815 C.M.R. 4.06 – Late Penalty Interest Procedures

(1) Eligible vendors may qualify for late penalty interest if the vendor has provided the goods and/or services, has properly submitted an invoice, and the payment received by the vendor was not scheduled on the warrant within the contractual payment period i.e., from the date of receipt of the invoice to the warrant date, or if no such period is specified in the contract, within 45 days.
(2) Invoices received by departments after the close of the Commonwealth's accounts payable period in violation of 815 CMR 4.03(1)(d) shall be ineligible for the payment of late penalty interest. Departments shall notify the vendor in writing when an invoice must be processed as a prior year deficiency appropriation request.
(3) Notwithstanding the time frame specified in the contract, if a vendor has not receive payment pursuant to 815 CMR 4.05(8), as modified by 815 CMR 4.05(11), then the vendor may demand late penalty interest by invoicing the department for same. The demand shall be submitted on a Commonwealth Standard Invoice (Mosaic Form PV) in the manner specified in the contract to the address to which the original invoice was submitted. The vendor shall document the method and timing of presentment of the original invoice and provide a copy of the check stub or wire transfer certificate denoting payment to the department.
(4) Late Penalty interest shall be computed at a rate to be set semiannually on January 1st and July 1st by the Commissioner of Administration by publication in the Massachusetts Register. With the exception of departments procuring the services of Medicaid providers, the Commonwealth will pay interest at the rate promulgated by the Secretary of Administration and Finance on the amount owed from the payment date (or the 46th day if no payment date is specified in the contract) until the warrant date on which the department had scheduled the payment.
(5) The department shall date stamp the demand for late payment in accordance with 815 CMR 4.05(1). The department shall review the vendor's demand for late payment interest within five days of receipt. The department shall approve the payment of late penalty interest if said department confirms the original invoice was not scheduled for warrant within the payment date. Said payment shall be computed and processed in accordance with procedures set forth in 815 CMR 4.06(6). Failure of the department to review the vendor's demand for late penalty interest within the stated time frames shall subject the demand to desk review by the Office of the General Counsel to the Comptroller pursuant to 815 CMR 4.07.
(6) The amount of penalty interest shall be computed as follows: The payment due under the original invoice, multiplied by the number of days between the contract payment date and the warrant upon which the payment was actually scheduled, multiplied by the daily interest rate as set by the Commissioner of Administration and Finance. The department shall add the figures to the invoice submitted by the vendor and shall process the late penalty interest in accordance with the Office of the Comptroller’s policies and procedures, under Object Code 698. It is the department's responsibility to assure that the invoice for late penalty interest clears the payment process successfully to facilitate its appearance on the earliest warrant.
(7) If the department disapproves the vendor's demand for late penalty interest because the time frames were tolled due to the proper rejection of the invoice under 815 CMR 4.05(3), (5) and (7) inclusive, or because the payment was made within the payment date, then within five days the department will notify the vendor of the rejection of the demand and forward the file to the Office of the General Counsel to the Comptroller for desk review pursuant to the provisions delineated in 815 CMR 4.07.