Selling goods or services to other Departments

Pre-sale internal controls

Before making any supplies to another department, the selling department should ensure that the purchasing department has provided appropriate approval for the supply for example an approved purchase order or an authorising email.

The invoice preparer must also confirm all the following:

that this is a genuine supply
the costs are eligible to be recharged
supporting documents are provided and retained in an accessible location

If it is unclear of the exact nature of the transaction or supporting documentation is not available, then this should be challenged by the invoice preparer before the invoice is created. Escalating to the School Finance Advisor or the Institutional Finance Manager if required.

All internal invoices over £50,000 will require Head of Institution approval before being created.

Heads of Institution will be required to confirm compliance with these and the requirements below as part of their annual Institution Assurance Statement.

Generating an internal trading invoice

Costs must be internally invoiced to the purchasing department in a timely fashion and supporting documentation provided.

Departments are required to create internal sales transactions on UFS when trading with other internal departments. Departments must not create manual invoices.

The process for generating an invoice to another department is very similar to that of raising an invoice to an external customer.

For Financial Learning Hub for detailed guidance on raising an internal invoice.

Key points to remember when raising an internal invoice
On the main invoice header screen	Currency - must remain as the default Class - invoice or credit memo (debit memos cannot be used for internal trading) Type - internal invoice or internal credit memo Customer number - select frpm pre-allocated internal customer number listing Terms - defaults to 'Internal'
In the 'More' tab in the header region	In the PO field add the purchase order number (if available) or type the name of the person who authorised the order
Within transaction lines	Description - include details that will assist with the settlement of the invoice. These description will appear int he receiving department's Accounts Payable module. It is therefore vital that you enter a meaningful description. Avoid vague descriptions such as 'see attached documents' Tax code - must be 'Internal' If you are raising a credit memo, you must apply the credit back to the original invoice (further guidance on the Finance Training Learning Hub) When line details have been entered, users are advised to save their work before they update the accounting information

AR transaction Receivables and Revenue codes

In the Accounts Receivable module of UFS this is known as “Completing”. This must be undertaken by a different person to that which has raised or requested the invoice to ensure separation of duties.

In addition to ensuring that the invoice is raised correctly as described above the selling department’s finance team and approver must also confirm that this is a genuine supply and the costs are eligible to be recharged.

For each transaction line UFS will default in three account codes:

Revenue
Receivables
Tax

The revenue account code must be amended to an appropriate departmental cost centre, source of funds of 'GAAB' and a transaction code in the L range or occasionally the K range (the latter are normally retained for central divisions use). Transaction codes in the E or F range are NOT to be used in the AR module as they refer to expenditure.

The receivables code will default as a University departmental internal trading control account that is linked to the internal customer record. This code must not be changed or deleted. Nor should you ever amend the Tax lines.

Approval of sales invoices

Sending the invoice

Invoices will be transmitted to the customer department automatically by email overnight. UFS will use the departmental email address that can be found on the finance webpages.

If there are any supporting documents these must be scanned and sent to the same email address as soon as possible, referencing the invoice number in the subject line.

Recharging another department

The terms 'recharges' and 'reimbursements' are commonly used inter-changeably however, for taxation purposes they are treated slightly differently. Please see the VAT & Other Taxes section Financial Procedures Manual.

If you are recharging another department for goods or services that your department has previously received from a supplier, then there are two separate transactions.

Between the original supplier and your University department.
Between your department and your customer.

Original purchase

There are three options:

At the time of purchase - code the PO or AP invoice from the supplier to source of funds GAAB and the appropriate E transaction code if you know that the goods/services are to be passed on and recharged to another department.

Alternatively, post purchase
Adjust the original AP invoice if it was originally paid for out of a research grant
- Remove: the existing distribution line for the item in question on the original accounts payable invoice by entering a corresponding negative line.
- Enter a new line in the AP invoice distributions, coded to source of funds GAAB with an appropriate E or F transaction code.
- Validate and secondary approve the invoice again.
Raise a GL journal to transfer the cost to the correct internal trading source of funds code
- Credit: the original source of funds and transaction code
- Debit: source of funds GAAB with the original transaction code
Save and post the journal

Subsequent resale

An internal trading invoice should then be raised in the normal way using an appropriate L transaction code to describe the supply and the source of funds code GAAB.