CTCM Contract Financing and Payment Management

Question 1

Under Texas prompt payment law, what is the standard deadline for a state agency to pay a vendor invoice after approval?

Accepted Answer

30 days

Answer

10 days

Answer

45 days

Answer

60 days

Question 2

What interest rate applies to late payments by Texas state agencies under the Texas Prompt Payment Act?

Accepted Answer

A rate set by the Texas Comptroller each fiscal year

Answer

The federal funds rate plus 1%

Answer

A flat 5% per annum

Answer

Prime rate plus 2%

Question 3

A contract manager receives an invoice that does not match the agreed contract price. What is the correct first step?

Accepted Answer

Return the invoice as defective and notify the vendor in writing

Answer

Pay the invoice to avoid prompt payment penalties

Answer

Approve partial payment for the agreed amount

Answer

Escalate directly to the agency's legal counsel

Question 4

Which payment method is most appropriate for Texas state contracts involving ongoing services delivered over time?

Accepted Answer

Progress payments tied to milestones or deliverables

Answer

Lump sum payment upon contract execution

Answer

Advance payment of the full contract value

Answer

Payment only at contract closeout

Question 5

When a Texas state contract includes a retainage provision, what is the primary purpose of withholding a portion of payment?

Accepted Answer

To ensure the contractor completes all work satisfactorily before final payment

Answer

To fund contract modifications requested by the agency

Answer

To cover HUB subcontractor payments directly

Answer

To offset future invoice discounts

Question 6

A Texas agency contract for construction services includes a payment bond requirement. What risk does the payment bond address?

Accepted Answer

Risk that subcontractors and suppliers are not paid by the prime contractor

Answer

Risk that the prime contractor defaults on the project

Answer

Risk of cost overruns beyond the contract ceiling

Answer

Risk of agency budget rescission