Accounts Payable Procedures

 

 

 

Before a commitment to spend is made, the departmental budget manager should determine the availability of funds by using the most current budget printout for the appropriate account and deduct from it known commitments or expenditures in process which are not reflected in the balance. Funds must be available in the account to be charged prior to committing to an expenditure.

 

 

Fill out and obtain approval on a purchase order in accordance with separate instructions issued by Purchasing Manager for all purchases of $1000 or more. In some cases, a Contract Abstract form with accompanying contract proposal will be required in lieu of a purchase order.

 

Place order with vendor directly or through Purchasing Manager. Be sure to tell vendor to send the purchased items and the invoice to your attention. Check items received to see that they are correct and complete.

 

 

An invoice is a description and the amount of goods or services purchased. Only original invoices will be accepted by Accounts Payable. Duplicate or photo copies are not acceptable unless the department head explicitly certifies on the copy that the original copy was never paid and that payment should be made from a duplicate copy. Compare invoice with original order. Determine that only items received have been billed to you and that prices are correct. No sales tax should be added on purchases of materials installed or used by University personnel for University purposes. Make corrections, if necessary, on face of invoice to remove sales tax. Have authorized person sign (not just initial), date and put full 8 digit account number (XXXX-XXXX) to be charged on face of original invoice. Each invoice must be individually approved. Make a copy for your files, and forward the original to Accounts Payable for processing. Make sure the invoice is submitted in time to take advantage of any discounts.

 

 

Disbursements may be approved by the departmental budget manager, department head or his or her designee in compliance with the contract policy (See “Special Items). An approval signature must show at least one initial of the first name and the last name in full. Rubber stamps or copies of signatures are not acceptable. Only one approval signature is required for payments to vendors, recipients of honorariums, prospective employees or other guests of the University due reimbursement. Two signatures–one approval signature and a signature of the person requesting payment is required for reimbursements or authorization for advances to employees. The approval signature must be that of the requester’s superior and should never be the same person as the requester. Only the party directly responsible for the procurement of the goods or services should sign as the requesting employee.

 

 

NORMAL–The bulk of the university’s disbursements are made via computer-generated checks which are mailed after l0 A.M. each Tuesday. Items to be paid by 10:00 a.m. each Tuesday must be submitted to Accounts Payable by 12:00 noon on Wednesday of the preceding week. Payments to your suppliers will be made in a timely manner, with all cash discounts taken, if you submit invoices when received, rather than accumulating them. If payment is needed before the customary average of 30 days for non discount invoices, please mark "pay next batch" on the face of the respective invoices.

 

Many vendors allow a “cash discount” if payment is made within a specified period, usually by the tenth day of the month following the date of the invoice. In order for the University to realize the maximum benefit from this practice, it is imperative that all such invoices be submitted to Accounts Payable as soon as possible after departmental receipt and processing. Your budget benefits from the cash discount or suffers the loss from paying too late.

 

Exception Processing–Sometimes items must be paid prior to the regular Tuesday payment day. In these cases, invoices received by 3:00 will be paid the following morning. Since these checks require special handling and disrupt the university’s cash management plan, you are strongly encouraged to keep them at a minimum. Employee travel advances and reimbursements would be an example of requests for early payment. Reimbursements and/or refunds payable to University employees and students should be paid in cash when the amount is less than $100. There is no deadline for submission of Form 19’s to be paid in cash as the payment will be made immediately upon request during Cashier’s hours (Monday-Friday 9:00 a.m.–3:00 p.m.).

 

All accounts payable checks should be mailed either by the US Postal Service or the SPO. Pickup at the Cashier’s counter will be available only when delivery time requires it. This procedure should be avoided if at all possible. Only under rare circumstances will Accounts Payable send a vendor or employee check back to the originating department. Sound business practice dictates that the checks be mailed directly by the Treasurer’s Office. If it is necessary to include related correspondence with the check, please include it with the invoice when you submit it for payment. Accounts Payable will enclose it with the check when it is mailed. Packages of goods to return to a vendor should be mailed by the returning department and should not be sent to Accounts Payable.

 

 

All contracts between the University and another party must be approved and executed by the head of the division in which the contract originates. Division heads are also responsible for developing written contract policies for their divisions which shall include provisions concerning the delegation of contracting authority within the division and the retention of copies of contracts. Copies of all division contract policies shall be provided to the Treasurer. For purposes of this policy, divisions heads are the Provost, Associate Provost, Vice President for Business and Community Relations, Vice President of University Relations, Dean of the College, Dean of the School of Theology and Dean of Students.

 

A contract is any agreement which is legally enforceable whether or not it is titled “contract.” Other terms for “contract” are agreement, purchase order, invoice, letter of agreement, appointment letter, license, memorandum of understanding, release, bill of sale, lease, etc.

 

All contracts must be in the name of the University of the South and not in an individual’s or department’s name.

 

Any contract exceeding $25,000 in value must be approved and executed by the Provost or the Vice President for Business and Community Relations after it has been approved by the appropriate division head unless the Provost has otherwise notified the division head. All equipment leases must be approved and executed by the division head.

 

A division head may delegate, in writing, to a member of his or her staff the authority to approve and execute contracts. Without such delegated authority, no University faculty or staff member has the authority to commit the University to any contract. A copy of any delegation of authority shall be furnished to the Treasurer’s and Purchasing offices.

 

Copies of invoices and purchase orders shall continue to be retained by the Treasurer’s and Purchasing offices, respectively.

 

Any contract may be referred to Legal Counsel for review. For maximum usefulness, Legal Counsel should be consulted before a final agreement has been reached between the parties. A contract mustbe reviewed by Legal Counsel if any of the following apply:

 

 

 

 

 

Upon request, Legal Counsel will assist in drafting agreements.

 

 

 

A credit memo is a notice of credit or refund against prior charges and purchases. It reduces the amount owed on past or subsequent invoices. All credit memos must be promptly approved, account-coded, and sent to Accounts Payable for processing.

 

 

Although the dollar amount may appear small, a discount term of “2/10, n/30” provides the opportunity for the university to realize a 36% per year savings in paying its obligations. If the discount is missed due to slow handling of the invoices, the effective cost far exceeds that of the current cost of borrowed funds. Please do all you can to see that your budget and Sewanee take advantage of as many cash discounts as possible.

 

 

It is the responsibility of the departmental budget manager to avoid sending invoices for processing which have previously been paid. Please devise your own system to ensure that second submissions are not sent to Accounts Payable.

 

 

Do not alter the amount of an invoice for goods or services received. If the amount is overstated because of a math error or incomplete shipment, contact the supplier and request a credit memo. Send the invoice and credit memo to Accounts Payable together and both will be processed to correct the mistake. You may, however, subtract any sales tax charges.

 

If an old invoice (more than 30 days) is submitted, please state on an attachment that it has not been paid and the reason for which it is late.

 

All Master card/Visa statements should be submitted to Accounts Payable as quickly as possible after they are received. There is an extremely tight turn around time on these bills. The cardholder should a) sign the statement, and have his or her supervisor approve it; and b) attach paid receipts, including hotel bills, airline tickets, meal receipts, etc. Be sure to include the purpose of the trip/entertainment as well to comply with IRS requirements.

 

Master card/Visas should be used for travel and entertainment expenses and minor purchases where invoicing is not possible. Any purchases for equipment or other major items should be coordinated through the Purchasing Office, and therefore should not be charged with the Master card/Visa. Under no circumstances should an employee charge personal expenses to the corporate Master card/Visa.

 

 

Requests for reimbursement of payment of moving expenses should be sent to the Director of Personnel for handling in accordance with federal income tax laws.

 

There are specific IRS rules relating to payments to non-resident aliens (non-employees). When payment is being requested for services, flat amounts for travel or food, honorariums, payments for performances by musicians, athletes, or anything that would be considered taxable, one of the following forms must be received before payment can be processed:

 

Form 8233 “Exemption From Withholding on Compensation for Independent Personal Services of a Nonresident Alien Individual” (intended for people without social security numbers), or

 

Form W-9 “Request for Taxpayer Identification Number and Certification” (intended for people with social security numbers).

 

Having the appropriate tax form submitted with the request for payment would be ideal, but if that can not be accomplished, it will be necessary for us to request the form from the payee to determine taxability of the income before a check can be written. Appropriate taxes must be withheld from the check and transmitted to the IRS, if applicable. As you can see, there could be a delay in getting the check processed.

 

Any requests for payments to which this rule would apply should be promptly sent to Accounts Payable to allow them to determine the taxability and proper withholding, if appropriate. If you have questions, you may call:

 

Sarah Sutherland                 1349                Assistant Treasurer

Connie McBee                      1306               Accounts Payable Manager

Donna Pierce                        1249                Legal Counsel

 

Because of the above IRS regulations, please expect payments to nonresident aliens to be delayed until the necessary paperwork is obtained.

The purpose of the Personal Vehicle Reimbursement Form (available on Public Information/Treasurer’s Office/Forms) is to initiate payment to non-employees for use of their personal vehicle while on University business. Expenses are reimbursed on a rate per mile basis which is set annually. This reimbursement rate is designed to be sufficient to cover gas, insurance, and general upkeep of the automobile. University insurance does not cover non-employees while using personal vehicles on University business.

 

The purpose of the Request for Payment–Form 19 (available on Public Information/Treasurer’s Office/Forms) is to initiate payment of advances (indicate destination and dates of trip), honoraria and awards, refunds, petty cash reimbursement (attach receipts), and similar transactions where a document is not available. Please use the original document if one is available. Please note that personal reimbursements require two signatures, one from the requester and one from his or her supervisor. All receipts should be attached. Travel advances must also be approved by the individual’s supervisor. Submit a Travel and Business Expense Report promptly upon returning from your trip in order to clear the advance.

 

Journal and magazine subscriptions are often billed on a renewal form which must be returned to the vendor. This is one situation wherein approval should be made on a photo copy of the invoice (renewal notice) so that the original can be sent to the vendor. Both the approved photo copy and renewal form should be submitted to Accounts Payable for processing.

 

 

When traveling on university business, you may request a travel advance for your estimated expenses. Requests should be submitted on a Request for Payment Form-Form 19 (available on Public Information/Treasurer’s Office/Forms). This request requires two signatures–yours and your supervisor’s and the 8 digit account number(s) to charge the expenses. ALL travel advances are initially charged to 1000-1341. You will be given a Travel and Business Expense Form (also available on Public Information/Treasurer’s Office/Forms) to complete and return when your trip is finished. When your approved expense form is turned in to Accounts Payable, with your receipts attached, your office budget will be charged for the actual expenses and any moneys owed to you will be reimbursed. Travel advances need to be cleared within five days of your return. Travel expenses without an advance may be submitted for payment using the same Travel and Business Expense Form and receipts.

 

Please note that the Internal Revenue Service requires that you provide information on the amount, time and place and business purpose of requests for reimbursement for travel or entertainment.

 

The general policy of the University is to not reimburse an employee for personal entertainment and alcoholic beverages while traveling on University business. Certain expenses are reimbursable when advance approval of the Provost is obtained for the entertainment of special guests of the University.

 

 

A vendor statement is a listing of charges and credits transacted with a given vendor for a period of time, normally one month. Accounts Payable does not pay from vendor statements except for certain vendors who bill by monthly statement, such as doctors. The departmental budget manager should utilize the statement of account to check the accuracy of invoice billings, payments and other credits. All statements should then be sent to Accounts Payable for review and vendor communications.

 

 

With rare exception, payments for services rendered by University employees and University students must be added to the individual’s paycheck. Accordingly, no requests should be made of Accounts Payable to pay an employee or a student for services rendered unless independent contractor status has been determined. All requests for service compensation should be addressed to the Director of Personnel Services, must be signed by the employee or student, and must be approved by the employee's department head.

 

The following factors will assist in determining independent contractor status. An independent contractor:

 

 

 

 

 

 

 

IF in doubt, request a determination of contractor status by the Assistant Treasurer.

 

Requests for payment to independent contractors should be submitted to Accounts Payable. Approved methods for requesting payment are copies of contract, invoice, or Request for Payment (Form 19). A performer must accept our check to contract for a University function. Employees may not pay contractors for services rendered through their individual travel advances, petty cash vouchers, or employee reimbursements.

 

When arranging for services with an independent contractor, call extension 1759 or 1306 to see if a taxpayer identification number is on file. If a number is on file, submit your request for payment in the usual manner. If a taxpayer number is not on file, then you must request W-9, get the form completed, and submit it along with the request for a check. Include the payee mail address on all check requests. Failure to follow these procedures may result in a delay in getting your vendor paid timely. Your request will be returned to you if the required information is not complete. If the payee fails to provide the information, up to 31% of the fee can be withheld for payment to the Internal Revenue Service.