Update: Supplier Net 45 Payment Terms
June 9, 2021
As previously announced, in March 2021 the Procurement team completed the conversion of its highest volume eligible suppliers to Net 45 Payment Terms. In the next phase of this project, the team will notify remaining eligible suppliers that their Payment Terms will change to Net 45 in September 2021. Suppliers will be notified by July 2021. This effort will align Yale’s Supplier Database with General Payment Policy 3401, Section 3401.3.
Section 3401.3 of the General Payment Policy indicates Standard Payment Terms of Net 45 days for eligible 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 identified the University’s highest volume eligible suppliers and converted their Payment Terms to Net 45. The next phase, to be completed in September 2021, will impact the remaining eligible supplier database, following lessons learned from phase one. Supplier records have been carefully vetted by the Procurement team to determine eligibility. Departments with direct relationships with any potentially eligible suppliers will be 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
- Other 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