Accounting Office / Accounts Payable

Recommended Practices

Payments to outside vendors usually require a purchase order number. Exceptions: registration fees, subscriptions, memberships, utilities, airline tickets, and purchases made with a Purchasing Card or through CyBuy.

1.) The vendor releases goods or performs services after obtaining a purchase order number. Recommended Practice: Vendors should not release goods or perform services without having received a purchase order number from the university department. Potential Delays and Problems: No purchase order number is recorded when the order is taken: Without a purchase order number, the vendor cannot be assured that the person obtaining the goods or services has been authorized to obligate the university. Payment of the invoice will be delayed until a valid purchase order number has been established or identified.
2.) The vendor mails the invoice to Accounts Payable. Recommended Practice: Invoices should be mailed to Iowa State University, Accounts Payable, 1520 Administrative Services Building, 2221 Wanda Daley Drive, Ames, IA 50011-1004, faxed to 515-294-6470, or e-mailed to Potential Delays and Problems: The invoice is mailed to the department: If the vendor mails the invoice to the department receiving the goods or services, Accounts Payable is unaware that an invoice has been received, so the payment process does not begin. If the department receives the invoice, it should immediately forward it to Accounts Payable. The department also should notify the vendor to mail future invoices directly to Accounts Payable. The vendor mails a statement instead of an invoice: To avoid duplicate payments, we prefer to pay from individual invoices. If only a statement is mailed, it will be returned with a request for individual invoices.
3.) Accounts Payable enters the invoice on the appropriate purchase order. Recommended Practice: Vendor invoices should have a valid purchase order number and a unique invoice number. Potential Delays and Problems: The vendor does not provide a purchase order number: Accounts Payable sometimes can determine the correct purchase order number based on memory or from information available internally. However, this is a time-consuming and error-prone practice. Many of the invoices we receive do not contain a valid purchase order number. Invoices will be paid more rapidly and more accurately if the vendor provides the correct purchase order number. If Accounts Payable is not confident that it has identified the correct purchase order number to be charged, the invoice will be forwarded to Procurement Services for further investigation. The vendor does not provide an invoice number: All vendors should have a system that provides unique invoice numbers on their invoices. This allows their customers to distinguish between identical invoice amounts, and allows the vendors to correctly determine which invoices are being paid when the customer mails a check. Unfortunately, many do not provide a unique invoice number, so Accounts Payable must create one to populate that field on the voucher. We often use the date of the invoice, with the amount or a few additional letters of text. This delays payment, and also makes duplicate payments more likely.
4.) Accounts Payable scans the invoice and generates a VO Document. Recommended Practice: Accounts Payable scans invoices and generates VO Documents every business day. Potential Delays and Problems: Scanner Functioning: There is only one scanner, which can create capacity limitations on high-volume days, or when the scanner is not functioning properly.
5.) The Accounting Office audits and approves the VO Document and routes it to the departments that initiated the Web Req and that are funding the expenditure. Recommended Practice: Unlike other payment processes, the Accounting Office audits and approves the document before the funding department. Potential Delays and Problems: A taxpayer identification number is missing on a payment for services: If a taxpayer identification number is required but is not yet available, the Accounting Office must delay approval until this information is provided by the payee.
6.) The funding department receives and approves the VO Document Recommended Practice: Funding departments should review each VO Document to determine if the goods have been received or if the services have been provided. Potential Delays and Problems: The funding department does not review the VO Document: Accounts Payable does not know if the goods have been delivered for the correct prices, or if the services have been provided. Since many of our invoices arrive without valid purchase order numbers, Accounts Payable also is making educated guesses about which purchase order number to charge. Without the funding department's review of every VO Document, it is possible to make inappropriate payments. Sometimes a vendor will send us an invoice, even though payment already has been made by a P-Card. If Accounts Payable creates a VO Document for the invoice and no one at the department reviews the VO Document, the vendor will be paid twice. The funding department delays approval because of a dispute with the vendor: If there is a problem with the product or the performance of a service, add a note in the Notes & Attachments section, place it on Hold, and please notify Procurement Services. Procurement Services agents can provide assistance in resolving the dispute with the vendor. Vendors often contact Accounts Payable about unpaid invoices, so please notify us if there is a problem that is delaying the payment. The VO Document is not approved: Although approximately 80% of VO Documents are negative approval, which means payment will take place after seven calendar days, the other VO Documents will not be paid unless the funding department actively approves them. Payment needs to be expedited: Negative approvals can be expedited if the funding department clicks the Approve button. Checks are written the evening of each business day after the last approver has approved. Emergency checks are no longer an option.
7.) Checks are generated after the last funding department has approved the VO Document Recommended Practice: After the last funding department has approved the VO Document, checks are printed Monday, Tuesday, Wednesday, Thursday, and Friday evenings, and mailed from the Administrative Services Building the next business morning. Potential Delays and Problems: Weekends and holidays: Weekends and holidays will delay the mailing of the check to the vendor. Weak Internal Controls for Check Distribution: Checks for outside vendors should not be mailed to campus addresses or picked up by employees in the Administrative Services Building unless absolutely necessary. These practices make check fraud more likely, and are an inappropriate use of staff time. Proper planning and awareness of our check writing schedule should make these practices unnecessary. Foreign Drafts, Wire Transfers, ACH Transfers: Payments by methods other than an Iowa State University check require special processing by the Treasurer's Office and our bank. (Note: When the payment is made by ACH or wire transfer, no documents are sent to the vendor. However, there is a short text message we can send.)
8.) The vendor receives the check, cashes it, and applies it to the outstanding invoice. Recommended Practice: Usually this goes very smoothly, as the invoice information is printed on the check stub. Potential Delays and Problems: Payment application errors: Large companies sometimes use a lockbox service, and the correct information about the invoices is not transmitted to the company. We sometimes have vendors who insist on applying the check to the oldest outstanding invoice, rather than the one identified with our remittance. Application errors can also be the result of human error within the company. In all of these cases, Accounts Payable assists the vendor with resolving the discrepancies. The check is lost or delayed in the mail (or wherever): The Accounting Office will replace a check free of charge if it has been outstanding more than ten business days. Please contact Carole Gill at 515-294-5181 if you are convinced it is more than a simple delay in the mail. You will need to know the payee name, check number and amount before you call. The vendor cannot determine where to apply the check: Some vendors throw away the stub from the sealed check that has the information about which invoices are being paid. Accounts Payable will provide this information to vendors upon request. Iowa State University has utilized a vendor credit, issued a debit memo to adjust a charge, or deducted sales tax or freight: If the vendor has not properly recorded the adjustments we have included as remittance information our records will not match. Accounts Payable will provide assistance to vendors to resolve discrepancies. Payments to foreign vendors: The postal and banking systems in some countries are not as efficient as we sometimes expect. Even payments by wire transfer, which happen the same day within the United States, can take several days to reach overseas vendors. If the payment was by an Iowa State University check, the Accounting Office can reissue the check at no charge if more than ten business days have elapsed. Please contact Carole Gill at 515-294-5181. For foreign currency drafts or wire transfers, please contact Brad Dye at 515-294-1002.
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This page was last updated January 24, 2017.