Invoices - Resolving Invoice Holds

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Scope

This procedure covers the resolution of accounts payable invoice holds—that is, invoices, check requests, and payment vouchers that could not be paid due to a discrepancy.

System References

Invoices - Canceling Invoices [NAV5516U]

Invoices - Finding Invoices [NAV5517U]

Invoices - Releasing or Placing Invoice Holds [NAV5515U]

Invoices - Running Invoice on Hold Report [NAV5537U]

Policy

Invoices are entered by the AP Invoice Processor.

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

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

The Prompt Payment Act (Code of Virginia, Article 2.1) requires that all state agencies pay invoices in 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

Vendor invoices reflecting prices that exceed purchase order prices will not be paid and will be placed on hold, except for invoices that fall within University tolerances.

Tolerances will be established by the Director of Procurement Services.

Proof of delivery documents, for example, supplier packing lists or purchase receipt tags, are filed and maintained by the receiver; they are not forwarded to the accounts payable department for filing and reference.

Purchase orders are issued for all restricted items and for purchases not allowed on Payment Vouchers (See the Goods and Services Procurement Guide).

Financial liability is recognized at the time payment is approved; that is, inventory and departmental accounts are debited at the time Accounts Payable enters and approves the invoice. The process charges the departmental account for the payment and credits the accounts payable liability account.

Invoices are processed daily in the order in which they (or other requests for payment) are received. Invoices are paid on the system-calculated due date. The accounting entry to reduce accounts payable liability and cash accounts is made at that time.

There are four types of invoice holds:

matching holds which are created when the invoiced item does not agree with the purchase order information in either quantity or unit price
system variance holds which are created when the header and distribution amounts do not agree.
other system-generated holds such as payment falls outside the open Payables period
manual holds placed on the invoice in accordance with specific University policy

Manual holds on Accounts Payable invoices are required:

when payment vouchers require additional information.
when errors exist in amounts or calculations in invoices or payment vouchers.
when payment vouchers are missing receipts or receipts do not match the expensed value (for travel, petty cash, attachments).
when originator requests hold because of a dispute.
for restricted purchases.

Responsibility

The AP Invoice Processor and the PO Purchaser or PO Requester are responsible for working together when necessary to resolve accounts payable holds involving vendor invoices generated from purchase orders.

The Invoice Processor is responsible for reviewing invoices on hold, canceling invoices in the AP system and manually releasing holds where authorized.

The AP Administrator is responsible for authorizing the override of invoice holds in the AP system.

Distribution

Director of Procurement Services

AP Administrator^*

AP Fellows Stipend Processor^*

AP Invoice Processor^*

PO Purchaser^*

PO Requester^*

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 whenever an invoice is placed on hold. A full review of invoices on hold is conducted daily.

This procedure continues from:

Invoices - Entering Vendor Invoices [PRO5504U].

AP Invoice Processor

1. Run the Holds Reports.

Run the Invoices on Hold Reports daily.

Refer to Invoices - Running Invoice on Hold Report [NAV5537U].

Payables
N ® Other ® Requests ® Run
Submit a New Request

Run any other scheduled customized reports. (TBD)

2. Review the Invoices on Hold report to identify action required.

If invoices on hold require additional information from the PO Purchaser or PO Requester for resolution, goto task #3. Otherwise, goto task #9.

3. Notify the PO Purchaser or PO Requester that they must resolve the hold or obtain necessary approvals to override it.

PO Purchaser, PO Requester

4. Resolve the accounts payable hold, providing documentation as needed.

The resolution may involve any or all of the following steps:

Document the resolution to the problem with an attachment.
Correct system data such as entering receipt or changing price/quantities on the PO.
Obtain proper approvals.

5. Return notice to the Invoice Processor along with appropriate documentation if necessary or override approvals.

AP Invoice Processor

6. Find the invoice.

Refer to Invoices - Finding Invoices [NAV5517U].

Payables
N ® Invoices ® Entry ® Invoices
Invoices

If invoices require cancellation or alteration, goto task #7. Otherwise, goto task #8.

7. Cancel or change the invoices as specified by the PO Purchaser or PO Requester.

Refer to Invoices - Canceling Invoices [NAV5516U].

Payables
N ® Invoices ® Entry ® Invoices
Invoices

Note cancellation reason on the PO Purchaser or PO Requester’s notice.

8. Manually release holds as authorized by the PO Purchaser or PO Requester.

Refer to Invoices - Releasing or Placing Invoice Holds [NAV5515U].

Payables
N ® Invoices ® Entry ® Invoices
M ® View ® Find
Find Invoices

Include additional approvals and explanations required to override University policy.

9. Review the remaining held invoices to ascertain possible courses of action.

If held invoice requires AP Administrator approval to override, goto task #10. Otherwise, goto task #14.

10. Forward invoice information to the AP Administrator for approval.

Include supporting documentation, including a copy of the invoice if necessary, along with the Invoices on Hold report.

AP Administrator

11. Review the invoices on hold and supporting documentation

12. Note approval to override holds on the Invoices on Hold report.

13. Return annotated report to the Invoice Processor.

AP Invoice Processor

14. Manually release the holds.

Refer to Invoices - Releasing or Placing Invoice Holds [NAV5515U].

Payables
N ® Invoices ® Entry ® Invoices
M ® View ® Find
Find Invoices

Include additional approvals and explanations required to override University policy.

End of activity.

Invoices - Resolving Invoice Holds: Flowchart

Effective: 05/13/09