments regarding this burden estimate or any other aspect of this collection of information, including suggestions for reducing this burden, to Department of Defense, Washington Headquarters Services, Directorate for Information Operations and Reports, 1215 Jefferson Davis Highway, Suite 1204, Arlington, VA , and to the Office of Management and Budget, Paperwork Reduction Project ( ), Washington, DC 1. PROC. INSTRUMENT IDEN. (CONTRACT) DAFI01-**-C-4195 6. INVOICE NO./DATE 2. SHIPMENT NO. 72-85 5. DISCOUNT TERMS NET 30 DD Form 250, NOV 92 USAPPC V1.00 Form Approved OMB No 8. ACCEPTANCE POINT (ORDER) NO. 3. DATE SHIPPED 10 OCT ** TCN 13. SHIPPED TO DPW BLDG 400 FORT STEWART, GA 31314 11. SHIPPED FROM (If other than 9) FOB: 14. MARKED FOR 12. PAYMENT WILL BE MADE BY FIELD SITE ATTN: ACCOUNTS PAYABLE 10. ADMINISTERED BY CONTRACTING AND PROCUREMENT 9. PRIME CONTRACTOR HARDWARE SUPPLIES R US 3030 CANNADY AVE. PEMBROKE, GA 31321 Previous edition may be used. 19. UNIT PRICE 17. QUANTITY SHIP/REC'D* 10 CONTRACT QUALITY ASSURANCE 21. 22. RECEIVER'S USE Quantities shown in column 17 were received in apparent good condition except as noted. DATE RECEIVED SIGNATURE OF AUTH GOVT REP TYPED NAME AND OFFICE B. DESTINATION has been made by me or under my supervision and they conform to contract, except as noted herein or on supporting documents. CQA ACCEPTANCE of listed items has been made by me or under my supervision and they conform to contract, except as noted herein or on supporting documents. AND TIITLE CODE DATE SIGNATURE OF AUTH GOVT REP OF if different, enter actual quantity received below quantity shipped and encircle. ) mark, PLEASE DO NOT RETURN YOUR COMPLETED FORM TO EITHER OF THESE ADDRESSES. SEND THIS FORM IN ACCORDANCE WITH THE INSTRUCTIONS CONTAINED IN THE DFARS, APPENDIX F-401. DENICE ROMAN PBO, GM13 18 OCT ** /S/ MICHEL GORDON CONTRACTING AGENT Refer to page 11 in the 702 What information do we need from the receiving report? We need the AOG and the ROG. Which block has the AOG? Block 21b Which block has the ROG? Block 22 We will now add the dates to the PDD Wksht. VG-25

CONTRACT INVOICE Interest Penalty ECPD -PDD Julian Date = DAYS LATE DAILY PERCENTAGE FACTOR INTEREST RATE PRINCIPLE INTEREST AMT Discounts Step 1: Principle X Discount % = Discount Amount Step 2: Principle - Discount Amount = Cost to Govt = TOTAL INTEREST . TODAY’S DATE BILLING OFFICE TERMS RECEIVING REPORT ROG AOG (if given) + 7 = EARLIER DATE (of CAD or AOG) LATER DATE (of invoice rcc’d block or earlier date block) + 30 DAYS= PAYMENT DUE DATE WORKSHEET Payment Due Date (PDD) C.A.D. #1 #2 #3 18 OCT ** Field Site 5% 10N30 10 OCT ** 17 OCT ** 17 OCT 16 NOV + DAYS = DISCOUNT PAYMENT DUE DATE (DPDD) DATED 13 OCT ** 10 20 OCT ** RECEIVED (in billing office) Refer to page 11 in the 702 The first date is the ROG. We found it in block 22 with a date of 10 OCT. We add 7 days to find our CAD. This gives us a date of 17 OCT. Our AOG in block 21b is 18 OCT. We compare the two dates to pick the earlier date. The earlier date is 17 OCT. We compare the earlier date to the invoice received date of 13 OCT. We choose the later date to carry forward. The later date is 17 OCT. We add 30 days to 17 OCT and find our payment due date for NET 30 as 16 NOV. VG-26

Prompt Payment Act If we do not make the payment by the due date, we owe a late penalty in the form of interest. Certain criteria must be met to pay the interest penalty A valid procurement document must have been received in the Accounts Payable Office. There can be no dispute over the goods or services received. A proper invoice must have been received in the Accounts Payable Office, or there was a failure to notify the vendor of an improper invoice (7 days for NET 30, 5 days for dairy/agricultural commodities, and 3 days for meat products). Two kinds of interest: Simple and Compound Refer to page 18 paragraph 2 and 3 in the 702 CALCULATING INTEREST PENALTY. The following conditions must exist in order for the government to pay a Prompt Payment Act Interest Penalty: (1) A valid procurement document must have been received in the Accounts Payable Office. (2) There can be no dispute over the goods or services received. (3) A proper invoice must have been received in the Accounts Payable Office, or there was a failure to notify the vendor of an improper invoice (7 days for NET 30, 5 days for dairy/agricultural commodities, and 3 days for meat products). d. TYPES OF INTEREST PENALTIES. There are two types of interest penalties that we may be called upon to compute, Simple Interest and Compound Interest. Simple Interest is computed for payments that are late by 30 days. Compound Interest is computed for payments that are more than 30 days late.

EXCEPTIONS TO THE PROMPT PAYMENT ACT Financing purposes, i.e. Progress Payments Advance Payments Amounts in Dispute INTEREST PENALTIES LESS THAN $1.00 Refer to page 19 in the 702 INTEREST PENALTY EXCLUSIONS. Interest on late payments will not be paid under the following circumstances: (1) Payments made solely for financing purposes, except for construction architectural/engineer type payments. (2) Non-invoiced advance payments. (3) Amounts withheld in accordance with the terms of the contract. (4) A dispute with the business concern over the amount of the payment or other issues concerning compliance with the contract terms. (5) When the amount of interest is less than $1.00. (6) When making payments to CHAMPUS. VG-28

OFFICE OF MANAGEMENT AND BUDGET (OMB) INTEREST PENALTY OMB has established an additional penalty to be applied when interest for late payment is due to a vendor, but was not paid. AMOUNT: 100% of original interest penalty, but not less than $25.00 and not more than $5000. OFFICE OF MANAGEMENT AND BUDGET (OMB) INTEREST PENALTY OMB has established an additional penalty to be applied when interest for late payment is due to a vendor, but was not paid. An additional penalty will be assessed against the paying office. The amount of the additional penalty will be 100 percent of the original interest penalty owed, but not less than $25 and not more than $ Interest will be calculated on the unpaid interest penalty amount. This interest will be compounded every 30 days, until paid or for one year. The OMB penalty amount will accrue, compounded each 30 days until paid or the maximum penalty is reached. The accrual does not automatically stop after one year. This additional penalty will be assessed when the following conditions exist: (1) A payment must have been made where interest was due but not paid. (2) The vendor must ask for the interest and the OMB penalty in writing, within 40 days of the date of the check or EFT payment. (3) The vendor must reference a specific invoice on which he/she believes the interest is due and must attach a copy VG-29

LATE INTEREST PENALTY COMPUTATION
Simple Interest Payment Due Date Worksheets. Refer to pgs in HO 702 and work through the Simple Interest penalty formula. We will now work through a late interest penalty computation VG-30

SIMPLE INTEREST CALCULATION Interest Penalty = Discounts - 13 DEC **
TODAY’S DATE BILLING OFFICE CONTRACT TERMS RECEIVED (in billing office) + DAYS = DISCOUNT PAYMENT DUE DATE (DPDD ) RECEIVING REPORT ROG AOG (if given) + 7 = EARLIER DATE (of CAD or AOG) LATER DATE (of invoice rec’d block or earlier date block) + 30 DAYS= INVOICE DATED Interest Penalty PAYMENT DUE DATE WORKSHEET ECPD -PDD Julian Date = Total Days Late Daily Percentage Factor Interest Rate Principle Interest Amt Discounts Step 1: Principle X Discount % = Discount Amount Step 2: Principle - Discount Amount = Cost to Govt TOTAL INTEREST Payment Due Date (PDD) C.A.D. #1 #2 #3 SIMPLE INTEREST 13 DEC ** CALCULATION Field Site 5%10 N30 10 10 OCT ** 20 OCT ** 13 OCT ** 5%10 N30 17 OCT ** 10 OCT ** 17 OCT ** 16 NOV ** 17 OCT ** 18 OCT ** 13 DEC ** 347 16 NOV ** 320 First we want to compare the due date to todays date. 16 NOV vs. 13 DEC. Is the payment late? Yes, so we owe interest. Now we need to decide what type of interest is owed. To do this we need to find out how many days we are late. You will use the middle portion of your PDD to calculate the interest owed. The first block we need is the Expectd Check Payment Date. For the PEs you will use todays date of the scenario unless a different date is given in the instructions. Todays date is 13 DEC for this scenario, so that becomes our ECPD. We need to subtract our Payment Due Date of 16 NOV. You will want to use the Julian dates to ensure you are calculating the correct number of days late. You will refer to your 702 handout on page 22 to find the Julian Dates. The Julian date for 13 DEC is 347 and 16 NOV is 320. We subtract these to find that we are 27 days late. Since we are 27 days late, what type of interest will we need to calculate?? Simple 27 VG-31

TODAY’S DATE BILLING OFFICE CONTRACT TERMS RECEIVED (in billing office) + DAYS = DISCOUNT PAYMENT DUE DATE (DPDD ) RECEIVING REPORT ROG AOG (if given) + 7 = EARLIER DATE (of CAD or AOG) LATER DATE (of invoice rec’d block or earlier date block) + 30 DAYS= INVOICE DATED Interest Penalty PAYMENT DUE DATE WORKSHEET ECPD -PDD Julian Date = Total Days Late Daily Percentage Factor Interest Rate Principle Interest Amt Discounts Step 1: Principle X Discount % = Discount Amount Step 2: Principle - Discount Amount = Cost to Govt TOTAL INTEREST Payment Due Date (PDD) C.A.D. #1 #2 #3 .05 SIMPLE INTEREST 13 DEC ** CALCULATION Field Site 5%10 N30 10 10 OCT ** 20 OCT ** 13 OCT ** 5%10 N30 17 OCT ** 10 OCT ** 17 OCT ** 16 NOV ** 17 OCT ** 18 OCT ** 13 DEC ** 347 16 NOV ** 320 Refer to page 21 in the 702 Next we need to find the Daily Percentage Factor. You will find this chart on page 21 in the 702. It is a set number determined by the DOD. We are 27 days late, so according to the chart our daily percentage factor for 27 days is The Interest rate is a given at 5%. You would find that rate at its.gov if you needed too as a disbursing officer. Not necessary for classroom instruction, will be given for all scenarios. Then we will add the principle amount as listed on the invoice. This amount is We will multiple all of these numbers across to find the total interest owed. 27 VG-32

TODAY’S DATE BILLING OFFICE CONTRACT TERMS RECEIVED (in billing office) + DAYS = DISCOUNT PAYMENT DUE DATE (DPDD ) RECEIVING REPORT ROG AOG (if given) + 7 = EARLIER DATE (of CAD or AOG) LATER DATE (of invoice rec’d block or earlier date block) + 30 DAYS= INVOICE DATED Interest Penalty PAYMENT DUE DATE WORKSHEET ECPD -PDD Julian Date = Total Days Late Daily Percentage Factor Interest Rate Principle Interest Amt Discounts Step 1: Principle X Discount % = Discount Amount Step 2: Principle - Discount Amount = Cost to Govt TOTAL INTEREST Payment Due Date (PDD) C.A.D. #1 #2 #3 SIMPLE INTEREST 13 DEC ** CALCULATION Field Site 5%10 N30 10 10 OCT ** 20 OCT ** 13 OCT ** 5%10 N30 17 OCT ** 10 OCT ** 17 OCT ** 16 NOV ** 17 OCT ** 18 OCT ** 13 DEC ** 347 .05 $ $5.55 16 NOV ** 320 Refer to page 20 in the 702. Upon completion of the math, we owe $5.55 in interest. CHECK ON LEARNING: Do we need to calculate any additional interest? No, b/c it is less than 30 days late, simple interest What would be the total cost to the government? 27 $5.55 VG-33

COMPOUND INTEREST CALCULATION Refer to page 20 in the 702 VG-34

Interest Penalty = Discounts COMPOUND INTEREST CALCULATION - 28 DEC **
TODAY’S DATE BILLING OFFICE CONTRACT TERMS RECEIVED (in billing office) + DAYS = DISCOUNT PAYMENT DUE DATE (DPDD ) RECEIVING REPORT ROG AOG (if given) + 7 = EARLIER DATE (of CAD or AOG) LATER DATE (of invoice rec’d block or earlier date block) + 30 DAYS= INVOICE DATED Interest Penalty PAYMENT DUE DATE WORKSHEET ECPD -PDD Julian Date = Total Days Late Daily Percentage Factor Interest Rate Principle Interest Amt Discounts Step 1: Principle X Discount % = Discount Amount Step 2: Principle - Discount Amount = Cost to Govt TOTAL INTEREST Payment Due Date (PDD) C.A.D. #1 #2 #3 COMPOUND INTEREST 28 DEC ** CALCULATION Field Site 5%10 N30 10 10 OCT ** 20 OCT ** 13 OCT ** 5%10 N30 17 OCT ** 10 OCT ** 17 OCT ** 16 NOV ** 17 OCT ** 18 OCT ** 28 DEC ** 362 16 NOV ** 320 Refer to page 20 in the 702 Let’s look at this scenario again, but with different dates. First we need to find out how many dates late we are on making the payment. What is the first thing we need? The ECPD. The ECPD is todays date for the scenario, which is 28 DEC. What was the payment due date? 16 NOV. We find the Julian dates and subtract to find that we are 42 days late. What kind of interest we will owe? Compound b/c it is more than 30 days late. 42 VG-35

TODAY’S DATE BILLING OFFICE CONTRACT TERMS RECEIVED (in billing office) + DAYS = DISCOUNT PAYMENT DUE DATE (DPDD ) RECEIVING REPORT ROG AOG (if given) + 7 = EARLIER DATE (of CAD or AOG) LATER DATE (of invoice rec’d block or earlier date block) + 30 DAYS= INVOICE DATED Interest Penalty PAYMENT DUE DATE WORKSHEET ECPD -PDD Julian Date = Total Days Late Daily Percentage Factor Interest Rate Principle Interest Amt Discounts Step 1: Principle X Discount % = Discount Amount Step 2: Principle - Discount Amount = Cost to Govt TOTAL INTEREST Payment Due Date (PDD) C.A.D. #1 #2 #3 COMPOUND INTEREST 28 DEC ** CALCULATION Field Site 5%10 N30 10 10 OCT ** 20 OCT ** 13 OCT ** 5%10 N30 17 OCT ** 10 OCT ** 17 OCT ** 16 NOV ** 17 OCT ** 18 OCT ** 28 DEC ** 362 .05 $ $6.16 16 NOV ** 320 Refer to pages in the 702 Now we will need to find the percentage factor for 42 days late. Is there a DPF for this? No, when we are more than thirty days late we break it up into 30 day increments. The interest is compounded every 30 days. So first we need the DPF for thirty days at The interest rate is a given at 5% and then we list the principle. We multiply these numbers across to find that we owed $6.16 for the first 30 days that we were late. 42 VG-36

TODAY’S DATE BILLING OFFICE CONTRACT TERMS RECEIVED (in billing office) + DAYS = DISCOUNT PAYMENT DUE DATE (DPDD ) RECEIVING REPORT ROG AOG (if given) + 7 = EARLIER DATE (of CAD or AOG) LATER DATE (of invoice rec’d block or earlier date block) + 30 DAYS= INVOICE DATED Interest Penalty PAYMENT DUE DATE WORKSHEET ECPD -PDD Julian Date = Total Days Late Daily Percentage Factor Interest Rate Principle Interest Amt Discounts Step 1: Principle X Discount % = Discount Amount Step 2: Principle - Discount Amount = Cost to Govt TOTAL INTEREST Payment Due Date (PDD) C.A.D. #1 #2 #3 COMPOUND INTEREST 28 DEC ** CALCULATION Field Site 5%10 N30 10 10 OCT ** 20 OCT ** 13 OCT ** 5%10 N30 17 OCT ** 10 OCT ** 17 OCT ** 16 NOV ** 17 OCT ** 18 OCT ** 28 DEC ** 362 .05 $ $6.16 16 NOV ** 320 Refer to pages in the 702 Now we need to find out what we owe for the additional days. We were late 42 days. We subtract 30 days to find that we still owe 12 more days of interest. So the next DPF we will use is 12 days. This gives us a DPF of We will use this to start the next row of calculations. We take the DPF by the interest rate by the principle. However, if we are compounding interest would should our principle amount be at this point? .05 42 VG-37

TODAY’S DATE BILLING OFFICE CONTRACT TERMS RECEIVED (in billing office) + DAYS = DISCOUNT PAYMENT DUE DATE (DPDD ) RECEIVING REPORT ROG AOG (if given) + 7 = EARLIER DATE (of CAD or AOG) LATER DATE (of invoice rec’d block or earlier date block) + 30 DAYS= INVOICE DATED Interest Penalty PAYMENT DUE DATE WORKSHEET ECPD -PDD Julian Date = Total Days Late Daily Percentage Factor Interest Rate Principle Interest Amt Discounts Step 1: Principle X Discount % = Discount Amount Step 2: Principle - Discount Amount = Cost to Govt TOTAL INTEREST Payment Due Date (PDD) C.A.D. #1 #2 #3 $2.48 $8.64 COMPOUND INTEREST 28 DEC ** CALCULATION Field Site 5%10 N30 10 10 OCT ** 20 OCT ** 13 OCT ** 5%10 N30 17 OCT ** 10 OCT ** 17 OCT ** 16 NOV ** 17 OCT ** 18 OCT ** 28 DEC ** 362 .05 $6.16 16 NOV ** 320 Refer to page 20 in the 702 We have to add the interest that we owed for the first 30 days we were late to the principle. This makes our new principle total Now you will calculate the total interest owed for those 12 days. We owe $2.48 for the 12 additional days. What is our total interest owed for this late payment? 8.64 What is the total cost to the government? .05 42 VG-38

TODAY’S DATE BILLING OFFICE CONTRACT TERMS RECEIVED (in billing office) + DAYS = DISCOUNT PAYMENT DUE DATE (DPDD ) RECEIVING REPORT ROG AOG (if given) + 7 = EARLIER DATE (of CAD or AOG) LATER DATE (of invoice rec’d block or earlier date block) + 30 DAYS= INVOICE DATED Interest Penalty PAYMENT DUE DATE WORKSHEET ECPD -PDD Julian Date = Total Days Late Daily Percentage Factor Interest Rate Principle Interest Amt Discounts Step 1: Principle X Discount % = Discount Amount Step 2: Principle - Discount Amount = Cost to Govt TOTAL INTEREST Payment Due Date (PDD) C.A.D. #1 #2 #3 COMPOUND INTEREST 28 DEC ** CALCULATION Field Site 5%10 N30 10 10 OCT ** 20 OCT ** 13 OCT ** 5%10 N30 17 OCT ** 10 OCT ** 17 OCT ** 16 NOV ** 17 OCT ** 18 OCT ** 28 DEC ** 362 .05 $ $6.16 16 NOV ** 320 Show slide #44 refer to slide 38 note .05 $ 42 VG-39

Terminal Learning Objective
Action: Conditions: Standard: Implement Provisions of the Prompt Payment Act on Accounts Payable documents. Given DFAS-IN Regulation 37-1, DFAS-IN Manual FY, and various accounts payable payment packets. Show slide #45 Terminal Learning Objective. Review / Summarize Lesson During this lesson, we discussed and/or you reviewed prompt payment act procedures to include: discount payments, interest penalties, acceptance dates, and payment due dates. Understanding the provisions of the prompt payment act and applying those procedures to accounts payable documents will aid in reducing interest penalties and missed discounts for the government. Compute Payment Due Dates and Interest Penalty Payments without error IAW applicable regulations. VG-40

Practical Exercise Show slide #22 Practical Exercise
NOTE: Handout the Practical Exercise. Allow 5 minutes (0.10 Hrs) for the introduction, 75 minutes (1.50 Hrs) for completion of the practical exercise, and 25 minutes (0.50 Hrs) for a review.

PROMPT PAYMENT ACT (PPA)

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PROMPT PAYMENT ACT (PPA)

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Presentation on theme: "PROMPT PAYMENT ACT (PPA)"— Presentation transcript:

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