An advance payment is required on all industrial projects with industry sponsors. This advance payment is required because as an agency of the State of Texas UT Austin is prohibited from extending credit to a private enterprise. Since it may take several months to receive payment for an invoice for materials and salaries necessary to initiate a project, an advance payment for these “start up” or “mobilization” activities is required. The amount of the advance payment is usually 25% of the total project cost. However, the amount of the advance payment may be higher or lower depending on the circumstances, e.g. if the sponsor has a bad credit rating or poor payment history with UT Austin, a higher amount (up to the full project cost) may be required; if the sponsor has a good credit rating and an ongoing history of prompt payment with UT Austin the amount may be lower. The sponsor is notified of this advance payment requirement in the proposal transmittal letter. The amount of the advance payment is cited in the payment clause of the contract. An invoice for the advance payment is transmitted by upon execution of the sponsored research agreement, with payment due within 5 business days of receipt. The advance payment is applied against the final invoice for the project, and any funds remaining are returned to the sponsor.
This policy does not apply when the industrial sponsor has a prime government contract under which UT Austin will be a subcontractor. These subcontracts are administered by UT Austin’s Office of Sponsored Projects.