8474     LATE PAYMENT PENALTY         
(Revised 06/08)

The California Prompt Payment Act (the Act) Government Code (GC), Section 927 et seq., requires state agencies to automatically calculate and pay the appropriate late payment penalties (as specified in SAM Section 8474.2) if they fail to pay properly submitted, undisputed invoices on the date required by the contract or specific grant, which shall not exceed 45 days; or if a payment date is not specified in the contract or specific grant, within 45 calendar days of receipt of the invoice.  The DGS will not approve contracts with invoice payment terms exceeding 45 days.

To avoid late payment penalties, the maximum time from state agency receipt of an undisputed invoice to issuance of a warrant for payment is 45 days.  Thirty of the 45 calendar days allowed for vendor invoice processing and payment are allocated to the state agency payment approval process.  The remaining 15 calendar days are allocated to the SCO's claim audit and warrant generation process.  State agencies, on an exception basis,  may avoid penalty payments through the use of Office Revolving Funds (as defined in SAM Section 8474.1c) or utilize SCO's claim schedule expedite service.