Where orders are first placed by phone and then confirmed in writing, the order form should be marked 'Confirmation Order' to avoid duplication.
Conditions of Purchase
Whether written or not, purchase orders are legally binding and care should be taken to ensure that they are normally placed on the University's Standard Conditions of Purchase.
The University's Standard Conditions of Purchase are available from Procurement Services website.
These should be used unless other terms have been agreed in writing. More specific University model conditions of contract may be appropriate for some purchases. Advice should be sought from the relevant University specialist (see Framework Contracts) or Procurement Services staff who will liaise with the Legal Services Office where necessary. Where suppliers' terms are used, advice should be sought from Procurement Services.
Lease or hire purchase contracts merit particular attention and further advice should be sought in line with Financial Regulations. Less reputable suppliers may attempt to hide the full costs or may leave scope to inflate prices unreasonably. It is generally safer to purchase and to deal direct with manufacturers or with nominated sole agents, who in any case tend to offer the better deals. If you are approached by a supplier to consider a lease option, irrespective of the Total Value, you must contact Procurement Services as a cost benefit analysis should be undertaken so that the best procurement approach can be advised.
The University's Standard Terms
The University's Standard Terms are referred to on the face of the CUFS order form. Full-sized and reduced versions of the terms are available on disk, via email from Procurement Services and also via Procurement Services website.
Payment should only be made on satisfactory receipt of the goods or service as prepayments are strongly discouraged. Procurement Services can offer advice and assistance in negotiating out any requests for pre-payments. Where they are unavoidable, it is important to ensure the right cover is in place to reduce any financial risk to the University and that authorisation is sought prior to any commitment being placed (Financial Regulations 18.4). Cash sent with an order may be lost if the supplier ceases trading or fails to honour the contract for some other reason. If advance payment is unavoidable the supplier should be required to produce a banker's guarantee (performance bond). Advice from Procurement Services should be sought in these instances.
Coding in CUFS
All orders and invoices should be coded to the appropriate commodity code, and if possible an accurate item code. The CUFS system offers helpful pull-down lists, which may be searched by item description.
The University pays VAT in the same way as any other business on supplies of goods and services. Most businesses are able to reclaim VAT incurred on purchases. However, where a purchase is used in the course of making a VAT exempt supply or for a non-business activity, no VAT reclaim is available. As most of the University's income is either VAT exempt or non-business activity, there will be no VAT reclaim available on most of the University's transactions. VAT reclaims are available for expenditure on commercial research grants and for purchases used for VATable trading activities.
There are some exemptions and reliefs which can apply to some of the University's transactions, because of its charitable status and given that some items are zero-rated or exempt in their own right.
These are detailed in the Finance Division's VAT and Other Taxes procedures.
Businesses may now claim interest from large businesses such as the University for late payment of invoices. See the Better Payment Practice Campaign webpages for more detail.
If payment is made after the last day of the agreed credit period (as set out in the University's Standard Terms) the supplier may claim interest. Such claims could prove very expensive, so it will be even more important to follow University policy and pay promptly. The following precautions are suggested:
- Unless extended credit terms are negotiated, the University's standard payment terms (as stated in the Standard Terms) should be agreed in advance wherever possible.
- Invoices should be marked with the date of receipt together with any query on the goods or services provided. If an invoice is held for query the supplier should be notified immediately in writing.
- Invoice addresses should be stated clearly on purchase orders; if an invoice is received late as a result of being wrongly addressed, the supplier should again be notified immediately in writing.
Disaggregation of duties
The Financial Regulations state that wherever possible, invoices should be approved for payment by someone other than the signatory/authoriser of the corresponding purchase order. Ideally, receipt should also be confirmed independently, by means of a signed copy of the purchase order or goods received note, and it is in the interest of staff to try to arrange this. However, it is recognised that in some smaller institutions this segregation of duties is not feasible, in which case it is the responsibility of Heads of Departments to ensure that regular independent checks are instituted.
Retention of Records
Internal Audit require that documents such as purchase orders, goods received notes and relevant quotations be kept for a minimum of two years beyond the completion of the order or contract or, in the case of research grant contracts for the duration of the award if longer. Where an order is placed through CUFS, the electronic record suffices.