Early Payment Discounts on Vendor Invoices

May 30, 2018

2017-15500

Audit

As a follow-up to an audit of a contractor where the Tennessee Valley Authority (TVA) missed early payment discount opportunities of $1,029,965, we audited TVA’s management of early payment discounts on vendor invoices. Early payment discounts are offered by some contractors for payments made prior to the due dates on invoices. Our audit objective was to determine if early payment discounts are appropriately managed by TVA. Our scope included invoices from Supply Chain contracts and purchase orders with greater than $1 million in spending in any one fiscal year from October 1, 2014, through July 31, 2017. We found TVA’s management of early payment discounts needs improvement. TVA missed early payment discount opportunities of $932,340 out of $4,879,957 in early payment discounts available during our audit period. We also found early payment discount terms were generally entered accurately into TVA’s Maximo system utilized to process and approve invoices. However, we noted a few exceptions where Maximo’s payment terms did not accurately reflect the contractual payment terms.

Yes

Yes (agency-wide)

$932340

$0