3401 General Payment

Responsible Official: 
Chief Procurement Officer
Responsible Office: 
Accounts Payable
Effective Date: 
July 1, 1998
Revision Date: 
July 1, 2017

* This policy has been updated to accommodate Workday Financials business processes and terminology.  Please note the effective revision date.

Note:

  • New Buy/Pay Matrix In section 3401.3 Supplier Invoice Payments.
  • Petty cash will be available only for visiting scholars, speakers, and faculty.  Employees must use Yale’s expense management solution for reimbursement.  No new petty cash funds will be opened for departments.

Policy Sections

3401.1 Payment Roles and Responsibilities

3401.2 Internal Controls and Segregation of Duties

3401.3 Supplier Invoice Payments

3401.4 Requests for Payment

3401.5 Purchasing Card 

3401.6 Yale Internal Systems Invoice Interface

3401.7 Forms of Payment

Scope

This policy provides guidance governing all disbursements of University funds, except those for salaries and wages, and the appropriate usage of various payment methods.  Salary and wage payments are addressed in Policy 3501 Payroll.

Policy Statement

The Accounts Payable (AP) department is responsible for overseeing the payment process for the University, including payment methods, and disbursement controls.  Certain specific responsibilities for payment of expenses, as described in this policy, are delegated to lead administrators, operations managers, and their duly authorized designees.  All who have responsibility for any aspect of the University’s payment functions must adhere to the provisions of this policy.

The University disburses funds for payment of goods and services only when the following conditions have been met:

  • Valid supplier has been sourced and added to the supplier master;
  • Disbursement requests must be for a valid business purpose;
  • Goods or services must have been procured in accordance with University purchasing policies. (See Policies 3201 General Purchasing, 3301 Travel on University Business, and 3302 Business Meals & Entertainment);
  • Transactions must have been properly approved by an individual with decision-making authority and accountability for the funds being disbursed;
  • Goods and/or services must have been received, or prepayment properly authorized;
  • Transactions must include complete and accurate supporting documentation; and
  • Transactions must bear a proper Purchase Order number.

Payments for goods and services are made payable only to the provider of those goods or services (or to a contractually named agent), and not to secondary parties such as other non-profit organizations, mutual funds, religious organizations, etc.

Reason for the Policy

The University must maintain control over the disbursement of its funds by requiring proper approval and consistent application of procedures for payment transactions.  This policy seeks to promote fiscal control, timely and accurate disbursement of funds for external purchases and employee reimbursements, and compliance with state and federal regulations and donor restrictions.

Definitions

Authorizer - Primary

A lead administrator, operations manager or duly authorized designee of a department, unit or Shared Service Center; the individual having budgetary responsibility for the transaction involved.

Authorizer - Secondary

An authorized transaction approver removed from the initiating department, unit or business support center who, for reasons of risk aversion or internal control, performs a secondary review and approval of certain transactions.

Business Office

An organizational unit that manages business operations for academic or other units, approving and conducting business transactions in accordance with University policies and procedures.

Controller’s Office

The University Controller is responsible for working with the Accounts Payable department to develop and maintain adequate internal controls in the disbursement process, and to assess risks and review quality assurance standards.

Expense Reimbursement 

A request to reimburse a University employee for appropriate expenses incurred for travel or entertainment (see Policies 3301 Travel on University Business, and 3302 Business Meals, Entertainment, and Other Social Events) and for the purchase of miscellaneous items up to an established dollar limit (see Policy 3201 General Purchasing Policy).

Non-PO Invoice (formerly known as OK2Pay invoice)

An invoice authorized for payment by a department for orders placed directly with a supplier that are not associated with a purchase order or contract order.

Quality Assurance Review

Periodic review conducted by the office having oversight responsibility for a particular business process.  The objective of such reviews is to assess compliance with policies and procedures, improve efficiencies, and identify areas where additional training is needed.

Receipt Acknowledgment

The acknowledgement of the receipt of goods or completion of services.  When designated, this step is required before supplier payment.

Requester

An individual initiating a transaction for the purchase of goods and services; or an individual requesting payment of a transaction as permitted within this policy.

Supplier Invoice Request (formerly Check Request)

Method of payment by the Accounts Payable department to a non-employee for payment of items such as honoraria, royalties, subscriptions, and such.

Yale’s E-Procurement Solution

The Workday Create Requisition function replaces SciQuest as Yale’s e-procurement solution as of July 1, 2017.  SciQuest catalogs and contract pricing are available via the Connect to Supplier Website option.

Yale’s Expense Management Solution

The Workday Create Expense Report function replaces Oracle iExpense as Yale’s expense management solution as of July 1, 2017.  Yale’s expense management solution includes the processing, creation, and submission of expense reports for the following expenditures: travel and business related expenses and miscellaneous small dollar purchases incurred on a University PCard or with personal funds (cash out-of-pocket (OOP)).  The expense management solution supports the requesting and clearing of cash advances for travel and expenses as well as study subject advances.

Accounts Payable Department

The Accounts Payable department oversees the University’s disbursement process to ensure that only authorized disbursements are made, that the disbursement process is efficient, and that tax reporting related to disbursements is completed.  Accounts Payable processes invoices for payment in accordance with payment terms negotiated during the purchasing process.

Accounts Payable is also responsible for conducting quality assurance reviews to monitor the effectiveness and efficiency of the payment process, and to identify additional training needs for those authorized to approve payment transactions.  The reviews include evaluation of the validity of the business purpose for individual transactions, the proper coding of allowable and unallowable costs per University policies and state/federal regulations, the validity of charging instructions, and the presence of supporting documentation as required by policy or procedure.

Authorization

Accounts Payable will process all valid invoice transactions.  Those requiring additional approvals (non-PO or PO requiring receiving, etc.) will be routed to the appropriate cost center managers and/or the lead administrator/operations manager or duly authorized designee for departmental approval and charging instructions.

  • Payment for purchases made using a purchase order is authorized when the purchase order is issued, and the receiving notification if required, is complete as described in Policy 3201 General Purchasing Policy and Procedure 3201 PR.01 Purchase Requisition Process.  If a lead administrator or operations manager or a duly authorized designee requests invoice approval, then the authorization occurs at the time the invoice is approved for payment.  Departmental approval of invoices constitutes confirmation of receipt of goods and services.
  • Payment for purchases made using a purchasing card is covered under 3215 PR.01 Yale Purchasing Card.
  • Requests for payment (e.g., check request, non-PO invoice, advances, or petty cash replenishment request) must be authorized by the lead administrator, operations manager, or a duly authorized designee with sufficient approval limits prior to submission of the request.

Additional Approvals

Certain transactions may require review and approval by additional authorizers—director of Accounts Payable and/or the Controller’s Office—because of a high risk for compliance problems, the special nature of the payment, or the size of the payment.

  • For payment of invoices (excluding wire transfers), see procedure 3401 PR.04 Submitting Invoices for Payment.
  • For payment of check requests (excluding wire transfers), see procedure 3401 PR.02 Supplier Invoice Request.
  • For payment of wire transfers, see procedure 3401 PR.06 Requesting a Wire Transfer.
  • Payments by wire transfer have additional approvals required based on wire amount, and whether payment sent outside the US. 
  • The director of Accounts Payable must approve:
    • All wire transfer forms to reflect that the supporting documentation has been reviewed and found to be appropriate;
    • Domestic wires greater than $50,000; and
    • All Foreign wires.
  • The Controller’s Office must approve:
    • All domestic wires greater than $100,000; and
    • All foreign wires with a US equivalency of greater than $10,000.

Secondary authorizers review transactions for compliance with the conditions outlined in the Policy Statement above, but may not be in a position to attest to the appropriateness of the expenditure within the department’s approved annual budget.  Primary responsibility for budgetary appropriateness remains with the primary authorizer.

Business Offices

Every disbursement transaction must be authorized by the lead administrator or operations manager or a duly authorized designee of the department having budgetary responsibility for the funds being disbursed.  The lead administrator or operations manager of a department or a duly authorized designee is responsible and accountable for all transactions submitted by his/her department or center.  Accordingly, the authorizer verifies that the transaction meets the conditions specified in the above policy statement, is appropriate within the department’s approved annual budget, and is allowable within any applicable funding source restrictions.

University Controller

The University Controller is responsible for working with Accounts Payable to develop quality assurance and internal control standards, to assess areas of risk, and to monitor the results of quality assurance reviews.

Business process owners in partnership with the Controller’s Office are responsible for developing good internal controls and for promoting a sound internal control environment; the Controller will consult with process owners and advise them accordingly.  Segregation of duties is an important component of a sound internal control environment, minimizing the risk of fraud, concealment of error, or loss.

The University has separated the functions of purchasing, supplier setup and maintenance, and accounts payable by delegating them to three distinct units.

Departments should strive to separate, as much as possible, the functions of purchasing, receiving, invoice processing and approval, and account reconciliation in order to add a measure of internal control within the department.  The authorizer of a transaction must not be the recipient of the funds disbursed.

Quality assurance reviews performed by the Accounts Payable or the Controller’s Office will include attention to the internal control environment of the departments and business support centers under review.

Buy/Pay Matrix for Goods and Services

BUSINESS NEED

EXAMPLES

HOW to BUY

HOW to PAY

POLICY / PROCEDURE

Common Goods & Services

Office Supplies, Lab Supplies, Computers, Furniture, Leases, Professional Services, etc.

Yale Purchase Order
(via Yale’s eProcurement Solution)

Purchase Order Invoice

3201 PR.01 Purchase Requisition Process

3201 PR.02 Competitive Bidding Process

3210 PR.01 Professional Services & Consulting Process

3401 PR.04 Submitting Invoices for Payment

Express Shipping Services

FedEx, UPS, DHL, USPS

Yale Express Shipping Order (via eShipGlobal)

Non-Purchase Order Invoice (third party)

3201 PR.01 Purchase Requisition Process

Uncommon Services

Utilities, Sub-Contracts

Order In-Person

(Order In-Person, Call In Order, Order via the Web)

Non-Purchase Order Invoice (aka OK2Pay)

3401 PR.04 Submitting Invoices for Payment

Travel & Business Related Expenses

Hotels, Airfare, Rail, Rental Cars, Conference Fees, Business Meals

Order In-Person

(Order In-Person, Call In Order, Order via the Web)

PCard & Expense Report
(via EMS)

3215 PR.01 Yale Purchasing Card

Miscellaneous & Small $ Purchases

Books, Licenses, Subscriptions

Order In-Person

(Order In-Person, Call In Order, Order via the Web)

PCard & Expense Report
(via EMS)

Non-Employee Payments

Honoraria, Non-employee Reimbursements, Study Subject Payments, Tax Authority Payments, Employee Benefits Payments

Order In-Person

(Order In-Person, Call In Order, Order via the Web)

Supplier Invoice Request

3201 PR.02 Competitive Bidding Process

Other Specialized Payments

Study Subject Payments, Small Travel Advances, etc.

Order In-Person

(Order In-Person, Call In Order, Order via the Web)

Personal Funds; reimbursed via Petty Cash

3417 PR.01 Human Research Study Participant Remuneration

3301 PR.01 Travel Arrangements for University Business

Policy 3305 Long-term Activity Expense Advances

Yale Internal Services

Facilities Services, Animal Services, Telecom Services, Dining Services, Library Services

Contact the Yale Internal Service Provider to Order

Yale Department Subsystem Bill

Note:  See ISP web site for ordering instructions.

For details on the appropriate use of the purchase methods mentioned above, see Policy 3201 General Purchasing Policy.

The University requests that suppliers send all invoices directly to Accounts Payable.  Invoices over the receipt of goods threshold will be routed to the department for receiving approval.

Departments that process invoices through a subsystem that provides electronic submission to Accounts Payable may receive invoices directly from the relevant suppliers.

When the department receives an invoice directly from the supplier, it is the responsibility of the department to submit that invoice to Accounts Payable as quickly as possible, and to expedite any other steps necessary to process the invoice for payment.

For payment purposes, supplier statements and fax copies of invoices are not considered appropriate supporting documentation for purchases.  The University will not pay from such statements or copies.

Invoices are processed in accordance with the procedures accompanying this policy, and all relevant financial, legal, and contractual requirements are observed.

Matching Requirements for Invoices Related to Purchase Orders

To assure that only valid payments are made for goods and services received, the University requires matching of various documents (e.g., invoices and purchase orders) prior to releasing payment to a supplier.  The table below illustrates the requirements for invoice matching.

CONFIRMATION TYPE

REQUIREMENT for CONFIRMATION

REQUIRED WHEN…

Two-way confirmation

  • purchase order
  • invoice*
  • Invoice < $5K

Three-way confirmation

  • purchase order
  • receiving acknowledgment
  • invoice*
  • Invoice >= $5K

Non-PO Invoices - Supplier Invoices Without a Related Purchase Order

Non-PO Invoices, formerly OK2Pay Invoices, received by Accounts Payable will be routed to the appropriate department for charging instructions and approvals.

Receipt Acknowledgment

Before payment of goods and/or services over the Receipt of Goods Acknowledgment Threshold, the department recipient of goods and/or services must confirm receipt of goods and/or services.  For the Receipt of Goods Acknowledgment Threshold, see Policy 3201 – section 3201.8 General Purchasing Policy – Receipt of Goods Acknowledgment.

Recurring Invoices

Recurring invoices may be created for payment transactions of fixed amounts occurring at regular intervals over a specific period.  This method is typically used for leases, letters of agreement, interest payments and promissory loans.  Accounts Payable monitors recurring payments annually for the continuing validity of the agreements.  All supporting documentation must accompany requests for recurring payments and should remain on file in Accounts Payable.

Electronic Invoices

Electronic interfaces and file transfers reduce the need for manual input of paper invoices into Accounts Payable and should be encouraged whenever feasible.  The Procurement Office negotiates supplier agreements, including agreements for the electronic submission of invoices.  Often such agreements stipulate that payment will occur without the receipt of further documentation, and that necessary adjustments will be included in future billings.  Departments, therefore, should thoroughly review their monthly financial statements for inappropriate or unauthorized transactions.  Accounts Payable should be notified immediately of any such erroneous transactions.

Supplier Invoice Requests (formerly Check Requests)

Supplier Invoice Requests may be submitted for direct payments to non-employees and other direct payments that cannot be made using a purchasing card or standard invoice payment methods.  Non-employees are reimbursed for University-related travel in accordance with Policy 3301 Travel on University Business.

Expense Reimbursements

Employees are reimbursed for travel, entertainment and other business expenses in accordance with Policies 3301 Travel on University Business, and 3302 Business Meals, Entertainment, and Other Social Events.  Expense reimbursement requests and supporting documentation must be filed in accordance with the relevant University policy and related procedures.  See Policy 3215 Yale Purchasing Card and Procedure 3215 PR.01 Yale Purchasing Card Procedure.

Advance Requests

Requests for advances may be authorized for anticipated travel or non-travel expenditures related to University business as set forth in policies 3301 Travel on University Business, and 3305 Long-Term Activity Expense Advances.  Advances must be cleared in accordance with the relevant University policy and related procedures.

The Yale University Purchasing Card is a Yale-sponsored credit card issued to a qualifying employee to pay for travel-related services or small dollar goods and services necessary for conducting University business.  The use of this card reduces disbursements of petty cash, check requests and employee reimbursements, and the processing costs associated with such transactions.

Refer to Procedure 3215 PR.01 Yale Purchasing Card Procedure for purchasing card requirements, guidelines and details.

Certain departments are authorized to process transactions in a decentralized manner using subsystems that interface directly with the Accounts Payable system and automatically generate payments.  These departments must adhere to University purchasing and payment policies and must maintain a sound internal control environment pertaining to their decentralized activities.  Subsystem interfaces must meet established design standards in order to be approved for automatic transmission.  Exceptions must be approved by the Controller’s Office.

All checks (excluding payroll and specialty account checks) are issued by the Accounts Payable department.  A facsimile signature of the Vice President for Finance and Chief Financial Officer is applied to all checks.  A review and second signature is required for checks greater than $100,000.

Refer to Procedure 3401 PR.06 for details on other forms of payment (i.e., SUA, ACH/EFT, wire transfers).

Special Situations/Exceptions

Exceptions to this policy must be approved by the Controller’s Office, in consultation with the Provost’s Office, General Counsel, or an Officer of the Corporation, as appropriate.