Vendors - Clearing Payment Holds

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Vendors - Clearing Payment Holds: Flowchart

Scope

This procedure covers removing the payment hold placed on a new supplier.

System References

Vendors - Entering Additional Information

Vendors - Removing Payment Holds

Policy

Vendor information in the database is maintained by the Vendor File/1099 Coordinator who cannot also create invoices.

Invoices for new vendors will remain on hold until the AP Vendor File/1099 Coordinator ensures all vendor information is received and valid, and removes the payment hold.

All new vendors are placed on payment hold until they provide a completed Tax Verification Information letter or documentation of their Tax Identification Number (TIN).

The Prompt Payment Act (Code of Virginia, Article 2.1) requires that all state agencies pay all invoices within 30 days. Agencies must report their prompt pay status to the State Comptroller on a monthly basis.

The University's standard payment terms:

are 30 days from receipt of a valid invoice or receipt of goods or services, whichever is later.
are always "Net 30" unless Procurement Services establishes a pre-agreed-upon contract with a vendor.
are established by the Vice President for Budget and Management in accordance with the state's Prompt Payment Act
are reflected on every payment, unless pre-agreed upon terms are established by a contract
can be changed only with the appropriate approvals
always take precedence over the terms reflected on the vendor's invoice

IRS 1099-MISC forms (1099s) are required for certain payments to individuals and partnerships, specifically:

royalty payments to individuals (of $10 or more), or to companies (of $600 or more)
rent payments (except to real estate agents)
prize or award payments
backup withholding
all attorney fees
payments to physicians and health care providers (including corporations of health professionals)
nonemployee compensation
payments for services greater than $600 to all vendorss unless their tax status states they are exempt

Payments for which an IRS 1099-MISC form is not required include:

payments to corporations (refer to the latest IRS codes for exceptions) except for medical corporations
payments for merchandise for resale
rent paid to real estate agents
travel reimbursements paid to employees

All new vendors are placed on hold until they provide a completed IRS W-9 form or documentation of their Tax Identification Number (TIN).

Vendors must be in the vendor file to get paid.

Vendors are also called Suppliers in Integrated System documentation.

Responsibility

The Director of Procurement Services is responsible for:

ensuring that standard payment terms are used
communicating standard vendor payment terms
approving all changes and exceptions to the standard payment terms

The Payments Manager is responsible for:

approving all Vendor Maintenance forms
ensuring the accuracy of the vendor database

The AP Vendor File/1099 Coordinator is responsible for updating vendor information in the database.

Distribution

Director of Procurement Services

AP Administrator

AP Vendor File/1099 Coordinator^*

Ownership

The Director of Procurement Services is responsible for ensuring that this document is necessary, reflects actual practice, and supports University policy.

Activity Preface

This activity is performed after the AP Vendor File/1099 Coordinator reviews new vendor information in the database, and ensures that the vendor has provided completed tax information, including the correct Tax Identification Number (TIN).

New vendors are placed on payment hold until the review by the AP Vendor File/1099 Coordinator is complete.

AP Vendor File/1099 Coordinator

1. Review the vendor information.

Refer to Vendors - Reviewing Vendors.

Payables
N ® Suppliers ® Entry
Suppliers

Review the vendor's information in the vendor file to ensure completeness and accuracy.
Ensure the vendor has provided a Tax Identification Number.
If a vendor package was sent to the vendor, ensure that all information is complete.
Ensure that data was entered using the established naming conventions.

2. Update the vendor information, if necessary.

Refer to Vendors - Entering Additional Information.

Payables
N ® Suppliers ® Entry
Suppliers

3. Remove the payment hold.

Refer to Vendors - Removing Payment Holds.

Payables
N ® Suppliers ® Entry
Suppliers

4. File any paper documents.

File the Vendor Change Form in the vendor file, sequenced by supplier number.

End of activity.

Effective: 08/13/04

Revision: 2

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