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Payment Terms

A 45-day payment term is a utility industry standard. Suppliers that regularly do business with utilities should be familiar with these payment terms.

AEP accepts nearly 70 early payment terms, most common include:

  • 2% 10/Net 30
  • 1.5% 15/Net 30
  • 1% 20/Net 30

Please submit a request or contact AEP's Supply Chain Solution Center at 833-493-0821 to sign up for accelerated payments.

Accelerated Payment Program

The Accelerated Payment Program is part of AEP's ongoing initiative to electronically transact with our suppliers. By making our processes more efficient, we are now able to offer our suppliers earlier payments. The Accelerated Payment Program delivers faster invoice payment in exchange for an agreed upon discount deducted from the gross invoice amount.

Some of the benefits to participating in AEP's Accelerated Payment Program include:

  • Accelerated Cash Flow - Participating suppliers can expect to accelerate turning receivables to cash from 45 days to as few as 6 days after invoice receipt
  • Reduced Days Sales Outstanding (DSO) - By accelerating conversion of receivables to cash, participating suppliers will reduce DSO and free up working capital for other needs

Approved invoices are those which have passed all review processes (mechanized or manual) and been authorized for payment processing.

The discount is calculated by determining the number of days between when the payment is initiated and the net due date of the invoice. The system then applies a discount in accordance with the discount terms agreed upon. For example, an accepted accelerated payment offer with terms of 2% 10 net 50 would equate to a 2% discount as long as the invoice was paid on or before the 10th day after the invoice was received.

Yes. This is a great benefit for our suppliers of AEP's e-Invoicing initiative. If you are registered and send your invoices to AEP through the Ariba Network, then your invoice status and settlement date are displayed within your account for your convenience.

In order to participate in AEP's Accelerated Payment Program, you must be setup to receive an ACH credit electronically. Accelerated payments will not be made by check as the time needed for the check to be processed, mailed and settled would greatly limit the opportunity for Accelerated payment to be received in a timely manner. Currently, over 85% of our vendor payments are made by ACH credit. An email is sent the day prior to receipt of funds listing the invoice number (s) and dollar amount (s) being paid.

Use AEP's Financial EDI authorization form. The return of the completed form will provide for set-up of ACH credit as the payment method and enable your company to take advantage of the accelerated payment program.

Questions?

A specific invoice and/or invoice discount: Please submit an inquiry to AEP's Supply Chain Solution Center

eInvoicing

eInvoicing is the process of receiving POs, confirming orders and submitting invoices electronically via the Ariba Network. Invoices automatically post within PeopleSoft and are released for payment according to payment terms. Suppliers receive order notifications, transaction histories and full audit trails via the Ariba Network.

The Ariba Network is the world's largest trading partner community, home to more than 730,000 companies, including more than half of the Fortune 500. Ariba provides fast transmission, tracking and processing of orders and invoices.

The Ariba Network has been selected by AEP as the preferred method for sending purchase orders and receiving PO invoices.

The Ariba Network is AEP’s preferred method of transacting purchase orders and invoices. Suppliers will be encouraged to join the network.

Suppliers will be able to see the following statuses for invoices once received and/or processed in PeopleSoft:

  • Processed
  • Paying
  • Paid
  • Rejected
  • Canceled

Participation in the program will be an evaluation factor that AEP considers when selecting suppliers or reviewing suppliers for renewal.

Questions?

Please submit an inquiry or contact AEP's Supply Chain Solution Center at 833-493-0821.

Invoice Payment Process

Common reasons for delayed payment include:

The invoice has not been received by AEP’s Accounts Payable Department.

Resolution:

  1. AEP’s Accounts Payable Department will ask the vendor for a copy of the invoice.
  2. Once the invoice has been matched with all appropriate back-up material (e.g. a receipt of goods, required approvals, etc.) the payment should be processed.

The invoice is missing information or contains inaccurate information.

Resolution:

  1. AEP’s Accounts Payable Department will attempt to obtain missing information or correct the inaccurate information.
  2. If attempts to gather the required information are not successful, the Accounts Payable Department may return the invoice to the vendor for clarification. See the invoice template and invoice requirements for more information.

The invoice price does not match the pre-negotiated price on the Purchase Order.

Resolution:

  1. AEP’s Accounts Payable Department will contact the appropriate AEP buyer to determine which price is accurate based on set blanket order pricing or vendor quotation.
  2. If the Purchase Order price is accurate (and the invoiced amount is inaccurate), the invoice total will be adjusted to reflect Purchase Order pricing.
  3. If the invoice amount is accurate (and the Purchase Order price is inaccurate), the payment will be issued for the amount specified on the invoice and the Purchase Order will be adjusted accordingly.

The invoice is not approved by an AEP representative.

Resolution:

  1. If an invoice has been routed for an AEP representative’s approval but approval has not been obtained within a specified time frame, the invoice will be assigned to an Accounts Payable resolution team member for further investigation. NOTE: Every invoice should reference a Purchase Order Number or a Contract Number. If no Purchase Order Number or Contract Number is referenced on the invoice, the name of the individual who has ordered the merchandise should be provided to avoid delayed payment resulting from approver identification issues.

Issues when receiving goods, including:

The ordered material wasn’t delivered to the correct location.

Resolution:

  1. AEP’s Accounts Payable Department will request that the vendor supply a proof of delivery.
  2. Based on information provided on the proof of delivery, an Accounts Payable Representative will determine the location to which the material was delivered and provide that information to the receipting storeroom.
  3. The receipting storeroom will verify the receipt of the goods and process a receipt, which will facilitate the payment process.

The quantity of goods received does not match the quantity of goods invoiced.

Resolution:

  1. AEP’s Accounts Payable Department will contact the receiving storeroom for verification of the quantity received and perhaps request proof of delivery from vendor to justify the invoiced quantity.

  2. If the invoiced quantity is inaccurate, the Accounts Payable department will authorize for payment only the amount associated with the correct amount of received goods.

  3. If there was an error by the storeroom staff in receipting for the goods, the receipt of goods will be adjusted to reflect the correct amount and payment will be processed accordingly.

Delays in the routing of the packing list/shipping documents from outlying (remote) locations to the main inventory (receipting) location.

Resolution:

  1. Because material is sometimes delivered directly to a job site instead of a receipting storeroom location, it is important that all invoices specifically outline the location to which the goods are shipped as well as the name of the AEP contact, if available. This will ensure that, if the necessary paperwork is not forwarded properly within AEP, the Accounts Payable Department can provide that information to the receipting storeroom.
  2. The receipting storeroom will verify the receipt of goods at the “remote” location and process a receipt, which will facilitate the payment process.

The shipment is lost, damaged or incorrect.

Resolution:

  1. If incorrect material is received, AEP’s storeroom will contact the vendor to obtain a Return Material Authorization (RMA) and return instructions.
  2. If a shipment is lost or damaged and the shipping terms indicate the responsibility belongs to AEP, the storeroom will acknowledge the receipt of the goods and initiate a freight claim with the carrier. Once the storeroom has receipted for the goods, the payment process will continue. If responsibility belongs to the shipper, payment will be delayed until the replacement shipment is received.

Material is shipped against a cancelled or expired Purchase Order.

Resolution:

  1. If an order has been placed against a canceled or expired Purchase Order, AEP’s Accounts Payable Department will contact the storeroom to determine whether the material will be accepted or returned to the vendor.
  2. If the order is accepted, AEP’s Accounts Payable Department will either contact the appropriate AEP buyer to issue a replacement Purchase Order or will approve the payment of the invoice by treating it as a “non-PO” order (generally only done under specific circumstances). In either event, the payment to the vendor will be issued as appropriate.
  3. If AEP determines that the shipment made against the invalid Purchase Order will not be accepted, the storeroom will request a Return Material Authorization from the vendor.

In certain instances, AEP has received approval from the tax authority to pay sales tax directly to the specific state and/or locality. In such instances, AEP will not pay sales tax through its vendors (even though the invoice might include sales tax). See direct pay permit information.

If the short pay was not related to AEP’s “direct pay” arrangement (as described in Question 2), the short payment could have been the result of a discrepancy between the invoiced price and the pre-arranged price outlined in the original Purchase Order. In that case, AEP’s Accounts Payable Department will contact the appropriate buyer to investigate the discrepancy. To resolve this issue, the buyer can either revise the Purchase Order to reflect the correct price or advise the Accounts Payable Department to short pay the invoice.

When the Purchase Order is initiated it outlines the Free On Board (FOB) and other shipping terms. If the vendor does not follow the terms outlined on the Purchase Order, AEP’s buyer may advise AEP’s Accounts Payable Department to deduct all non-approved freight charges from the payment. If a “collect” freight bill was already paid directly to the carrier by AEP for a particular shipment, the buyer also may advise the Accounts Payable Department to deduct from the payment any added freight charges for that shipment.

Please submit an inquiry or contact AEP's Supply Chain Solution Center at 833-493-0821

For questions or further support, contact AEP's Supply Chain Solution Center at 833-493-0821.