Policy: VII.A.11x (inactive)
Issued: September 1, 1988
Owner: Procurement Services
TIMELY PAYMENTS TO VENDORS
This policy describes the need for all areas of the University to make timely payments to all vendors.
2.0 Policy [Top]
Good business practice and state law require the prompt payment of all legitimate vendor invoices. It is University policy to pay invoices after receipt of satisfactory goods or services according to the terms of the purchase order/limited purchase order. Delaying the payment of legitimate vendor invoices is not only unethical; it can cause problems for other departments. In some cases, vendors refuse to make any shipments to University departments until all past-due invoices are paid. In other instances, vendors have refused orders from one department because of another department's delinquent account.
Prompt payment of vendor's invoices, even at the end of the fiscal year or grant period, is the proper processing method. Prompt payments:
- Help hold down prices for all University departments,
- Reduce vendor cash flow problems (which can often impact the vendor's service to the University),
- Minimize invoice service charges,
- Promote goodwill toward the University within the business community,
- Present a favorable perspective of the University's fiscal position,
- Significantly reduce confusion, telephone calls, memoranda, and inter departmental conflict.
DEPARTMENTS SHOULD ONLY ORDER GOODS OR SERVICES WHEN SUFFICIENT FUNDS ARE AVAILABLE. ONCE GOODS OR SERVICES ARE RECEIVED, A RECEIVING REPORT SHOULD BE PROCESSED IMMEDIATELY.
See also Procedures:
- 6-9, "Receiving Goods/Services for Purchase Order Classes C, G, I & S,"
- 6-11, "Receiving Goods/Services for Purchase Order Classes M and V,"
- 6-12, "Preparing Receiving Reports for Limited Purchase Orders,"
- 6-13, "Reporting Receiving or Invoice Problems on Limited Purchase Orders,"
- 6-14, "Vendor Invoice Received Directly by Department,"
- 6-15, "Replacing a Missing LPO."
Payment of Invoices
Under certain conditions, departments may find it necessary to withhold payment of a vendor's invoice. Prior to taking such action, the department should contact the appropriate commodity buyer in Material Management to discuss the situation. If the decision is to withhold payment, the department must send a registered letter to the vendor stating payment is being withheld and the reason why. Copies must be forwarded to the Director of Procurement Services.
Departments can legitimately withhold payment from a vendor under the following conditions, IF THE VENDOR WAS INFORMED BY REGISTERED LETTER:
- A partial shipment causing the entire order to be unusable,
- Damaged or non-functional goods,
- Unsatisfactory installation in terms of the contractual agreement,
- Significant or unexplained variance over the purchase order price, or
- Prior shipment problems.
3.0 Definitions [Top]
4.0 References [Top]
Policy VII.A.12, "Problem Orders."
5.0 Approvals and Revisions [Top]