State of Texas Payment Processing Information for Vendors
Updated April 8, 2009
Contents
The Bill Payment Process
For most payments made by Texas state agencies (including state institutions of higher education), the Comptroller of Public Accounts plays the role of both the bank and the accountant. The Comptroller maintains a statewide accounting system that processes payments.
After a vendor provides goods or services to a state agency and the agency receives the vendor's invoice for those goods and services, the agency submits a voucher to the statewide accounting system. The voucher tells the computer whom to pay, how much to pay, what the payment is for, and which funds the agency wants to use to pay the bill. The agency also uses the voucher to tell the computer when to pay the bill. The Comptroller may not create or alter another agency's voucher in any way, and may not make a payment without a voucher.
Texas Identification Number
The statewide accounting system and certain other state databases use a "Texas Identification Number," called a TIN, to track and process all payments made to a vendor.
When a vendor contracts with a state agency, the vendor will need to provide a federal employer's identification number or Social Security number, whichever is applicable. The agency will determine if a unique 11-digit TIN has already been issued to the vendor. If a TIN has not been issued, the agency will process a request to assign a TIN. Each TIN has three components:
- A 1-digit prefix number
- A 9-digit number based on the Social Security number or federal employer's identification number
- A 1-digit self-check number
There are three digits following each TIN called a mail code. Each vendor should have only one TIN; however, a vendor can have multiple mail codes.
At least one mail code will be assigned to a vendor. The mail code represents a mailing address for payments to the vendor. A vendor may contact any agency to establish additional mail codes to represent different mailing addresses or direct deposit instructions. If multiple mail codes are assigned to a TIN, be sure to include the appropriate mail code with the TIN on each invoice so the agencies will know where and how to send payment.
Payment Options
Vendors can choose whether they receive their state payments electronically (direct deposit) or in the form of a warrant (state check).
Payments by Direct Deposit
Direct deposit transactions are transmitted directly from the Comptroller's office to the vendor's financial institution.
Direct deposit offers considerable advantages over warrant payments to both the vendor and the state.
- Both the vendor and the state reduce costs because the process is paperless.
- Mail delays are eliminated because the money being transferred from the state to the vendor takes less time to transmit.
- The vendor's money earns more interest because payments are received faster.
More payment information available with direct deposit
More information about a payment can be transmitted to the vendor through direct deposit than with a warrant because the Comptroller's office makes direct deposit payments using an electronic format called "Corporate Trade Exchange" or CTX.
For example:
- A warrant has only 14 spaces for an invoice number while direct deposit offers up to 30 spaces.
- A warrant has only 30 spaces for a payment description while direct deposit offers 80 spaces.
- A warrant has space to list up to 8 invoices only while direct deposit offers up to 9,999 lines of detail.
The Comptroller transmits the payment with the additional information to the vendor's financial institution even if the vendor has not arranged to receive this information from the institution. If the vendor is interested in receiving the payment information transmitted with the payments, the vendor will need to notify the financial institution.
How to sign up for direct deposit
Vendors who are interested in receiving state payments faster through direct deposit need to:
- Make sure a TIN has been assigned. If a TIN has not been assigned, ask the agency to process a request to assign a TIN with direct deposit instructions.
- Fill out a "Vendor Direct Deposit Authorization" Form 74-176
.
The state does not charge any fees for processing a direct deposit request. - Submit the form to a state agency with whom the vendor is conducting business. If the vendor does business with multiple state agencies, submit the form to only one of the agencies.
- Request all agencies with which the vendor does business to make payments by direct deposit. Contacting the agencies helps the agencies know to process the payment for direct deposit.
- Include the mail code assigned for direct deposit with the TIN on all invoices.
Payments by Warrant
A state warrant is similar to a personal check and has a stub attached to its left side. The stub includes limited information that can help you identify what the payment is for. The stub includes the name of the agency that is making the payment and the telephone number to call for questions about the payment. Since one warrant may be created to cover more than one invoice, the stub also includes up to 8 lines of payment information. Invoice numbers (up to 14 spaces), brief descriptions, and payment amounts for the transactions that the warrant includes may be included on the stub. There might not be enough space on the stub to show payment information for all of the transactions covered by the warrant. The agency making the payment might include additional information in the envelope with a warrant.
After a state warrant is created at the Comptroller's office, the warrant is sent to the agency that owes the vendor. The agency then mails the warrant to the vendor.
When The State Can Pay
Texas has a law commonly called the "payment scheduling law." This law requires state agencies to schedule the timing of their payments so that the state receives the most benefit.
This means that state agencies are not allowed to pay vendors before the payments are actually due unless the invoice is less than $5,000 or the state has a business reason for paying early. For example, agencies are allowed to make early payments to vendors if the vendor and the agency already have an agreement to make a payment at a certain time, or if the vendor gives the agency a substantial discount for paying early.
When Payments Are Due
Texas' "prompt payment law" establishes when some types of payments are due. The law says that payments for goods and services are due 30 days after the goods are provided, the services completed, or a correct invoice is received, whichever is later. Here is an example:
A state agency ordered and received 50 chairs. No discount
for early payment is offered. The chairs are received on January 3, 2009. The
state agency receives a correct invoice for all 50 chairs on January 10, 2009.
The payment is legally due on February 9, 2009, which is 30 days after the date
that the agency received the invoice.
The agency may not pay for the chairs in the example above until February 9,
2009, because of the payment scheduling unless the invoice is less than $5,000
or the state has a business reason for paying early.
Interest Due on Late Payments
The prompt payment law also says that interest is due to a vendor for goods and services payments that are late. Interest starts accruing on goods and services payments on the first day that the payment is late. The law sets the rate that is to be used for the interest calculation.
If a payment for goods and services became late after Sept. 1, 1999, the statewide accounting system automatically computes and adds interest to the late payment. The vendor can determine whether interest was included in a payment by looking for the word "interest" on the last line of the warrant stub or within the direct deposit payment information. If interest was not paid and the vendor wishes to collect interest that is legally due under the prompt payment law, the vendor must submit a claim for that interest.
To submit a claim for interest due under the prompt payment law:
- The vendor submitting the claim for interest should contact the appropriate agency since procedures for filing claims for interest vary from agency to agency.
- The claim is submitted to the agency that paid the principal amount.
- The claim must be submitted not later than the sixth month after the date that the late payment is received.
- The vendor should be prepared to show the postmark date on the envelope for the warrant that was mailed, or banking information showing when the direct deposit transactions were received.
For more information, there are prompt payment and payment scheduling resources for understanding the prompt payment law. The vendor can also look up the prompt payment law in law books. See Texas Government Code, Chapter 2251.
Payments "On Hold"
State law prohibits the state making payments if the vendor:
- Owes a debt to the state
- Is delinquent in payment of certain taxes
- Is delinquent in repaying certain student loans
- Is delinquent in payment of certain types of child support
In such cases, the state will continue to process and create a payment but will not release it to the vendor until the vendor pays what is owed. Under certain circumstances, the law also authorizes the Comptroller to apply state payments against what is owed.
Easy Access Payment Information
The Comptroller's office currently provides vendors with two options for accessing payment information 7 days a week, 24 hours a day.
- State-to-Vendor Payment Information Web Site
- State-to-Vendor Fax on Demand System
State-to-Vendor Payment Information Web Site
For payments issued, the State-to-Vendor Payment Information Web site provides detailed payment information. The Web site is available from Payment Services for State Employees and Vendors. Under the heading 'For State Vendors', click on the State-to-Vendor Payment Information link to prompt a Main Menu screen that provides three options.
- Register for a Personal Identification Number (PIN)
- Login to Payments - PIN required (allows access to confidential and non-confidential payments)
State-to-Vendor Fax on Demand System
The Fax on Demand System provides detailed payment information for non-confidential vendor payments only. You can choose to receive information on the payments issued within the past 10, 20 or 30 days. All that is needed is a touch-tone telephone, a fax number where the payment information should be sent, and a TIN, EIN or SSN.
| English | (877) 570-0844 toll-free (512) 936-3461 in Austin |
| Spanish | (877) 570-0830 toll-free (512) 936-3462 in Austin |
Advance Payment Notification
Are you receiving payments by direct deposit? Advance Payment Notification lets you know a direct deposit payment has been processed one-business day before it posts to your bank account. You can choose to receive notifications by e-mail or fax, and whether or not to include payment remittance information.
For more information about Advance Payment Notification including the authorization form, see Advance Payment Notifications (APNs).
Who To Contact
For assistance with payments, vendors should call the paying agency. For other assistance, call the Comptroller's office at (512) 463-4850 or toll-free (800) 531-5441 ext. 34850. Normal business hours for the Comptroller's office are 8:00 a.m. to 5:00 p.m. CST, Monday through Friday.
Helpful Payment Resources
Helpful payment resources are available for vendors at Payment Services for State Employees and Vendors.
Texas Government Online
The following links are helpful when doing business with state government in Texas: