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FP7 Financial Info and FAQs --> Payments --> Prefinancing --> Prefinancing FAQs

Please clarify interest earned on payments by the EC when the partner is the coordinator in FP7. What does pre-financing mean? Does it refer only to the very first payment (initial pre-financing) or to all payments made by the EC during the lifetime of the project?

The only pre-financing payment is the first payment – all subsequent payments are reimbursement of costs and as such should immediately transferred to each beneficiary and not held by coordinator. The consortium agreement should reflect this. Thus, if the coordinator distributes the initial funding – i.e. pre-financing, he has no balance on which to report interest to the EC. If the coordinator has not distributed all the pre-financing by the time he receives the reimbursement of costs, the question is whether by retaining part of the pre-financing and then distributing all of this and only part of the reimbursement of costs means that there is no interest to report. Our view is that since he should normally distribute all the reimbursement of costs, the coordinator has to take the view he is now distributing all the reimbursement of costs and still retains part of the pre-financing, and therefore the interest is reportable to EC. He cannot say he is distributing the rest of the pre-financing and retain the reimbursement of costs.

 

We firmly believe that all the pre-financing should be distributed as received by the coordinator, but are aware that some consortium agreements do not reflect this ethical way of working. We have no doubt that any consortium agreement that does not have full distribution of the reimbursement of funds from the EC is entirely contrary to the spirit of the EC rules.

 

So effectively, yes the interest is only on the refinancing, not on reimbursement of costs per report. Failure to distribute the full reimbursement of costs from EC is undoubtedly unethical and should not be accepted by beneficiaries. Any coordinator who has not distributed the pre-financing in full by the time he receives the reimbursement of costs cannot arbitrarily identify the payment to beneficiaries as the pre-financing, while retaining the reimbursement of costs.



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