B-48221, APRIL 8, 1946, 25 COMP. GEN. 698

B-48221, APRIL 8, 1946, 25 COMP. GEN. 698

CONTRACTS - DISCOUNT - COMMENCEMENT OF DISCOUNT PERIOD WHERE, UNDER A CONTRACT FOR THE PURCHASE OF COAL PROVIDING FOR CASH DISCOUNT FOR PAYMENT WITHIN A DESIGNATED NUMBER OF DAYS FROM THE DATE OF INVOICE, THE COVERING INVOICES ARE DATED THE DAY OF SHIPMENT NOTWITHSTANDING THE FACT THAT SUCH INVOICES ARE NOT ACTUALLY MAILED UNTIL A LATER DATE WHEN PERTINENT INVOICE INFORMATION AS TO WEIGHT OF CARS, ETC., HAS BEEN RECEIVED FROM THE CARRIER, THE DISCOUNT PERIOD SHOULD BE COMPUTED FROM THE DATE OF MAILING, AS SHOWN BY THE POSTMARK ON THE ENVELOPE RATHER THAN FROM THE DATE OF INVOICE. 24 COMP. GEN. 716, AMPLIFIED.

COMPTROLLER GENERAL WARREN TO THE SECRETARY OF WAR, APRIL 8, 1946:

THERE HAS BEEN RECEIVED A LETTER DATED FEBRUARY 25, 1946, FROM THE OFFICE OF THE FISCAL DIRECTOR, ARMY SERVICE FORCES, WHEREIN, WITH RESPECT TO DECISION OF APRIL 3, 1945, B-48221, TO YOU, RELATIVE TO THE DISCOUNT PERIOD UNDER CONTRACTS PROVIDING FOR A CASH DISCOUNT FOR PAYMENT WITHIN A DESIGNATED NUMBER OF DAYS FROM DATE OF INVOICE, INFORMATION IS REQUESTED AS TO THE PROPER COMPUTATION OF THE DISCOUNT PERIOD WHEN THE PRODUCT PURCHASED IS RECEIVED PRIOR TO THE COVERING INVOICE, ATTENTION BEING INVITED IN CONNECTION THEREWITH TO THE CONFLICTING VIEWS OF THE LOCAL FINANCE OFFICER AND OF THE QUARTERMASTER GENERAL IN THE MATTER.

IT WAS HELD IN THE SAID DECISION OF APRIL 3, 1945, REPORTED AT 24 COMP. GEN. 716, RELEVANT TO THE CASH DISCOUNT PROVISION OF A CONTRACT FOR THE PURCHASE OF COAL, F.O.B. CARS AT CERTAIN DESIGNATED MINES, UNDER THE TERMS OF WHICH A DISCOUNT WAS OFFERED FOR PAYMENT "WITHIN 15 DAYS FROM DATE OF INVOICE," IN PERTINENT PART, AS FOLLOWS:

* * * CLEARLY, THE GOVERNMENT'S RIGHT TO THE CASH DISCOUNT CAN BE ASSERTED ONLY UPON PAYING THE INVOICE "WITHIN 15 DAYS FROM DATE" THEREOF. IT IS TO BE ASSUMED, OF COURSE, THAT IN NO CASE IS AN INVOICE TO BE ANTEDATED.

* * * BY AGREEING TO MAKE PAYMENT WITHIN A DISCOUNT PERIOD COMMENCING FROM DATE OF INVOICE--- WHICH DATE PROPERLY MIGHT BE REPRESENTED BY THE CONTRACTOR AS THE DATE OF SHIPMENT AT POINT OF ORIGIN--- THE GOVERNMENT MUST BE REGARDED AS HAVING CONSIDERED THAT THE DISCOUNT PERIOD WOULD INCLUDE THE TIME NORMALLY CONSUMED IN DELIVERY AND ACCEPTANCE OF THE COAL AT DESTINATION. * * *

IN VIEW OF THE FOREGOING AND ASSUMING THAT INVOICES ARE DATED ON OR AFTER THE DAY OF SHIPMENT AND ARE RECEIVED BY THE GOVERNMENT BEFORE DELIVERY OF THE COAL AT DESTINATION--- THUS INDICATED THAT THERE HAS BEEN NO UNDUE DELAY IN MAILING OF SAID INVOICES--- THE GOVERNMENT IS ENTITLED TO DISCOUNT ONLY WHEN PAYMENT OF THE INVOICE IS MADE WITHIN 15 DAYS FROM THE DATE THEREOF. * * *

IT IS REPORTED THAT IT IS THE PRACTICE OF CERTAIN CONTRACTORS TO DATE THEIR INVOICES THE DAY THAT SHIPMENT IS MADE NOTWITHSTANDING THAT SUCH INVOICES ARE NOT MAILED UNTIL A LATER DATE. THIS, FOR THE REASON THAT CERTAIN PERTINENT INFORMATION REQUIRED TO BE SHOWN ON THE INVOICES, SUCH AS THE WEIGHTS OF THE CARS, ETC., MUST BE DETERMINED IN THE FIRST INSTANCE BY THE RAILROAD COMPANIES AND THAT THIS INFORMATION IS NOT RECEIVED BY THE CONTRACTORS UNTIL 24 TO 48 HOURS AFTER THE CARS ARE IN TRANSIT, RESULTING IN THE INVOICES OFTEN BEING RECEIVED SUBSEQUENT TO THE ARRIVAL OF THE CARS AT DESTINATION.

UNDER SUCH CIRCUMSTANCES IN WHICH THE INVOICE IS RECEIVED AFTER THE ARRIVAL OF THE CARS AT DESTINATION, THE LOCAL FINANCE OFFICER HAS CONSTRUED THE DECISION OF APRIL 3, SUPRA, AS REQUIRING THAT THE DISCOUNT PERIOD BE COMPUTED FROM THE/DATE OF THE RECEIPT OF THE INVOICE. THE VIEWS OF THE QUARTERMASTER GENERAL IN THE MATTER ARE SET FORTH IN 2ND ENDORSEMENT OF FEBRUARY 7, 1946, TO THE COMMANDING GENERAL, ARMY SERVICE FORCES, IN PART, AS FOLLOWS:

5. IT IS NOTED THAT IN ACTUAL PRACTICE, INVOICES ARE DATE AS OF THE DAY THE PRODUCT IS SHIPPED, BUT ARE NOT COMPLETELY FILLED OUT AND MAILED TO THE GOVERNMENT UNTIL FROM 24 TO 48 HOURS LATER AND WOULD THUS USUALLY ARRIVE AFTER THE PRODUCT. TO THIS EXTENT THE INVOICES MAY BE CONSIDERED ANTEDATED. IN SUCH CASES IT MAY BE PROPER TO CONSIDER THAT THE DISCOUNT PERIOD DOES NOT COMMENCE TO RUN UNTIL THE DATE THE INVOICE IS MAILED, BUT THERE APPEARS TO BE NO JUSTIFICATION FOR HOLDING THAT SUCH PERIOD DOES NOT COMMENCE UNTIL THE INVOICE IS RECEIVED.

THE STATEMENT MADE IN THE SAID DECISION OF APRIL 3, 1945, THAT THE RECEIPT OF INVOICES PRIOR TO THE DELIVERY OF THE COAL AT DESTINATION WAS INDICATIVE OF THE FACT THAT THERE HAD BEEN NO UNDUE DELAY IN THE MAILING OF SAID INVOICES, WAS INTENDED ONLY AS AN EXAMPLE OF ONE OF THE WAYS OF INDICATING THAT THE CONTRACTOR DID NOT DELAY IN SUBMITTING HIS INVOICES FOR PAYMENT. OBVIOUSLY, THERE WOULD BE NO OBJECTION TO AN INVOICE BEING DATED AND MAILED SUBSEQUENT TO THE DATE OF SHIPMENT AND THE FACT THAT SUCH AN INVOICE, IF OTHERWISE CORRECT AND PROPER, WAS RECEIVED SUBSEQUENT TO THE ARRIVAL OF THE SHIPMENT WOULD NOT OF ITSELF ENTITLE THE GOVERNMENT TO THE DISCOUNT OFFERRED UNLESS PAYMENT OF THE INVOICE WAS MADE WITHIN THE DESIGNATED NUMBER OF DAYS FROM THE DATE THEREOF.

HOWEVER, IT ALSO WAS STATED IN THE SAID DECISION THAT, FOR DISCOUNT PURPOSES,"IN NO CASE IS AN INVOICE TO BE ANTEDATED.' THE COVER INVOICE PROPERLY MAY BE DATED THE DAY OF SHIPMENT ONLY IN THE EVENT IT IS MAILED ON SUCH DATE AND, SO FAR AS CONCERNS THE REPORTED PRACTICE OF CONTRACTORS TO DATE THEIR INVOICES THE DATE SHIPMENT IS MADE NOTWITHSTANDING THE FACT THAT SUCH INVOICES ARE NOT ACTUALLY MAILED UNTIL A LATER DATE, THIS PRACTICE--- REGARDLESS OF THE REASON ASSIGNED THEREFOR--- MUST BE REGARDED AS AN ANTEDATING OF INVOICES. UNDER SUCH CIRCUMSTANCES, THE DISCOUNT PERIOD SHOULD BE COMPUTED FROM THE DATE OF MAILING, AS SHOWN BY THE POSTMARK ON THE ENVELOPE, RATHER THAN FROM THE DATE OF THE INVOICE. WHILE THE GOVERNMENT, BY AGREEING THAT IT WAS ENTITLED TO DISCOUNT ONLY IN THE EVENT PAYMENT WAS MADE WITHIN A DISCOUNT PERIOD COMMENCING FROM DATE OF INVOICE, PROPERLY MUST BE REGARDED AS HAVING CONSIDERED THAT THE DISCOUNT PERIOD WOULD INCLUDE THE TIME CONSUMED FROM THE DATE OF MAILING OF THE INVOICE UNTIL IT WAS RECEIVED, THERE APPEARS NO BASIS FOR THE VIEW THAT SUCH PERIOD ALSO WAS INTENDED TO INCLUDE THE TIME CONSUMED FROM THE DATE OF SHIPMENT OF THE PRODUCT INVOLVED UNTIL THE CONTRACTOR WAS APPRISED BY THE CARRIER OF SUCH INFORMATION AS MIGHT BE NECESSARY FOR THE PREPARATION OF A PROPER COVERING INVOICE. TO HOLD OTHERWISE, EITHER WOULD CONSIDERABLY SHORTEN THE DISCOUNT PERIOD TO WHICH THE GOVERNMENT, UNDER THE TERMS OF THE DISCOUNT PROVISION, IS ENTITLED, OR ENTIRELY PRECLUDE THE RIGHT TO THE DEDUCTION OF DISCOUNT, DEPENDING ON THE EXTENT OF THE PROMPTNESS EXERCISED BY THE CARRIER IN TRANSMITTING TO THE CONTRACTOR THE REQUIRED INFORMATION OR BY THE CONTRACTOR IN PREPARING AND MAILING ITS INVOICE.