Payment Practices

Electronic Funds Transfer (EFT)

The Debt Collection Improvement Act of 1996 requires the use of EFT for most federal payments, with the exception of tax refunds. The Department closely monitors its monthly EFT performance, and submits consolidated monthly EFT activity reports to OMB, as part of the Department’s Performance Metrics data.

The Department’s vendor EFT percentage notably increased from 93 percent for FY 2005 to 96 percent for FY 2006. The Department accomplished this, in large part, by working closely with its bureaus to identify opportunities for new or improved business processes. This improved performance allowed the Department in FY 2006, on average, to meet OMB’s vendor EFT performance goal of 96 percent. The Department’s overall EFT percentage remained steady for FY 2006 at 98 percent. The Department believes its continued efforts to implement new or improved business processes will lead to further increases in vendor EFT percentages.

The Department’s achievements in this area are illustrated in the table below:

Bankcards

The Department is committed to the use of bankcards (purchase cards) as a means of streamlining Departmental procurements. Bankcard usage is closely monitored, and those that are no longer needed are promptly closed. This has resulted in an overall decrease, over the past five fiscal years, in the number of bankcards in use, from 6,405 at September 30, 2001 to 5,965 at September 30, 2006. The Department’s emphasis on EFT-compliant payment methods has contributed to an overall increase, over the past five fiscal years, in bankcard purchases, from $131.6 million at September 30, 2001 to $158.1 million at September 30, 2006. The Department continues to monitor the internal controls surrounding bankcard purchases to ensure that all such purchases are legal and proper. As of September 30, 2006, the Department had an overall zero percent bankcard delinquency rate.

Prompt Payment

The Prompt Payment Act of 1982 requires agencies to pay their bills to vendors on a timely basis, and to pay interest penalties when payments are made late. The Department closely monitors its prompt payment performance, and submits consolidated monthly prompt payment activity reports to OMB, as part of the Department’s Performance Metrics data.

The Department has further improved its prompt payment performance from 96 percent for FY 2005 to 98 percent for FY 2006. Furthermore, the number of invoices with late-payment interest penalties decreased significantly, from 8,974 in FY 2005 to 5,740 in FY 2006. Throughout FY 2006, the Department, on average, met OMB’s prompt payment performance goal of 98 percent. The Department continues to focus on improving its prompt payment percentage by working closely with its bureaus to identify opportunities for new or improved business processes.