On this page:
- Default VAT distribution
- Supplier settlement discounts
- Travel expenses
- Internal trading
- Paying a factoring company
- Incorrect purchase order distributions
Overview
Pro-forma invoices are not valid tax invoices, they are merely a document for information and should not be taken as a request for payment. The University should not pay against pro-formas or draft invoices. These should not be processed on CUFS. Departments should request the supplier provides a VAT invoice.
The University of Cambridge is a credit worthy organisation and should not generally need to pay for goods or services in advance. However, where payment in advance is requested there is an established process for this within the Financial Regulations 18.4.2 and 18.4.3. In cases where payment in advance is justified, risk assessed and approved, a valid VAT invoice can be processed in CUFS and paid on immediate terms.
Detailed reference materials on how to process suppliers’ invoices in the Accounts Payable (AP) module of UFS is available on the Finance Training webpage.
Default VAT distribution
When entering an invoice onto the AP module of UFS, the first distribution line (Tax / VAT) automatically defaults in. This information should under no circumstance be altered. It is this specific accounting line (‘charge account’) that checks the system to find out if the item within your department is subject to a VAT reclaim; if the details are changed, then UFS will not know that this check is required.
Supplier settlement discounts
From April 2015, HMRC changed the rules as to how VAT should be accounted for on invoices with a prompt payment discount. Prior to the change, VAT would always be calculated on the discounted value irrespective of whether the discount was actually taken. Now, suppliers offering prompt payment discount must record the VAT amount on the full invoice price. If the supplier is offering a prompt payment discount, the rate and terms of the discount offered will also be shown on the invoice.
The supplier will not know if the discount has been taken until they are paid in accordance with the terms offered on the invoice.
Options
- Suppliers may issue a credit note to evidence the reduction in payment made and the reduced VAT on that payment value (our preferred option).
- If a supplier does not wish to issue a credit note, the original invoice must contain the following information:
- The terms of the prompt payment discount (time and discount offered)
- A statement that the customer can only recover the actual VAT paid to the supplier
- Additionally, invoices may show the discounted price, discounted VAT, and total amount due if discount is taken
Refer to the guidance on processing prompt payment discount invoices in UFS.
Travel expenses
All reimbursements for travel and other expenses are made via the Accounts Payable Module, which means that a payment cannot be made to an individual unless they are on the Suppliers List. If required, refer to new supplier set-up procedures.
This is dependent on the type of supplier.
- Travel Expense Request for Employee - Use Concur
- Travel Expense Request for Student - Processed in CUFS, complete relevant student expense form
- Travel Expense Request for Visitor - Processed in CUFS, complete visitor’s expense form
- Travel Expense Request for Workers - Processed in Cambridge Casual Workers System (CCWS)
For further information on employee expenses, see Employee Expenses Policy.
Internal trading (now internal transfers)
AR Invoices are automatically transferred overnight (via an interface) into the receiving department’s AP module. PDF invoice copies are automatically emailed nightly to the receiving department. Departments should be emailing any backup documentation to support the invoice.
The Department must search for the invoice number in AP and make any relevant changes. When processing an internal invoice, departments must not change the pay group from ‘Internal.’
Tip: When searching for credit memos, prefix the number with a ‘%’ sign, i.e., %52865.
If invoices are not appearing in AP, contact the Accounts Payable helpdesk.
Refer to guidance on paying an invoice from another department.
Paying a factoring company
If you come across an invoice that states the payment should be processed to a factoring company, then process the invoice as normal against the actual invoicing company. However, check to ensure that the supplier has been set up with a site named 'Factor'. If there is no factor site then an amendment request should be made on the Supplier database to add a new Factor site, (refer to Supplier Database, factoring companies). The address for this site should have the name of the factoring company as the first line of the address, and this is the site that you should select. If this is not the case, then please contact the Accounts Payable Team immediately to ensure the payment will not be issued to the wrong payee. Invoices should never be posted directly onto a factoring company account, such as Alex Lawrie.
Incorrect purchase order distributions
If the distribution is incorrect when matching an invoice to a purchase order (PO), the changes should be made at the invoice processing stage.
If you feel the PO distributions require altering, then:
- Within AP, match the PO to the invoice as normal (with the incorrect distributions).
- Enter two new lines: the first a negative line to remove the value from the incorrect distribution and the second a positive line to the correct distribution code.
- Be careful to remove the PO number that defaulted in on both your new lines as you do not want to unmatch the PO.
This will leave the PO status as 'Matched', and the GL entries correct. If required, refer to guidance on matching an invoice.
The system tolerance levels, used when comparing the purchase order line amounts and invoice amounts, have been changed in AP to allow invoices with a 5% variance (up to a maximum of £100) to proceed without creating a hold.
Latest version 4.3, updated July 2024