Policy: VI.F.3x2 (inactive)
Issued: September 1, 1988
Owner: Procurement Services
Latest Revision: February 6, 2002
This policy has been replaced and migrated to the standardized format.
TIMELY PAYMENTS TO VENDORS
This policy describes the general obligations placed on the University and its individual departments to ensure that vendors are paid promptly.
This policy does NOT cover situations where a vendor is believed to have failed to fulfill its part of an agreed transaction for any reason. See Problem Orders -- Policy VI.H.3 for these types of situations.
2.0 Policy [Top]
2.1 University Responsibilities
Unless otherwise established in a contract for a specific purchase, the Commonwealth of Virginia's Prompt Pay law stipulates that payment must be made to the vendor within 30 days of the receipt of an original invoice by Procurement Services -- Accounts Payable, or 30 days after the receipt of goods and services in the department placing the order, whichever is later. The date of the postmark on the envelope in which the check is mailed is deemed to be the date payment is made.
2.2 Procurement Services Responsibilities
All valid invoices will be processed for payment promptly upon receipt.
In cases where an invoice cannot be processed for payment because the associated Limited Purchase Order (LPO) in Oracle is not complete, approved, and valid for the invoice, Procurement Services enters these invoices into Oracle with one of several holds. When a department fails to resolve an invoice hold of this type within 14 calendar days of the date the hold was placed, Procurement Services will process the payment, charging the transaction to the originating department's Suspense PTAEO.
Necessary report(s) will be provided to departmental users to enable them to determine when an invoice for which they are responsible has been placed on hold, and instructions for resolving holds will be made available to the departments. When replacement LPOs are necessary to correct the invoice, Procurement Services will remove invoice holds promptly upon notification by the department that the replacement LPO is in the system and has been approved.
2.3 Departmental Responsibilities
University departments must conduct their procurement activities in such a way that their invoices can be paid on time, and must resolve any invoice problems promptly. The failure of a department to do so is regarded as a matter of concern to the University as a whole. The payment performance of individual departments affects the University's overall compliance with the Commonwealth's Prompt Pay law. In addition, the payment performance of an individual department may compromise the ability of all other University departments to do business with the same vendor(s). Many vendors will, for example, refuse to accept orders from one University department because of another department's delinquent account.
Departments are responsible for staying informed about current processes and procedures for purchasing and paying for goods and services, as described on the Procurement Services website.
Whenever a problem arises that may cause payment to be delayed departments are expected to work closely with the vendor in question and with Procurement Services to resolve the matter as quickly as possible.
Departmental cooperation is particularly important in the following types of situations:
- If a vendor sends the invoice for a Purchase Order or Limited Purchase Order directly to the originating department, that department must accept the responsibility for forwarding the document to Procurement Services as quickly as possible.
- When invoices cannot be matched to a Purchase Order in Oracle, departments should work closely with the vendor and with Procurement Services to resolve the problem invoice as quickly as possible. In particular, departments are expected to make full use of the Procurement Services website for instructions and resources for resolving specific types of problem invoices.
In the event that a department has failed to resolve an invoice hold within the allotted time period, resulting in charges to the department's Suspense PTAEO, the department must clear out all charges against the Suspense PTAEO at least once a month. Users clear out the charges against Suspense PTAEO accounts, identified as Other Than Personal Services (OTPS), by Grants Management (GM) cost transfers in the Oracle Integrated System. Please see Expenditure Batches in GM on the ISP website for details.
If Procurement Services is unable to process an invoice for payment on time, the vendor can bill for interest at the prevailing 90-day U.S. Treasury Bill rate. Any interest penalty must be paid out of existing local departmental funds.
Departments should see the Procurement Services website for detailed instructions on resolving this and other types of problem invoices.
3.0 Definitions [Top]
4.0 References [Top]
Please see the following closely related policies and procedures:
5.0 Approvals and Revisions [Top]