Update: Supplier Net 45 Payment Terms
October 28, 2020
By the end of March 2021, the Procurement team will identify and convert eligible suppliers’ Payment Terms to Net 45. The purpose of this effort is to align with the newly updated General Payment Policy 3401. Section 3401.3.
Section 3401.3 of the General Payment Policy update includes changing Standard Payment Terms to Net 45 days for eligible suppliers, unless otherwise negotiated. This means that payments will now be remitted 45 days from the invoice date for those impacted suppliers. The Procurement Team is working, in two phases, to identify and convert eligible suppliers to Net 45 Payment Terms. The goal of this effort is to align the University’s Supplier Database with our Payment Terms Policy and existing contract language.
In its initial phase, the Procurement team has identified the University’s highest volume suppliers (by number of payments) with the intention of converting Payment Terms to Net 45 for those suppliers deemed eligible. Suppliers will be notified in advance of the changes, but before those notifications, Departments with direct relationships with any of the top 300 eligible suppliers have been asked to review a list of those suppliers relevant to their area and identify any issues with changing their Payment Terms to Net 45. Typical issues may include:
- Discount structures tied to existing payment terms
- Contractual obligations
- Cash flow considerations for small businesses
- Supplier belongs to an Ineligible Supplier Category (See Below)
The Following Supplier Categories are Excluded from Net 45 Payment Terms Updates
- Debt Service Suppliers
- Government Agencies and Municipalities
- Hospitals and Medical Service Providers
- Individuals (including employees and entertainers)
- Insurance Providers
- Landlords (real estate lease payments)
- Legal Services
- Other Non-Profit Organizations
- Retirement Services
- SUA Payment Program Suppliers
- Universities and Colleges
- Utility Companies
Finally, after the initial conversions are complete for our highest volume suppliers, an effort will be made to convert our remaining, eligible supplier database. Again, communications will be sent to any relevant departments and affected suppliers prior to that phase of changes.
Please refer any questions to the Procurement Help Desk.