FAM No. 2006-09 (Prompt Payment Act - Revised Interest Rate)
)
August 24, 2006
FINANCIAL ADMINISTRATION MEMORANDUM NO. 2006-010 (II.J.)
To: Bureau Assistant Directors, Administration
Chief Executive Officer, National Business Center
Bureau Finance Officers
Finance Officer, Financial Management Services
Director, Office of Acquisition and Property Management
From: Mona Williams /s/
Focus Leader, Asset and Debt Management
Office of Financial Management
Subject: Financial Current Value of Funds Rate
Attached is a copy of the Federal Register dated July 28, 2006, Volume 71,
No. 145, page 42894,which contains the revised Current Value of Funds Rate
(CVFR) for calendar year 2006. The CVFR has been revised to 4 percent for the
period beginning on July 1, 2006, and ending on December 31, 2006. The CVFR is
required for use in the following financial calculations:
• Assessing interest charges for outstanding debts on claims owed to the Federal
Government.
• Determining whether to accept cash discounts by paying early. Prompt Payment
rules require agencies to analyze the total costs and total benefits to the
government of accepting a discount and paying early. The discount conversion
formula is available at http://www.fms.treas.gov/prompt/formulas.html.
• Determining when to pay purchase card invoices when a rebate is offered by
the credit card issuer. Prompt Payment rules require agencies to analyze the
total costs and benefits to the government of taking advantage of a credit card
issuer’s rebate offered for early payment. A spreadsheet at
http://www.fms.treas.gov/prompt/rebate.html automatically calculates the net
savings for credit card invoices if payment is made early versus the Prompt
Payment due date. The spreadsheet requires input of both the basis points
offered by the credit card provider and the CVFR in effect. Should you have
any questions on this subject, please contact Jonathan House on (202) 219-4096.
Attachment
Prior Financial Administration Memorandums on this Subject:
No. 2005-018 (II.J.), December 22, 2005 - Active
No. 2005-002 (II.J.), February 3, 2005 - Inactive
