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.

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, 3617 Administrative Services Building, Ames, IA 50011-3617, or faxed to 515-294-3401. 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 Purchasing 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 prints a voucher and attaches invoice copies. Recommended Practice: Accounts Payable enters invoices every day, but only prints vouchers on Monday, Wednesday and Thursday evenings, due to processing costs. The vouchers and invoice copies are mailed through campus mail the next morning. Potential Delays and Problems: Mail delivery schedules: On days when there is a large volume of vouchers to assemble, some vouchers may not be ready to distribute by the pickup time for campus mail delivery. These will be mailed the following day. As there is an eight-day negative approval period, this usually should not pose a problem.
5.) Accounts Payable mails a Departmental Copy of the voucher to the department for review. Recommended Practice: Usually only the Departmental Copy of the voucher is mailed to the department, as the Accounting Copy will be retained and released for payment in eight business days if the department makes no objection. The Accounting Copy also will be mailed if a signature or fund account number is required. A Remittance Copy also will be mailed if we will be sending one to the vendor with copies of the invoices, although this represents only 20% of the volume of tracking vouchers. The information that otherwise would have appeared on a Remittance Copy for the vendor to apply the payment will be printed on the stub of the sealed check. Potential Delays and Problems: The department does not review the voucher: 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 department's review of every voucher, 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 voucher for the invoice and no one at the department reviews the voucher, the vendor will be paid twice. The Accounting Copy is filed at the department: As the Accounting Copy usually is not mailed to the department, the Accounting Copy sometimes is filed by the department rather than being signed and returned to the Accounting Office, 3606 Administrative Services Building. Please read the label at the bottom of the voucher carefully. If it reads Accounting Copy or Remittance Copy, it needs to be returned to the Accounting Office, 3606 Administrative Services Building. No payment will be made if an Accounting Copy is held at the department. The department holds the Accounting Copy because of a dispute with the vendor: If there is a problem with the product or the performance of a service, please notify Purchasing. Purchasing 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 voucher is lost: If an Accounting Copy of a voucher is lost we can generate a new voucher. However, we may have to contact the vendor to get a copy of the invoice.
6.) Accounts Payable releases the Accounting Copy of the negative approval voucher to the Accounting Office for auditing and data entry after eight business days. (If the department received, signed and returned the Accounting Copy to the Accounting Office, it is audited and entered without further delay.) Recommended Practice: The purpose of the eight-day negative approval period is to give departments adequate time to review the voucher and determine if the goods have been received or if the services have been provided. Potential Delays and Problems: Payment needs to be expedited: If the vendor is insisting on payment before the eight days have expired, Accounts Payable can release the voucher earlier if the department requests.
7.) Data Entry enters the voucher. Recommended Practice: Usually, the only data to be entered is the tracking number, so this process is relatively trouble-free. Sometimes fund accounts or class codes must be inserted if none were set up during the creation of the "B" or "C" contract. Although fund accounts are set up for all "I" contracts, the department sometimes needs to manually allocate the amounts between them. Potential Delays and Problems: Fund account and class code changes made to the voucher: Making changes to the pre-printed fund accounts or class codes will result in the encumbrance not being relieved. As an alternative, consider doing a Correction Voucher after the voucher has posted. If the funding source has been permanently changed, please contact Purchasing to change the encumbrance so that future vouchers will bear the correct fund account. Other changes are made to the voucher: Other changes to the voucher often require reprinting the voucher, especially if the payment is to be made by a sealed check (no Remittance Copy of the voucher). Reprinting can take up to two extra business days, as only print vouchers on Tuesday, Wednesday and Thursday evenings.
8.) The check is printed and mailed to the vendor. Recommended Practice: Checks are printed Monday, Tuesday and Thursday evenings, and mailed from the Administrative Services Building the next morning. Potential Delays and Problems: 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. 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 Accounts Payable, 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.)
9.) 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 or the Remittance Copy. 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 Treasurer's Office will replace a check free of charge if it has been outstanding more than ten business days. Please contact Sandy Russell at 515-294-4364 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. (You can find the check number by going to WebFM and clicking on the reference number of the charge posted to your account.) 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 Treasurer's Office can reissue the check at no charge if more than ten business days have elapsed. Please contact Sandy Russell at 515-294-4364. For foreign currency drafts or wire transfers, please contact Sandy Russell at 515-294-4364. Back to Disbursements / Vendor Payments page

Last Updated April 24, 2006.