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Disbursements Internal Process

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Disbursements Internal Process

    Accounts Payable Internal Process and Policies for Payments

    Direct Orders, Purchase Order Payments, and Direct Debits

    Implemented February 2007

    Updated November 2009

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    Table of Contents

    Background …………………………………………………3

    Accounts Payable Standard Process……………………3 Direct Payments…………………………………………….3

    Recurring Payments……………………………………….3

    Distributed Directs HFS Process………………………4

    Libraries Process…………………………………………..4

    Rush Payments……………………………………………..4

    OnePurdue SRM PO Payments………………………..5,6

    Payments to Foreign Entities………..…………………..7

    Tolerance…………………………………..………………..7

    Check Handling…………..………………………………...8

    Payment Methods……………….…………………………9

    Miscellaneous………………….…………………………...9

    Additional Resources………….………………………...10

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Background

    Procurement of goods and services occur in the following formats:

    ; Electronic procurement system (OnePurdue)-a Purchase Order is created after an

    electronic purchase requisition is approved and submitted to the vendor.

    ; Direct orders outside of the electronic procurement system- an order is placed with a

    vendor by a department. The vendor will send a bill that is paid upon approval of a direct

    invoice voucher.

    ; Department purchasing card order-an order is placed with a vendor by a department.

    These orders should be charged to the ordering department‟s purchasing card upon shipment

    of the goods.

    In the procurement model, a good or service is ordered at a predetermined or estimated price. When the good is received or the service provided, payment is owed to the vendor. The vendor will provide a bill for the good or service, which should be close to the price identified or estimated during the requisition stage. When these conditions are met, the vendor‟s bill should be paid.

Accounts Payable Standard Process

    Once the Accounts Payable staff receives an invoice voucher, the goal is to have it processed with 48 hours, and paid according to the vendor‟s payment terms.

Upon receipt, the AP clerk will:

    ; Check Invoice Voucher for accuracy and approvals

    ; Match invoice with vendor master data

    o If new vendor, arrange for Master Data team to create one

    ; Key invoice into OnePurdue system

Direct Payments

Direct Invoices (No purchase order, no encumbrance)

    o Customer departments send completed Invoice Voucher with supporting documentation

    and approval signatures to the Central Accounts Payable.

    o Central Accounts Payable clerk will review for completeness, check vendor master data,

    enter into system.

    ; If vendor master data missing, contact Vendor Master Data Team to set up.

Recurring Payments

    Payments can be set up to repeat on a specified schedule, for the same dollar amount each pay date. Recurring payments are created via invoice voucher with the following information included:

    ; First Payment Date

    ; Last Payment Date

    ; Interval (Monthly, Weekly, Daily)

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    ; Reference Information (Invoice number, etc)

    ; Recurring Amount

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    Rush Payments

    Accounts Payable staff prioritize invoice vouchers that are clearly marked as “RUSH”. The goal is to have rush payments processed within 24 hours of receipt of the voucher.

    ; Hand deliver rush check requests to Accounts Payable for vendor payments, or to the

    Tax Department for personal payments.

    ; A completed DIV, including appropriate approvals and backup documentation is

    required

    Housing and Food Services Direct Invoice Voucher Process (Existing Vendors)

ZV60

    o HFS will enter their invoices directly into SAP using Tcode ZV60

    o Once the transaction is parked, a printout of the transaction will be stapled to the invoice (in

    place of an invoice voucher).

    o The printout will be routed for approvals.

    o Once fiscal approval has been obtained, the printout and invoice will be sent to the HFS

    Business Office for review.

    o Upon HFS BO review, the printout and invoice are sent to Central Accounts Payable for

    posting.

ZV60 Upload

    o HFS will enter invoices into Excel Spreadsheet template for ZV60 Upload

    o Entries per upload should be limited to 20 invoices

    o Once the transactions are parked, a printout of the transactions will be stapled to the invoice

    (in place of an invoice voucher).

    o Invoices should be stacked in document number order, with printout on top.

    o The printout will be routed for approvals.

    o Each document number will be approved with one signature on the printout, as long as

    each document is within the signers‟ comptroller delegation authority.

    o If any document exceeds the signers‟ comptroller delegation authority, it will be

    forwarded to the next fiscal approver for review.

    o Once fiscal approval has been obtained, the printout and invoice will be sent to the HFS

    Business Office for review.

    o Upon HFS BO review, the printout and invoice are sent to Central Accounts Payable for

    posting.

    Libraries Direct Invoice Voucher Process

    o Libraries completes Invoice Voucher according to the following guidelines:

    o Include Vendor Name and Address.

    o Include Vendor Number (if known).

    o Provide unique „Payable Number‟ in Reference field (See Libraries naming convention

    list).

    o Libraries will keep list cross referencing payable numbers with invoices paid.

    o Central Accounts Payable will list invoice numbers on check stub (up to 50 characters).

    If not enough space, AP staff will send list of invoices paid to vendor as an enclosure.

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    Personal Payments (Payments to Individuals)

    o Customer departments send completed Invoice Voucher with Form 21, supporting

    documentation and approval signatures to Central Accounts Payable.

    o Central Accounts Payable clerk reviews for completeness, checks vendor master data,

    forwards to Tax Department.

    ; If vendor master data missing, contact Vendor Master Data Team to set up.

    o Tax Department audits, forwards to Accounts Payable to key

OnePurdue SRM PO Payments

    Orders are placed in the OnePurdue system. As procured items are delivered, designated individuals in each department or organizational unit are responsible for updating the OnePurdue system to indicate that the order has been received. This activity serves as an authorization to pay for that good or service. Fiscal Approver training includes instruction on receiving in OnePurdue.

    All invoices for orders placed through the OnePurdue system will be mailed to WL Accounts Payable. Accounts Payable staff will query the OnePurdue system to review the status of orders before processing an invoice for payment.

    Process for Invoices with OnePurdue Purchase Order Number

    The individuals in the role of Accounts Payable WL are responsible for reviewing and paying

    invoices received from Purchase Orders through the OnePurdue system.

    Upon receipt of a vendor invoice, Accounts Payable staff audit for payment terms, price discrepancies, and line item detail. Accounts Payable staff will query the system against the appropriate order number, and review the status of that order. Audit issues include problems with pricing or with

    receipt of goods.

    ; All invoices for OnePurdue SRM orders will be mailed to Central Accounts Payable on the West

    Lafayette campus.

    ; As invoices for OnePurdue SRM orders arrive, Accounts Payable staff will perform a System Search by

    PO number to verify the order. The Accounts Payable staff will enter the invoice using the t-code MIRO.

    ; If the Accounts Payable staff determines that further discussion is needed with the department before

    paying an invoice, they will notify the Department Business Office, or a similar entity within the area.

    ; Payment tolerance for orders is 15% (with $100 cap) or $25, whichever is greater. The tolerance does

    not include freight charges, Accounts Payable clerks are expected to apply the „reasonable test‟ to

    freight charges if less than or equal to $500. Any freight charges exceeding $500 will require further

    investigation by Account Payable clerks beginning with approval by the appropriate buyer in Purchasing.

    ; If invoices are entered and blocked for payment because they are out of tolerance, the Departmental

    Business Office will need to research the issue, update the OnePurdue system, if necessary, and/or C:\convert\temp\100594480.doc 11/25/2010

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    complete a Form 26 with instructions and approval for payment. (See B@P process on How to

    Release Blocked Invoices)

    ; If an invoice arrives with no reference to Purchase Order, the Accounts Payable staff will send the

    invoice to the ordering Department‟s Business Office. The Business Office will need to identify the

    order, complete a paper invoice voucher, attach it to the supplier invoice, and return all to Accounts

    Payable, unless supplier is foreign, in which case see Process for Electronic Payments to Foreign

    Entities.

    Following are potential scenarios the Disbursement staff will encounter when verifying the status of orders and the actions Disbursement staff will take for each scenario:

Order is Fully Received

    1. If the order has been marked as „received in the OnePurdue system AND the cost reflected on

    the invoice is within tolerance, Accounts Payable will process payment of the invoice.

2. If the order has been marked as „received‟ in the OnePurdue system but the cost reflected on the

    invoice is out of tolerance, the OnePurdue system will block the invoice for payment.

Partially Received Orders

    1. If the order has been partially received, the invoice is for a partial shipment AND the invoice is

    within tolerance, Accounts Payable will process payment of the invoice.

    2. If the order has been partially received, the invoice is for a partial shipment but the invoice is out of

    tolerance, the OnePurdue system will block the invoice for payment. The Department will be

    responsible for reviewing the blocked invoice report, and taking appropriate action. See „Out-of-

    tolerance Guidelines‟ and „How to Release Blocked Invoices‟ for more information.

    3. If the order has been partially received but the invoice reflects the total cost for all items on the

    order, the items being invoiced will be entered into the system, creating an out-of-tolerance item

    for quantity. The Department will be responsible for reviewing the blocked invoice report, and

    taking appropriate action. See „Out-of-tolerance Guidelines‟ and „How to Release Blocked

    Invoices‟ for more information.

Unreceived Orders

    1. Invoices will not be paid until the order has been received.

ADDITIONAL SCENARIOS

    Fully Received with Additional Items

    1. If the order is fully received but the invoice reflects the delivery of additional items, Accounts

    Payable will enter the number of items being invoiced into the system, creating an out-of-

    tolerance situation for quantity. The Department will be responsible for reviewing the blocked

    invoice report, and taking appropriate action. See „Out-of-tolerance Guidelines‟ and „How to

    Release Blocked Invoices‟ for more information.

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Direct Debits

    Process for Electronic Payments to Foreign Entities

OnePurdue orders

    If Purchasing obtains quote with bank account information, will make information available to Accounts Payable

    o Once order received and out-of-tolerance approval obtained, if applicable, from

    Customer department, Accounts Payable staff prepares Direct Debit Journal Voucher

    and Form 52A.

    o If supplier bank information missing, Accounts Payable staff contacts Customer

    department to obtain information.

    o Accounts Payable staff prepares and sends Direct Debit Journal Voucher and Form 52A

    to Treasury Operations.

    o Treasury Operations contacts Department for missing/incorrect bank information, if

    applicable.

    o Treasury Operations processes transaction.

    o Treasury Operations forwards Direct Debit Journal Voucher and Form 52A to Accounts

    Payable for data entry into system.

    o Encumbrance closes when payment run is processed.

Direct Pays (No purchase order, no encumbrance)

    o Customer departments send completed Direct Debit Journal Voucher & 52A with

    supporting documentation and approval signatures to the Central Accounts Payable.

    o Accounts Payable routes to Tax Dept for tax implications and verification of Comptroller

    approval

    o Tax Dept prepares new vendor set-up form (if necessary), and forwards paperwork to

    Treasury Operations.

    o Treasury Operations processes the transaction

    o Treasury Operations forwards Direct Debit Journal Voucher and Form 52A back to

    Accounts Payable for data entry into system.

Tolerance

    This relates to mis-matched dollar amounts between an invoice from the vendor and the amount on the order; and mis-matched quantities between an invoice from the vendor and the quantity on the order. The tolerance levels are applied on a line by line basis, not on an invoice total basis. An out of tolerance situation on a single line of an invoice causes the entire invoice to be blocked from payment in the OnePurdue system.

    ; The OnePurdue Accounts Payable system will automatically release an invoice if the

    difference between the invoice amount and the order amount is < 15% up to an invoice

    overage of $100.

    ; If an item is out-of-tolerance > 15% but < $25, the item will be manually unblocked by

    Accounts Payable and paid with no action required by department.

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    ; If an item is out-of-tolerance > 15% and the amount is > $25, but < $100, negative approval

    guidelines will be applied as follows:

    o Business Offices will have 5 business days to respond to ap@purdue.edu if NOT okay

    to pay.

    o If there is no action by the department the payment will be released in 5 business days.

    ; If an item is out-of-tolerance > $100, positive approval is required by the department.

    o The item will remain on the blocked invoice report until action is taken by the Business

    Office.

    o The vendor will remain unpaid until action is taken by Business Office.

    o Items on the list longer than 10 days will be reported to the Comptroller.

    ; If an item is out-of-tolerance due to quantity, positive approval is required by the department.

    o The item will remain on list until action is taken by the Business Office.

    o The vendor will remain unpaid until action is taken by Business Office.

    o Items on the list longer than 10 days will be reported to the Comptroller.

    NOTE: Shipping charges are not included when calculating out-of-tolerance, unless the shipping is a line item on the Purchase Order.

Check Handling

Held Checks

    Checks may be requested to be held for pick-up at the Reception Desk at Freehafer Hall. Held checks are indicated by marking „Y‟ in the “Held Check?” box on the invoice voucher. A contact

    person name and phone number must be clearly marked on the DIV. Checks may be picked up at the reception desk in Freehafer Hall.

Enclosures

    Enclosures are no longer sent from Accounts Payable; instead departments are encouraged to utilize the 50-character text field that we have available to us on our remittance advice for payment explanation. Any text information of 50 characters or less may be placed in the field marked "Text to appear on remittance advice" contained in the DIV form. If a department finds that 50 characters is insufficient to explain a payment to a vendor, the check should be marked as a "Held Check" and someone from the department will need to pick up the check and process its mailing as necessary.

Check Copies/Cancellations/Re-writes

    There are several reasons why a check may need to be voided and re-written, or the payment simply cancelled.

    ; Paid to wrong vendor

    ; Lost/Stolen

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    ; Torn/Ripped

    ; No longer needed

    ; Duplicate

    ; Incorrect Amount

    For help with this process, see

    https://www2.itap.purdue.edu/bs/BPP/Processes/Cancel%20and%20rewrite%20process.pdf

Payment Methods

Purdue University uses the following methods when paying vendors:

    ; Automated Clearing House (ACH)

    ; Checks

    ; Wire Transfer

    ; Purchasing Card

ACH

    ACH is a method of payment that electronically transfers funds to the vendor‟s bank account.

    ; To establish a vendor payment via ACH, the ACH authorization form must be completed by the

    vendor and sent to Accounts Payable with the first DIV

    ; This authorizes all future payments to the same vendor to be paid via ACH

Checks

    If a domestic vendor has not completed the authorization form for payments via ACH, the vendor master record will default to check as a payment method.

Wire Transfer

    Wire transfer is a method of payment that electronically transfers funds to the vendor‟s bank account

    on the same day it is initiated. This is most commonly used for foreign vendors, whether in US Dollars or foreign currency. See B@P process on “How to Pay a Non PO Related Invoice via Wire Transfer” https://www2.itap.purdue.edu/bs/BPP/Processes/PayNonPOInvoiceWireTransfer.pdf

Purchasing Card

    A Purchasing Card is a Purdue MasterCard used to conduct University business. See “Purchasing Card Handbook” at http://www.purdue.edu/ecco/pdf/pcardhbk.pdf

Miscellaneous

Cancelled Orders

    If the order has been cancelled but an invoice is received for the order, Accounts Payable will review file to see if a credit has also been received. If a credit has been received, the invoice and the credit will be entered into the system at the same time. If a credit has not been received, Accounts Payable contact the department to obtain a credit.

    Follow Up Process

    The Accounts Payable staff will contact departments as discussed in the out-of-tolerance guidelines above when discrepancies exist between the invoice and the order information in the OnePurdue C:\convert\temp\100594480.doc 11/25/2010

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