Par.

1. Purpose

2. Authority

3. Policy

4. Responsibilities

5. Procedures

6. Review of Cash Management Program Operations

1. PURPOSE. To prescribe guidelines and procedures for effective cash management practices, for compliance with Department of the Treasury (Treasury) regulations, and for implementation of Department of Transportation (DOT) policies regarding cash management. This Order is not intended for application to situations relative to the scheduling of payments to State highway agencies (SHAs) for reimbursement of Federal-aid and other highway program costs incurred, or the billing and collection of ineligible or disallowed costs relative to these programs. In general, the financial/cost reimbursement relationship between FHWA and the SHAs is governed by the FHWA/State Financial Management Handbook, individual agreements, and memoranda of understandings.

2. AUTHORITY

   1. DOT Order 2700.13A, "Cash Management," dated August 28, 1980.
   2. Treasury Fiscal Requirements Manual (TFRM), Volume 1, Part 6, Chapter 8000, "Cash Management," TransmittalLetter 320, dated June 4, 1980.
   3. Treasury Circular No. 1084, dated December 29, 1976, "Regulations Governing Cash Management Practices Within the Federal Government," (Appendix No. 1 to TFRM Volume 1, Part 6, Chapter 8000).
   4. Treasury Management Letter No. 60, dated May 10, 1982, and Supplement 1, dated July 28, 1982, regarding the processing of "special" or "rush" payment requests and guidelines for submission of payment vouchers qualifying for discounts.
   5. The Prompt Payment Act, Pub. L. 97-177.

3. POLICY. It is FHWA policy to administer a cash management program which effectively manages cash as a productive resource. Management of cash deals with financial activities encompassing disbursements, billings, and collections, and cash held outside the cash account of the Treasury. The FHWA cash management program will be administered such that there will be a narrowing of gaps between disbursements and receipts through expediting receipts and controlling disbursements to avoid premature payments. Further, effective cash management practices will be utilized to give full consideration to the earning value of Treasury cash balances, ensure that cash balances held outside Treasury are maintained at the minimum amount necessary and are commensurate with the activity in the account, and reduce the uncertainty in forecasting net cash flow.
4. RESPONSIBILITIES

   1. The Office of Fiscal Services will establish a system for monitoring FHWA cash management practices to ensure compliance with this Order and controlling DOT directives and Treasury regulations. Overall review of FHWA cash management practices will be conducted annually by the Finance Division, Office of Fiscal Services. Program guidance, information, and assistance will be provided to regional and division offices, as needed, by the Office of Fiscal Services.
   2. Regional Administrators are responsible for the establishment and maintenance of effective cashmanagement procedures within the regional staff offices and for ensuring that such procedures are established in each field operating division office. To the extent deemed necessary by the Regional Administrator, guidelines for uniform cash management practices will be issued to subordinate organizations throughout the region, encompassing the procedural elements discussed in paragraph 5 of this Order.
   3. Division Administrators will establish cash management procedures in accordance with this Order and any cash management policies or directives issued by the Regional Administrator. Division office procedures will ensure continuous monitoring of its cash management practices to achieve the use of cash as a productive resource in the conduct of financial activities.

5. PROCEDURES

   1. Disbursements. Financial management and accounting personnel will ensure that effective controls are available and in place for managing checks issued and cash payments made. Such disbursements will be made when due, and only when due. Program managers will give adequate consideration to the effect of cash flow in rendering program decisions which affect the timing of disbursements. Contracts, purchase orders, and other procurement arrangements for the purchase of goods or services from any organization outside the U.S. Government, will ensure that contracts, agreements, and invoices specify when payments are due.

   2. Scheduling of Payments

      (1) Bills will be paid when due. The issuance and mailing of checks will be made for receipt by the payee as close as administratively possible to the due date specified in the invoice, contract, or other agreement.

      (2) If the goods or services are not received by the 15th day before the due date of an invoice, payment will be made no later than 15 days from the receipt of goods or services, but not prior to the due date.

      (3) If no due date is specified, the due date will be considered to be on the 30th day from receipt of the invoice, and payment will be scheduled to be made on that date.

      (4) Payments will not be made on invoices prior to the receipt of the related goods or services, except as specifically provided by contract or other agreements executed pursuant to law. With the exception of payments involving disputed invoices, late receipt, or the nonreceipt of goods or services, payment not made within 30 days of receipt of an invoice, or by the specified due date, will be considered a late payment.

      (5) Regional disbursing offices shall forecast and request disbursing authority weekly based on bills on hand required to be paid during the following week. The Office of Fiscal Services, Finance Division, shall ensure that appropriate measures are taken with the U.S. Treasury in Washington, D.C., to make available sufficient funds.

      (6) The Office of Fiscal Services shall conduct a review of balances of unused disbursing authority at the end of each month to ensure the ongoing monitoring of cash balances under FHWA control not earning interest.

   3. Cash Discounts

      (1) Bills for goods or services provided to FHWA will not be paid until receipt ha been acknowledged. Every effort will be made to make all payments in a timely manner and in a manner that most favorably reflects on the cash position of the U.S. Treasury. It should be noted that in order for a payment to qualify for a discount, unless a specific written agreement exists otherwise between FHWA and the supplier. Payment data must consequently be submitted sufficiently in advance of the discount date to allow for processing by the U.S. Treasury and subsequent mailing and delivery by the U.S. Postal Service.

      (2) Payments will not be made to achieve discounts unless the related goods or services have been received, except as specifically provided by contract or other agreements executed pursuant to law.

      (3) Determination as to whether prompt payment discounts are cost effective will be made in accordance with I TFRM 6-8040.30, which provides a formula for converting sales discount terms to an effective annual interest rate to be used as a comparison against the percentage are based on the current value of funds to the U.S. Treasury. Discounts will only be taken when the discount terms applied in the conversion formula yield an effective interest rate equivalent to or greater than the percentage rate based on the current value of funds to the Treasury.

   4. Cash Advances

      Federal funds advanced by FHWA shall be limited to the minimum amount of cash required to carry out the purpose of the approved advance and careful consideration shall be given to timing the advance to coincide with the actual cash need. Amounts advanced to employees for travel, other Government agencies for services, working capital funds and other recipients shall be closely monitored (at least monthly) to insure that advances are not in excess of immediate needs and that balances arereturned immediately when determined to be in excess or no longer needed.

   5. Billings and Collections

      (1) All bills for collection are required to be issued with information that established a due date for payment, providing for an interest penalty for payments received after the established due date. Source documents will be updated, insofar as possible, to include provisions for a penalty charge if the FHWA is required to bill for nonperformance under the terms of the agreement, as provided by I TFRM 6-8020.20. Agreements for periodic payment of an indebtedness will have a provision for interest charges at the Treasury rate current at the time the payment schedule is approved. All charges for late payments of bills for collection are to be deposited to miscellaneous receipts of the U.S. Treasury, Account 1499.

      (2) Invoices for goods and services furnished to individuals and organizations outside the Government will be prepared and dispatched within one working day after the day the billing office is advised that the goods have been shipped or released or the services completed. The payment due date will not be more than 30 days from the date of the invoice. However, if the actual value of the goods or services cannot be determined on the day the invoices are to be prepared, the procedures provided in I TFRM 6-8020.10 will be followed.

      (3) When the FHWA office responsible for collection determines that the administrative cost of collecting late charges exceeds the amount of the charges, it may at its discretion waive such charges. The determination will be supported by a prepared statement citing the amount of late charges to be waived, and the elements of costs and their estimated values that would be incurred in attempting to collect the late charges owed. Only direct processing costs will be considered in the cost comparison analysis, unless the indirect costs are significant and easily verifiable. Statements are to be signed by the preparer, and submitted for approval of the waiver by the appropriate official, as prescribed in FHWA Order 1-1, FHWA Organization Manual, who will also sign and date the statement as evidence of approval.

   6. "Special" or "Rush" Payment Requests. In accordance with Treasury requirements, Treasury Disbursing Centers will maintain a one-day turnaround schedule for all payments that can be automatically processed. The processing of "special" or "rush" payment requests for all classes of payments (including salary, travel advances, cashier replenishments, discounts, and "hardship" payments) are not considered emergencies by Treasury and will receive routine one-day processing. FHWA program managers and financial personnel are responsible for proper planning and timely submission of payment documents in order to eliminate, or minimize insofar as possible, the need for priority payment requests.

   7. Deposits. Receipts will be deposited promptly. All the initial stage of processing the accounting documents, the payments received (i.e., checks, money order, cash, etc.) will be separated and the payments deposited promptly in the U.S. Treasury. The frequency and timeliness of deposits will be in accordance with I TFRM 6-8030.30 and 8030.40. Care is to be exercised to limit deposit transmittals to no more than one each day.

   8. Cash Held Outside Treasury

      (1) Except for imprest funds held in FHWA regional and division offices, no cash will be held outside of the U.S. Treasury.

      (2) Regional Administrators and Direct Federal Division Engineers are responsible for conducting quarterly operational reviews of imprest fund use and balances, to ensure that such funds are commensurate with actual needs and do not exceed the maximum limitations, in accordance with I TFRM 4-3000.

      (3) Imprest fund amounts in excess of actual needs will be promptly withdrawn and deposited in the U.S.Treasury.

6. REVIEW OF CASH MANAGEMENT PROGRAM OPERATIONS

   The Office of Fiscal Services will conduct an annual review of the FHWA cash management program operations carried out by headquarters and field offices, in accordance with the responsibilities discussed in paragraph 4 above. A copy of the annual report of findings will be submitted to the Departmental Office of Financial Management (M-80), for review and submission to the U.S. Treasury as required by I TFRM 6-8080.30 and 8080.40.

/s/
Daniel Markoff
Associate Administrator
for Administration