UNIVERSITY OF OTTAWA Financial Resources. UO - SMARTStream System Theory - Purchasing and Accounts Payable

Transcription

1 UNIVERSITY OF OTTAWA Financial Resources UO - SMARTStream System Theory - Purchasing and Accounts Payable version May 1999

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3 Theory Purchasing and Accounts Payable Table of Contents 1. Foreword Introduction Definitions Administrative Processes for the Acquisition and the Payment of Goods and Services Introduction Basic Principles Role Players Local Invoice Entry with no Purchase Order Planning the purchase Ordering Receiving the goods or services & approving the paper invoice Entering the invoice in SMARTStream Payables Approving the invoice electronically Central Invoice Entry with a Purchase Order Planning the purchase Creating and approving a requisition in SMARTStream Purchasing Verifying and attaching the requisition Ordering Receiving the goods or services & approving the paper invoice Forwarding all supporting documents to Financial Services Receiving in SMARTStream Purchasing and entering the invoice in SMARTStream Payables Central Invoice Entry with a Purchase Order for Encumbrance Only Planning the purchase Creating and approving a requisition in SMARTStream Purchasing Verifying and attaching the requisition Receiving the goods or services & approving the paper invoice Forwarding all supporting documents to Financial Services Receiving in SMARTStream Purchasing and entering the invoice in SMARTStream Payables I Local Invoice Entry and Central Approval Planning the purchase

4 4.5.2 Ordering Receiving the goods or services & approving the paper invoice Entering the invoice in SMARTStream Payables Approving the invoice electronically (local approval) Forwarding all supporting documents to Financial Services and approving the invoice electronically (central approval) Central Invoice Entry with no Purchase Order Entering the invoice in SMARTStream Payables Requests for Bank Drafts with Central Invoice Entry Planning the purchase Ordering the goods or services Receiving the goods or services and approving the paper invoice Forwarding all supporting documents and entering the invoice in SMARTStream Payables (Financial Services) Vendors Vendor Identifier Trade vendors Individual vendors Vendor Location Vendor Payables Information Vendor Purchasing Information SMARTStream Basic Concepts and Policies Enterprise Payables Concepts Diagram Purchasing Concepts Diagram Currency Currency Defaults Currency Conversion Rates Payments Payment Controls Payable Entity Payment Methods Payment Terms II Purchasing Introduction Integration of the Purchasing Module With Other SMARTStream Products

5 6.5.3 Defining Sites Calendar Purchasing Reference Information Requisition Entities Requesters Ship-to, Deliver-to and Ship-via Codes FOB Terms and Freight Terms Commodities and Purchase Commodities Buyers Cataloged Vendor Items and Uncataloged Vendor Item Description Only Item Standard Phrases Purchase Entities Payables Introduction Integration of the Accounts Payable Module with other SMARTStream Products Defining Payable Entities Taxes Tax Rate Code Tax Reclaimable Code Tax Rules Tax Defaults SMARTStream features For Purchasing Requisition Defaults Requisition Line Exceptions Requisition Approval Process Requisition Statuses Purchase Order Purchase Order Defaults/Overrides Purchase Order Statuses For Payables Invoices Defaults/Overrides System Payments On-Demand Payments Statuses III - 8. Documents: verification, printing, distribution and safekeeping Purchase Orders Blanket Orders

6 8.3 Cheques Bank Drafts Invoices and Supporting Documentation General safekeeping guidelines Lost Invoices Appendix A. Commonly Used Keywords B. Requisition Entities C. Ship-to Code D. Ship-via Code E. Commodity Code F. Standard Phrases 1. Foreword - IV - This manual was produced in the context of the Millénium Project by members of the Project Management Foreword 1-1

7 Team - most of the material was written as a team effort by Chantal Lanthier and Yves Jobin with some assistance from Francine La France, Liliane Kanaan, and Jean-Marc Dubé. Please note that the masculine is used for certain adjectives and pronouns. While this convention was adopted to keep the style light, it should be interpreted to infer both genders. Parts of the manual were taken directly from the Reference Manual: Theory for the Acquisition of Goods and Services and Payment of Invoices originally published during the Administrative Simplification project in Here and there throughout the text, we ve inserted this symbol to draw your attention to a particular statement; for example, it is used to underline a new convention or a way of things that has been changed. An up to date electronic version of this manual will be maintained on our web site in WordPerfect 6/7/8 format. You may download a copy by pointing your browser to: We would appreciate your feedback on the documentation that we ve prepared; please your comments and questions to this address: [email protected] Foreword 1-2

8 Introduction 1-3

9 2. Introduction This manual addresses a variety of topics. These range from defining the s administrative processes for the acquisition and payment of goods and services, to more system specific chapters that address UO - SMARTStream policies, concepts and features for Purchasing and Accounts Payable. You will also find the definitions of new terminology specific to SMARTStream or to the underlying administrative processes. Please note that throughout this document, wherever a word or a series of words is written in bold italics (e.g. Invoice), these refer to windows (activities) in the SMARTStream Purchasing or Payables modules. The material that is presented in these chapters is based on version 6.0 of Geac s SMARTStream system. For reference purposes, the number associated with this documentation is version May This document is one of a suite of manuals written to support our users. Figure 2.1 positions it within the series of manuals that were written for financial administrators at the University. Fig. 2.1 For your information, a complete set of the tables of contents of the other reference guides is available in Appendix C of the General Concepts manual. The General Concepts and Theory : Budget, General Ledger, and Funds Control modules are considered as pre-requisites to all other activities. In addition to these, we expect that all users of the Accounts Payable and Purchasing modules will master the material that is presented here and in the three accompanying User s Guides (Purchasing, Accounts Payable, and General Ledger and Funds Control); you are also expected to attend the corresponding courses. Depending on your professional duties, you may also be required to familiarize yourself with the other User s Guide (Budget), and follow the course that is associated with it. Introduction 2-1

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11 3. Definitions Buyer: Buyer Workgroup: Cataloged Vendor Item: A SMARTStream buyer is responsible for purchasing the items indicated on a requisition line. When requisitions are approved, SMARTStream Purchasing notifies the buyer specified on each requisition line. It can also refer to purchasing officers of Materials Management Services. A group of buyers responsible for purchasing items for all requesters assigned to a requisition entity. When requisitions are approved, SMARTStream Purchasing notifies the buyer workgroup assigned to each requisition line. Vendor Items defined in the SMARTStream vendor item database. Description Only Item: Documents without an invoice number: Description Only Items are items to which no identifier is attached whereas Vendor Items are those to which identifiers are attached. Using description only items always results in a requisition line exception. For documents that do not bear an invoice number (e.g. Bell Canada invoices), the payer should create such a number by adding to the client number (phone number in the case of Bell Canada) a suffix representing the year and the month in order to make the number unique - a unique number is required in the system. For example this will yield a number such as If no client number applies, then the order number should be repeated in the invoice number field - e.g Finance buyer: Garnishee: Item: Log Book: Manager: Refers to the financial officers at Financial Services. Finance buyers are responsible for encumbering all requisition line amounts related to invoices that follow the Central Invoice Entry with a Purchase Order for Encumbrance Only process. (refer to section 4.4 of this manual) From time to time, Revenue Canada will issue a garnishee against a vendor. A garnishee consists of collecting monies owed to a vendor and paying this amount directly to Revenue Canada instead of the vendor. An item designates a good or a service. It can also designate a description only item or a vendor item. An internal book where all transactions are recorded for a particular requisition entity along with the specific details for each transaction. The log book controls the unit s order numbers and contains useful information for management purposes such as the date of purchase, requester, supplier, brief description of the goods or services ordered, amounts, date of reception, date of payment, etc. The person accountable for the unit s budget. Definitions 3-1

12 Order Number: A unique 10 character identifier assigned to each purchasing transaction not originating from a SMARTStream purchase order. This identifier corresponds to the requisition number. The first 3 characters refer to the unit element of the accounting key (administrative unit), the fourth character indicates the transaction currency (1 for Canadian Currency, 2 for a US currency), the next 2 characters usually identify the person who initiates the transaction and the last 4 represent a sequential number, required to make the entire number unique. The following is an example of an order number: Administrative Unit of the Canadian Currency Person s Initials Faculty of Education Sequential number GL 0001 Payable entity: Purchase entity: A logical unit with a common set of processing rules and defaults that control the payment and handling of payment requests sharing certain common properties. A set of processing options and defaults that control how purchase orders are generated and sent to vendors. Purchase Order Number: Purchasing Officers: A unique identifier assigned to each purchasing transaction requiring the issuance of a SMARTStream purchase order. The purchase order number contains 11 characters. The first 10 characters come from the requisition number while the eleventh character is always M. This distinguishes the transactions handled by Materials Management Services. Purchasing officers at Materials Management Services Regional buyer: Requisition Line Exception: Requisition Number: Members of faculties or services to whom the Director of Materials Management Services has delegated the authority to purchase goods and services for an amount not exceeding $20, These individuals are defined as Buyers in SMARTStream Purchasing and have been granted security to print purchase orders for their respective unit only. An approved requisition added with description only items results in a requisition line exceptions. These can only be reviewed by purchasing officers. A unique 10 character identifier of assigned to requisitions. Requisition numbers have the same numbering convention as the Order Number described above. Definitions 3-2

13 Restricted items: Goods and services that requires the issuance of a SMARTStream purchase order regardless of the dollar value of the order. Statement Type Invoices: Unit: Invoices grouped onto one single document by a vendor for services rendered to most units across campus. To simplify their billing process and to cut down on administrative costs, Courier service companies regularly invoice this way. Designates the administrative unit or department of a faculty or a service. Vendor Item: Sourcing: Uncataloged Vendor Item: Items that have been sourced by Materials Management Services. These items have an identifier, a description, a price, and a unit of mesure. The process of source selection which includes the negotiation of all terms affecting the product, pricing, warranty, carrier selection, payment terms, service, etc. Vendor Items that do not exist in the SMARTStream vendor item database. Voucher Number: Vendor Identifier: A unique 10 character identifier of assigned to each transaction following the Local Invoice Entry with no Purchase Order process. (refer to section 4.2 of this manual). Voucher numbers correspond to the Order Number and must be entered in the voucher number field of the Invoice activity. One of the alphanumeric user-defined key fields used to identify and search for a particular vendor. The other key field is the Location. Definitions 3-3

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15 4. Administrative Processes for the Acquisition and the Payment of Goods and Services 4.1 Introduction This chapter describes the redesigned processes for the acquisition and payment of goods and services following the Administrative Simplification project that was undertaken at the University in It has been slightly modified from its original version to include all necessary references to the UO - SMARTStream financial system installed in When the need to purchase goods or services arises, you must choose and follow the appropriate process. In this chapter, you will find a detailed description of the six administrative processes that exist at the University of Ottawa. Their descriptions should be read in conjunction with the following flow diagram in order to determine which one applies to your specific situation. The same numbering scheme is used in the descriptions and in the diagram. Administrative Processes for the Acquisition and the Payment of Goods and Services 4-1

16 4.1.1 Basic Principles The principle of two signatures for each financial transaction should be respected at all times. Two distinct, knowledgeable, and responsible individuals must participate in every financial transaction. Both of these individuals must understand the business principles that apply and be familiar with the technical aspects of the process. Only original invoices must be used to initiate a payment; account statements must never be used as reference for a payment. Rather, they should be forwarded to Financial Services for follow up. Invoices must be entered in UO - SMARTStream as promptly as possible in order to benefit from any applicable discounts and to post the expense to Funds Control and to the General Ledger. The approval process engaged upon by the approver is the last step taken before finalizing the payment request; no other verification or control will be done by central services before the cheque is actually produced. Under no circumstances should someone divulge their password to someone else. The use of an unauthorized userid is a reprehensible act of fraud and subject to disciplinary action Role Players Every person involved in an administrative process assumes one of the roles listed below. Even though it is possible for a single person to assume more than one of these roles, it is not possible for one person to be both payer and approver for a particular transaction. Always consider that two distinct, knowledgeable, and responsible individuals must intervene in every single financial transaction. Managers (Deans, directors, researchers, or their delegates) Buyers/Requesters (Faculties and Services) Purchasing Officers (System Buyer) (Materials Management) Payers (Faculties and Services, Financial Officers) Approvers (Faculties and Services, Financial Officers) Financial Services Materials Management Service Suppliers Administrative Processes for the Acquisition and the Payment of Goods and Services 4-2

17 4.2 Local Invoice Entry with no Purchase Order This process applies to purchases of non-restricted goods and services for a value not exceeding $5,000 (before taxes) Planning the purchase Once a need for such a purchase has been identified, the buyer plans the acquisition of goods or services in compliance with policies and methods of the University and regulations of granting agencies (if applicable). He must make full inquiries in order to obtain the best combination of product, supplier, price, warranty, payment terms, and delivery options. The manager accountable for the project s budget must approve the purchase of the goods or services either in writing or verbally. He must verify that the required funds are available and that any University and/or granting agency rules that should apply in the purchasing process are in fact respected Ordering The buyer records the order number and all other pertinent information in the unit s log book. He conveys the order to the supplier by telephone, fax, letter, or , indicating the order number, article, quantity, price, delivery and payment terms, delivery address, invoicing address, Receiving the goods or services & approving the paper invoice Upon reception of the ordered goods or services the buyer or the manager examines them, initials the invoice or packing slip, (to indicate that the goods or services received correspond to the invoice/packing slip) and sends it along to the payer thereby indicating that the payment process should be initiated Entering the invoice in SMARTStream Payables After receiving the initialized original invoice or the invoice and initialized packing slip, the payer initiates the payment process in SMARTStream Payables. The packing slip and original invoice documents must be matched if they have been sent as separate documents. Aside from a short predetermined period of time at the end of the year, there is no need to create batches of invoices for processing. All invoices are entered and saved as independent transactions. There are three types of invoices: regular invoices, credit memos and debit memos, all of which can be added using the Invoice activity in SMARTStream Payables. In this activity, the payer enters the details of the transaction and saves the completed invoice. Administrative Processes for the Acquisition and the Payment of Goods and Services 4-3

18 When saving the invoice, SMARTStream Payables: Verifies the existence of the accounting key and displays an error message when the key does not exist in the Chart of Accounts window in SMARTStream Ledger; Verifies the availability of funds for the transaction and adjusts the corresponding Funds Control records. When there are insufficient funds for the transaction or if the accounting key used is valid but not included in Funds Control, a Funds Control Exception occurs and the payer receives an informational message to indicate that an error has occurred. The Funds Control records will not be updated. At this stage, further processing of the invoice document is blocked and an exception message is routed to Financial Services for remedial action. In cases where for administrative reasons, Financial Services cannot release an invoice with a Funds Control Exception, the payer is required to amend the invoice to remove the exception or delete the invoice altogether. Once these exceptions are resolved, saving the suspended document reassesses funds availability and enables the corrected documents to be further processed; Generates all of the appropriate entries to be posted to the General Ledger; Triggers the approval process by sending an electronic informational message to the approver s New To Do List and submitting the corresponding invoice to the approval process. The payer must also forward to the approver the (physical) invoice thereby indicating that it is ready to be approved in SMARTStream Payables Approving the invoice electronically The workflow component of SMARTStream Payables sends the completed invoice to the designated approver, or to a designated approval workgroup. Upon receiving the informational message in their New To Do List and the paper invoice, each approver must review, then approve or reject the invoice from either the Invoice Approval window or the Invoice Approval Status window. To approve each individual invoice, the approver must first verify the pertinence of the request for payment and compare it to the physical documents in hand. After the invoice is approved, its status changes to Complete. Payables can process it for payment. If the approver refuses to approve the invoice, it acquires a status of Rejected and is not eligible for payment; the approval process stops. SMARTStream Payables will send a message to the payer to Review Rejected Invoices. In order for a rejected invoice to be eligible for approval again, the payer can make a few modifications either by changing the existing accounting key(s) or the payment method, or by adding new accounting distribution lines to the invoice. The invoice once again becomes available for approval. If an invoice is posted to the General Ledger before the approver processes it, and the approver subsequently refuses to approve it for administrative reasons, the approver must ask the payer to cancel the invoice; when this is done, SMARTStream Payables generates reversing entries for all of the entries it created when posting the original document. Administrative Processes for the Acquisition and the Payment of Goods and Services 4-4

19 4.3 Central Invoice Entry with a Purchase Order This situation arises when the value of a purchase exceeds $5,000 (before taxes) or the goods or services being purchased are considered restricted Planning the purchase Once a need for such a purchase has been identified, the buyer in consultation with the requester, plans the acquisition of goods or services in compliance with policies and methods of the University and regulations of granting agencies (if applicable). He must make full inquiries in order to obtain the best combination of product, supplier, price, warranty, payment terms, and delivery options. The manager accountable for the project s budget must approve the purchase of the goods or services either in writing or verbally. He must verify that the required funds are available and that any University and/or granting agency rules that should apply in the purchasing process are in fact respected Creating and approving a requisition in SMARTStream Purchasing After the sourcing for the goods or service is done, the requester creates a requisition in SMARTStream Purchasing. From the log book, the requester selects the next available number for the requisition and enters all of the required information about the requested goods or services. The requester also ensures all other pertinent information is recorded in the log book for each transaction. Once the requisition is completed, the requester must forward and save the requisition in order to make it available for approval. Saving the requisition first triggers the validation of the accounting key and subsequently verifies that funds are available for this purchase. Should the accounting key be invalid or funds be insufficient, an error message will be displayed and the requester must take appropriate action. When saved, a SMARTStream Workflow will automatically route the requisition to the assigned approver by delivering the message Requisition Forwarded for Approval in the approver s New To Do List. From the New To Do List, the approver selects the task and approves or rejects the requisition. If the requisition is rejected, the requester receives the message Requisition Rejected in his New To Do List. In this case, no changes can be made to the existing requisition and a new requisition must be resubmitted, if desired Verifying and attaching the requisition Once approved, the requisitions are routed automatically to the Buyer Workgroup MMS of Materials Management Services. Also, approved requisitions with open requisition lines created with the Buyer Workgroup MMS appear on a daily report used to convert the requisitions into purchase orders. A designated purchasing officer, who is a member of this Buyer Workgroup, verifies the details of the requisitions with all of the supporting documents for the transaction. He converts the requisition into a purchase order, at the same time making any required adjustments. Once completed, the purchase order is saved in SMARTStream Purchasing. Administrative Processes for the Acquisition and the Payment of Goods and Services 4-5

20 4.3.4 Ordering Once a day, the purchasing officers will print and mail all purchase orders to the suppliers. In addition to being mailed, some purchase orders will occasionally be sent by fax as well Receiving the goods or services & approving the paper invoice Upon receipt of the goods or services, the requester or the manager of the requesting unit examines their condition if it s a good, and initials the invoice or the packing slip to indicate that the goods or services received correspond to the invoice/packing slip information Forwarding all supporting documents to Financial Services The signed invoice/packing slip is forwarded to Financial Services thereby indicating that the invoice matching process should be initiated Receiving in SMARTStream Purchasing and entering the invoice in SMARTStream Payables A designated financial officer at Financial Services initiates the payment process upon receiving the original invoice duly approved. The officer verifies the information on the invoice/packing slip against the Receiving activity making the purchase order lines available for payment. The officer then carries the corresponding purchase order line(s) into the Invoice window to complete the invoice entry process. Once a day, a SMARTStream process will match the invoices with the purchase orders and the corresponding receipt information. This is known as 3-Way Matching. Discrepancies from the matching process will result in a matching exception. These exceptions need to be resolved in order to allow a cheque to be printed. Matching exceptions messages are automatically routed to the purchasing officer s New To Do List; he reviews each case and takes appropriate actions. 4.4 Central Invoice Entry with a Purchase Order for Encumbrance Only This process is invoked when purchasing goods or services whose value exceeds $5,000, which are explicitly exempted from policy 36, and for which an encumbrance is required in order to reserve funds Planning the purchase When such a case arises, the buyer in consultation with the requester, plans the acquisition of goods or services in compliance with policies and methods of the University and regulations of granting agencies (if applicable). He must make full inquiries in order to obtain the best combination of product, supplier, price, warranty, payment terms, and delivery options. Administrative Processes for the Acquisition and the Payment of Goods and Services 4-6

21 The manager accountable for the project s budget must approve the purchase of the goods or services either in writing or verbally. He must verify that the required funds are available and that any University and/or granting agency rules that should apply in the purchasing process are in fact respected Creating and approving a requisition in SMARTStream Purchasing Once the sourcing for the goods or service is done, the requester creates a requisition in SMARTStream Purchasing. From the log book, the requester selects the next available number for the requisition and enters all of the required information about the requested goods or services. The requester also ensures all other pertinent information is recorded in the log book for each transaction. Once the requisition is completed, the requester must forward and save the requisition in order to make it available for approval. Saving the requisition first triggers the validation of the accounting key and subsequently verifies that funds are available for this purchase. Should the accounting key be invalid or funds be insufficient, an error message is displayed and the requester must take appropriate action. When the requisition is successfully saved, a SMARTStream Workflow will automatically route the requisition to the assigned approver by delivering the message Requisition Forwarded for Approval in the approver s New To Do List. From the New To Do List, the approver selects the task and approves or rejects the requisition. If the requisition is rejected, the requester receives the message Requisition Rejected in his New To Do List. In this case, no changes can be made to the existing requisition and a new requisition must be resubmitted, if desired. The original requester must cancel his rejected requisition in order to free the committed funds Verifying and attaching the requisition Approved requisitions with all open requisition lines created with the buyer FIN appear on a daily report used to convert the requisitions into purchase orders. A financial officer, verifies the details of the requisitions with all of the supporting documents for the transaction. The officer converts the requisition into a purchase order, at the same time making any required adjustments. Once completed, the purchase order is saved in SMARTStream Purchasing. This purchase order exists only as an electronic document and it is assumed that the actual order was placed using another mechanism Receiving the goods or services & approving the paper invoice Upon receipt of the delivered goods or services, the requester or the manager of the requesting unit examines their condition, and initials the invoice or the packing slip to indicate that the goods or services received correspond to the invoice/packing slip information Forwarding all supporting documents to Financial Services The signed invoice/packing slip is forwarded to Financial Services thereby indicating that the invoice matching process should be initiated Receiving in SMARTStream Purchasing and entering the invoice in SMARTStream Payables A designated financial officer at Financial Services initiates the payment process upon receiving the original Administrative Processes for the Acquisition and the Payment of Goods and Services 4-7

22 invoice duly approved. The financial officer verifies the information on the invoice/packing slip against the Receiving activity making the purchase order lines available for payment. The officer then carries the corresponding purchase order line(s) into the Invoice window to complete the invoice entry process. Once a day, a SMARTStream process will match the invoices with the purchase orders and the corresponding receipt information. This is known as 3-Way Matching. Discrepancies from the matching process will result in a matching exception. These exceptions need to be resolved in order to allow a cheque to be printed. Matching exceptions messages are automatically routed to the purchasing officer s New To Do List; he reviews each case and takes appropriate actions. 4.5 Local Invoice Entry and Central Approval This process is invoked when purchasing goods or services whose value exceeds $5,000, which are explicitly exempted from policy 36, and for which no encumbrance is required Planning the purchase Once such a need has been identified, the buyer plans the acquisition of goods or services in compliance with regulations and methods of the University and/or granting agencies. He must make full inquiries in order to obtain the best combination of product, supplier, price, warranty, payment terms, and delivery options. The manager accountable for the project s budget must approve the purchase of the goods or services either in writing or verbally. He must verify that the required funds are available and that any University and/or granting agency rules that should apply in the purchasing process are in fact respected Ordering The buyer records the order number and all other pertinent information in the unit s log book. He conveys the order to the supplier by telephone, fax, letter, or , indicating the order number, article, quantity, price, delivery and payment terms, delivery address, invoicing address, Receiving the goods or services & approving the paper invoice The buyer or the manager examines the delivered goods or services, initials the invoice or packing slip, (to indicate that the goods or services received correspond to the invoice/packing slip) and sends it along to the payer thereby indicating that the payment process should be initiated. Administrative Processes for the Acquisition and the Payment of Goods and Services 4-8

23 4.5.4 Entering the invoice in SMARTStream Payables Upon receiving the initialized original invoice or the invoice and initialized packing slip, the payer initiates the payment process in SMARTStream Payables. The packing slip and original invoice documents must be matched if they have been sent as separate documents. Aside from a short predetermined period of time at the end of the year, there is no need to create batches of invoices for processing. All invoices are entered and saved as independent transactions. There are three types of invoices: regular invoices, credit memos and debit memos, all of which can be added using the Invoice activity in SMARTStream Payables. In this activity, the payer enters the details of the transaction and saves the completed invoice. When saving the invoice, SMARTStream Payables: Verifies the existence of the accounting key and displays an error message when the key does not exist in the Chart of Accounts window in SMARTStream Ledger; Verifies the availability of funds for the transaction and adjusts the corresponding Funds Control records. When there are insufficient funds for the transaction or if the accounting key used is valid but not included in Funds Control, a Funds Control Exception occurs and the payer receives an informational message to indicate that an error has occurred. The Funds Control records will not be updated. At this stage, further processing of the invoice document is blocked and an exception message is routed to Financial Services for remedial action. In cases where for administrative reasons, Financial Services cannot release an invoice with a Funds Control Exception, the payer is required to amend the invoice to remove the exception or delete the invoice altogether. Once these exceptions are resolved, saving the suspended document reassesses funds availability and enables the corrected documents to be further processed; Generates all of the appropriate entries to be posted to the General Ledger; Triggers the approval process by sending an electronic informational message to the approver s New To Do List and submitting the corresponding invoice to the approval process. The payer must also forward to the approver the (physical) invoice thereby indicating that it is ready to be approved in SMARTStream Payables Approving the invoice electronically (local approval) The workflow component of SMARTStream Payables sends the completed invoice to the designated approver, or to a designated approval workgroup. Upon receiving the informational message in their New To Do List and the paper invoice, each approver must review, then approve or reject the invoice from either the Invoice Approval window or the Invoice Approval Status window. To approve each individual invoice, the approver must first verify the pertinence of the request for payment and compare it to the physical documents in hand. If the approver or one person in the approval workgroup refuses to approve the invoice, it acquires a status of Rejected and is not eligible for payment; the approval process stops. SMARTStream Payables will send a message to the payer to Review Rejected Invoices. In order for a rejected invoice to be eligible for approval again, the payer can make a few modifications either by changing the existing accounting key(s) or the payment method, or by adding new accounting distribution lines to the invoice. The invoice once again becomes available for approval. Administrative Processes for the Acquisition and the Payment of Goods and Services 4-9

24 If an invoice is posted to the General Ledger before the approver processes it, and the approver subsequently refuses to approve it for administrative reasons, the approver must ask the payer to cancel the invoice; when this is done, SMARTStream Payables generates reversing entries for all of the entries it created when posting the original document Forwarding all supporting documents to Financial Services and approving the invoice electronically (central approval) The signed invoice/packing slip is forwarded to Financial Services thereby indicating that it is now available for electronic approval. The workflow component of SMARTStream Payables sends the locally approved invoice to the designated approver at Financial Services. Upon receiving the informational message in their New To Do List and the paper invoice, the approver reviews, then approves or rejects the invoice from either the Invoice Approval window or the Invoice Approval Status window. To approve each individual invoice, the approver must first verify the pertinence of the request for payment and compare it to the physical documents in hand. After the invoice is approved, the status changes to Complete. Payables can process it for payment. If the approver refuses to approve the invoice, it acquires a status of Rejected and is not eligible for payment; the approval process stops. SMARTStream Payables sends message to the payer to Review Rejected Invoices. The local approver is also informed of the decision to reject the invoice he has approved. In order for a rejected invoice to be eligible for approval again, the payer can make a few modifications either by changing the existing accounting key(s) or the payment method, or by adding new accounting distribution lines to the invoice. The invoice once again becomes available for local approval and subsequently central approval. If an invoice is posted to the General Ledger before the approver processes it, and the approver subsequently refuses to approve it for administrative reasons, the approver must ask the payer to cancel the invoice; when this is done, SMARTStream Payables generates reversing entries for all of the entries it created when posting the original document. 4.6 Central Invoice Entry with no Purchase Order The following process applies to documents which are considered to be either Statement Type Invoices or Special Payroll Requests. The latter is a specific paper document submitted by the Human Resources Service when a special payroll cheque must be issued to an individual outside of the regular pay cycle. Statement Type Invoices are received by Financial Services from vendors that offer a service to most units across campus but choose to issue a single invoice for all services rendered. This often results in multiple small charges to various units on one invoice. To expedite the payment process, those invoices are entered by Financial Services. An example are the invoices received from most courier service companies. Administrative Processes for the Acquisition and the Payment of Goods and Services 4-10

25 4.6.1 Entering the invoice in SMARTStream Payables Upon receiving the Statement Type Invoice and all supporting documents from the vendor, the payer (financial officer) initiates the payment process in SMARTStream Payables. The financial officer will match the supporting documents against the invoice. The invoices are entered using the Invoice activity in SMARTStream Payables. In this activity, the payer enters the details of the transaction and saves the completed invoice. When saving the invoice, SMARTStream Payables: Verifies the existence of the accounting key and displays an error message when the key does not exist in the Chart of Accounts window in SMARTStream Ledger; Verifies the availability of funds for the transaction and adjusts the corresponding Funds Control records. When there are insufficient funds for the transaction or if the accounting key used is valid but not included in Funds Control, a Funds Control Exception occurs and the payer receives an informational message to indicate that an error has occurred. The Funds Control records will not be updated. At this stage, further processing of the invoice document is blocked and an exception message is routed to Financial Services for remedial action. In cases where for administrative reasons, Financial Services cannot release an invoice with a Funds Control Exception, the payer is required to amend the invoice to remove the exception or delete the invoice altogether. Once these exceptions are resolved, saving the suspended document reassesses funds availability and enables the corrected documents to be further processed; Generates all of the appropriate entries to be posted to the General Ledger; Triggers the approval process by sending an electronic informational message to the approver s New To Do List and submitting the corresponding invoice to the approval process. The payer must also forward to the approver the (physical) invoice thereby indicating that it is ready to be approved in SMARTStream Payables. 4.7 Requests for Bank Drafts with Central Invoice Entry This process is applied when a bank draft or a fund transfer is requested by a foreign supplier as payment for goods or services. This is usually the case when dealing with a supplier in a foreign country other than the United States. Regardless of the type of payment being issued, all purchases are subject to policy 36 which includes all foreign purchases of goods and services Planning the purchase Once a need has been identified, the buyer plans the acquisition of goods or services in compliance with policies and methods of the University and regulations of granting agencies (if applicable). He must make full inquiries in order to obtain the best combination of product, supplier, price, warranty, payment terms, and delivery options. The manager accountable for the project s budget must approve the purchase of the goods or services either in writing or verbally. He must verify that the required funds are available and that any University and/or Administrative Processes for the Acquisition and the Payment of Goods and Services 4-11

26 granting agency rules that should apply in the purchasing process are in fact respected. The individual should obtain the appropriate exchange rate from Financial Services and convert the invoice amount into Canadian dollars before verifying the availability of funds Ordering the goods or services The buyer records the order number and all other pertinent information in the unit s log book. He conveys the order to the supplier by telephone, fax, letter, or , indicating the order number, article, quantity, price, delivery and payment terms, delivery address, invoicing address, Receiving the goods or services and approving the paper invoice The buyer or the manager examines the delivered goods or services, initials the invoice or packing slip to indicate that the goods or services received correspond to the invoice/packing slip. If any of the essential information fields are not present on the invoice (i.e. supplier s name, price, payment terms, accounting keys, and corresponding amounts), then a payment request form should be completed and attached to the original invoice Forwarding all supporting documents and entering the invoice in SMARTStream Payables (Financial Services) The signed invoice/packing slip is forwarded to Financial Services thereby indicating that the payment process should be initiated. Once a week, normally on Friday mornings, Financial Services initiates the payment process for all duly received original invoices and corresponding payment request forms (where applicable). The information is first entered in a stand alone system that produces the bank drafts or fund transfers as requested. Then the designated financial officer re-enters the invoice data in SMARTStream Payables; this generates the corresponding transactions that are subsequently posted to SMARTStream Ledger. Administrative Processes for the Acquisition and the Payment of Goods and Services 4-12

27 5. Vendors Vendors are used by both the Purchasing and the Payables modules of UO - SMARTStream. Purchasing uses vendor and vendor item information to process requisitions and purchase orders. Payables uses vendor payment information and defaults to process payments. Certain elements of data can be specified as defaults at the enterprise level, at the purchase entity and payable entity level, and at the vendor level; when any of these defaults are specified at more than one level, then entity defaults override enterprise levels, and vendor defaults override entity defaults. For example, when you enter a vendor identifier on a requisition, on a purchase order or on an invoice, the defaults selected for the vendor become the defaults for the requisition, purchase order, or invoice. Generally, most defaults can be overridden at the document level. The has identified three types of vendors: trade vendors, individual vendors and onetime vendors. Although, all of these vendors are kept in the same database, only trade vendors are involved in Purchasing activities, the two other types are only involved in Payables activities. Trade vendors are the commercial partners with whom the University conducts business. They are commonly called suppliers and are used in both SMARTStream Purchasing and Payables. For all of the vendors with whom the University does business on a regular basis, Materials Management Services signs a business relation agreement; this is a formal process where conditions for conducting business are stated formally. Individual vendors are employees of the University that may need to be reimbursed for travel expenses, to be personally paid a professional honorarium, or for whom a special payroll request was issued or other individuals. One-time vendors are students that may require a reimbursement of fees due to changes in their study program. This information is transferred directly from the Student Information System (SIS). They are called one-time vendors because historical summary information will not be maintained for these individuals in UO - SMARTStream. The process of creating and maintaining vendor information in UO - SMARTStream remains the responsibility of Financial Services in order to streamline operations and to avoid the duplication of vendor records in the vendor database. Certain elements of data related to purchasing activities are maintained by Materials Management Services. 5.1 Vendor Identifier The Vendor Identifier is one of two key fields used in UO - SMARTStream to search for a particular vendor. It is a mandatory field which can include up to 10 upper case, alphanumeric characters. Only one Vendor Identifier is created per vendor operating name. The second key field is the Location. If all transactions with a specific vendor are directed to a single address, then the Location field is left blank. On the other hand, if a vendor has multiple addresses, the Location field is used to identify them. We have adopted a clear naming convention for Location fields: the main address is identified by the Vendor Identifier coupled with a blank Location field; all other addresses are identified by a three character numeric value in the Location field (i.e. 001, 002, 003, etc). The combination of the Vendor Identifier with the Location makes each vendor record unique. The following example illustrates the use of this naming convention. Vendors 5-1

28 Operating Name Banque nationale du Canada Mailing Address Vendor Identifier Location 242, rue Rideau, Ottawa, ON (main address used by U of O) BNC Blank 1701, rue Bank, Ottawa, ON (used only occasionally) 282, rue Elgin, Ottawa, ON (used only occasionally) BNC 001 BNC 002 To facilitate the search for a vendor in UO - SMARTStream, each of the three types of vendor has been subjected to its own naming convention as explained below. The following rules are meant as guidelines, to make the search for a specific vendor easier for all UO - SMARTStream users Trade vendors Identifiers for trade vendors include: the first seven letters of the vendor name(s) - the three remaining spaces should be used only if they make the identifier more meaningful, e.g. Operating Name Vendor Identifier Aberback Lapointe & Associés Surgenor Pontiac Buick (1975) Limitée ABERBAC (7 letters) SURGENOR (8 letters) less than seven letters if this is sufficient to recognize the vendor, e.g. Operating Name Vendor Identifier Algoma District Medical Group ALGOMA Vendors 5-2

29 no spaces between words or initials, e.g. Operating Name Vendor Identifier OM Video OMVIDEO no punctuation, special characters or accents, e.g. Operating Name Vendor Identifier A & A Asbestos Removal Ltd A.W. Chesterton Company Ltd Université de Montréal AAASBES AWCHEST UMONTREAL the first character of common words if it makes the identifier more meaningful; a list of commonly used keywords can be found in Appendix A of this manual, e.g. Operating Name Vendor Identifier Banque Royale BROYALE otherwise the acronym, initials or abbreviation would be sufficient, e.g. Operating Name Vendor Identifier Canadian Imperial Bank of Commerce Federal Express CIBC FEDEX a key word from the complete vendor name that is particularly meaningful, if it does not exceed 10 characters, e.g. Operating Name Vendor Identifier William Mercer Ltd MERCER a French language identifier if the vendor has a bilingual operating name, e.g. Operating Name Vendor Identifier Société canadienne des postes (french) Canada Post Corporation SPOSTES the vendor s registration number followed by an abbreviation of the province or country where registered. Vendors 5-3

30 e.g. Operating Name Vendor Identifier Canada Inc CA Individual vendors All identifiers for individual vendors start with a Z followed by a dash (-), then the first five (5) characters of the surname and the first initial, followed by a two-digit number to uniquely identify individuals who would otherwise have the same vendor identifier. They should not contain any punctuation, special characters or accents. e.g. Operating Name Vendor Identifier Jean-Marc Dubé (012345) Chantal Lanthier (056789) Z-DUBEJ01 Z-LANTHC01 Note that, if it is known, the employee number in brackets is appended to the employee s name in the Operating Name field, as illustrated in these examples. When a new individual vendor is created and everything in this vendor identifier would be identical to an existing vendor identifier except for the two-digit number at the end, then this number is increased by one, to maintain a unique identifier for all vendors. e.g. Operating Name Vendor Identifier Francine La France (111111) Francine Laframboise (222222) François Lafranchise (333333) Z-LAFRAF01 Z-LAFRAF02 Z-LAFRAF03 Vendors 5-4

31 5.2 Vendor Location The Vendor Location includes basic information, options and defaults for each vendor with whom the conducts business. The data elements most commonly customized for a vendor are: Remit-to address which represents the address on the vendor s invoice indicating where the cheque should be sent, Order-from address which represents the address where the purchase order will be sent when ordering from this vendor, Return-to address which represents the address where the goods should be returned if need be. 5.3 Vendor Payables Information Financial Services is responsible for maintaining the Vendor Payables Information in UO - SMARTStream. This information must be entered in the system before processing a purchase order and an invoice. It includes Controls, Options and Defaults for each vendor. Vendor Payables Information allows the assignment of a status to a vendor for Payables. Some of these statuses are explained below: Active: an active status indicates that documents may be processed in SMARTStream Payables and SMARTStream Purchasing (if defined in Vendor Purchasing Information, refer to section Vendor Purchasing Information) for that vendor. Inactive: a vendor is made inactive once the no longer deals with it. Factor: this status is given to a vendor which receives payments on behalf of other UO- SMARTStream vendors for various reasons. For example, if Revenue Canada has issued a garnishee for a vendor, then Revenue Canada would become a vendor with a factor status in UO- SMARTStream, while the vendor to whom the garnishee was issued would see its invoices paid directly to Revenue Canada. Privileged: this indicates that a vendor is recognized as a primary vendor of the. Other Vendor Payables Information includes: Remit-To Address: if not specified explicitly, this information defaults from the Vendor Location window (refer to section Vendor Location). Invoice Controls: these are used to specify the default payment terms (Net 30) when processing an invoice and the unit price tolerance for matching invoices to purchase orders. The unit price tolerance percentage is 0% to indicate that a matching exception will be generated as soon as the invoice line amount differs from the purchase order line amount. Payment Options are indicated in figure 5.1 and described below: Vendors 5-5

32 Payment Method Type of Payment Figure 5.1: Vendor Payables Information window Matching Controls Payment Options Payment Method is CAN for payments made in Canadian dollars. For most vendors, this value is left blank at the vendor level since it defaults from the Payable Entity level. For US based vendors, the Payment Method selected is US for payments in US dollars. The Payment Method is linked to the Bank Account from which the cheques are issued. Type of Payment indicates whether payments to this vendor are issued as a document (cheque) or as electronic information. Matching Controls indicates the three-way matching process chosen for purchase orders from a vendor. The scheduled matching process chosen is used to match the invoice with the related purchase order and receipt. Payment Options is set at Single Payment Per Entity indicating that all payment requests to one vendor location are combined by payable entity to generate a single payment. Vendors 5-6

33 5.4 Vendor Purchasing Information Once the Vendor Payables Information has been completed by Financial Services, Materials Management Services can proceed to define the Vendor Purchasing Information. This information must be entered in SMARTStream before processing a purchase order. It includes Controls, Options and Defaults for each vendor when adding a purchase order. The information entered in this window is described in the following paragraphs. More detailed information on this subject is available in section Purchasing. Vendors can also be assigned a status through the Vendor Purchasing Information activity. The statuses are identical to those available in the Vendor Payables Information activity. Refer to section Vendor Payable Information for a description of the statuses. Vendor Purchasing Information includes the following items: Order-From and Return-To Address, the information defaults from the Vendor Location window. Any modifications to these addresses must be made in that window. Order Information, these elements have certain default values normally assigned to them. These elements are identified in figure 5.2 and described in the following table. Payment Terms FOB Terms Ship Via Freight Terms Figure 5.2: Vendor Purchasing Information activity Freight Charges Miscellaneous Charges Vendor Certification Vendors 5-7

34 Default Value Payment Terms FOB Terms Ship-Via Freight Terms Freight Charges Miscellaneous Charges Vendor Certification N30 (Net 30 days) FOB Destination Best Way Freight Prepaid Do Not Authorize Freight Do Not Authorize Miscellaneous Charges all vendors must be certified in order to be issued a purchase order The terms listed above will default on to the purchase order but can be overridden at any time by the Purchasing Officers. It is important to note that the payment terms indicated in the Vendor Purchasing Information override those indicated in the Vendor Payables Information during the matching process. When specific terms are negociated with a vendor, the Order Information will include all of the terms of the negotiated contract. Other Vendor Purchasing Information includes: Receiving Information: information used to establish an acceptable tolerance when the quantity received differs from the quantity indicated on the purchase order. This can either be an overtolerance percentage (set at 0%) or an under-tolerance (the field is left blank). An over-tolerance percentage of 0% to indicates that a matching exception will be generated when the quantity received is greater than the quantity ordered. In the receiving information view, early and late days allowed for delivery are also defined as well as the lead time required for the delivery of goods purchased using catalogued vendor items. Send Methods: indicates how purchase orders and change notices are usually sent to the vendor. For example EDI, by Fax or Print. Print is the selected Send Method. Vendors 5-8

35 6. SMARTStream Basic Concepts and Policies 6.1 Enterprise Payables Concepts Diagram SMARTStream Basic Concepts and Policies 6-1

36 6.1.2 Purchasing Concepts Diagram SMARTStream Basic Concepts and Policies 6-2

37 6.2 Currency As described in Chapter 4 of the General Concepts Manual, UO - SMARTStream System Overview, some SMARTStream policies (Currency, for example) support the activities of many SMARTStream applications. In the SMARTStream environment, this concept is referred to as the Enterprise. As for all policies defined at this level, the information specified in the Currency policy will act as a default to other SMARTStream application windows. Most defaults can be overridden at the document entry level. In this case, the Currency policy allows us to manage the retrieval and use of various exchange rates for transactions processed in SMARTStream Budget, Funds Control, Ledger, Purchasing and Payables. SMARTStream can be set up either as a Single Currency or a Multiple Currency system. If we had chosen Single Currency, all business transactions would be recorded in one currency only. Aside from purchasing goods and services from Canadian vendors, the frequently deals with vendors in the United States and must pay invoices in US Dollars. For this reason, UO - SMARTStream was setup as a Multiple Currency system with two defined Currency codes: CAD - Canadian Dollars USD - US Dollars By choosing a Multiple Currency system at the Enterprise level, we still have the flexibility to be more restrictive at the application level (Budget, Ledger, etc..) if the use of a single currency (Canadian Dollars) is more appropriate. In practice, users will see Canadian and US Dollar transactions in the Purchasing and Accounts Payable modules; however, all transactions in Budget, General Ledger and Funds Control will be recorded in Canadian Dollars. SMARTStream Basic Concepts and Policies 6-3

38 6.2.1 Currency Defaults At the Enterprise level, some elements are defined and will act as defaults in other SMARTStream applications. These elements are indicated in figure 6.1 and described below. Rate Type Rate Entity Figure 6.1: Enterprise Policy (Currency View) Booking Currency Transaction Currency Rate Entity: the source for Currency exchange information for a Payable Entity. Only one Rate Entity is defined, its value is BANK - Taux de la banque d Amérique (BANK - Bank of America Rate). Rate Type: sets the number of days for which a rate remains valid and determines which action to take when the rate expires. We have chosen not to let this rate expire but rather to change it as required. Only one Rate Type is defined, its value is T - Taux courant (T - Current Rate). Booking Currency: the base currency in which SMARTStream Ledger maintains its primary balances. Because the University s books are kept in Canadian Dollars, the Booking Currency selected by the University is CAD - Canadian Dollars. Transaction Currency: the currency most frequently used in business transactions. The Transaction Currency selected by the University is CAD - Canadian Dollars. SMARTStream Basic Concepts and Policies 6-4

39 In SMARTStream Purchasing, the currency applied to a requisition comes from the Purchasing Site. In Site policy, Canadian Dollars (CAD) is defined as the default currency for Site UOCA and US Dollars (USD) for Site UOUS. When attaching requisition lines to a purchase order, the currency comes from the vendor selected and not the Purchasing Site. If such a currency is not defined for the selected vendor, then the currency will come from the purchase entity used when preparing the purchase order. Although the Transaction Currency may be overridden on the purchase order, there is no need to do so since all vendors are set up with a default currency. SMARTStream Payables uses the Transaction Currency set up for a vendor as the default currency on the invoice. If no default Transaction Currency is defined for the vendor, Payables uses the default currency from the Payable Entity (Canadian Dollars - CAD) to pay the invoice. Although the transaction currency may be overridden when paying an invoice, there is no need to do so since all vendors are set up with a default currency. For example, American vendors are set up with US Dollars (USD) as the default currency and Canadian vendors with Canadian Dollars (CAD) as their default currency Currency Conversion In SMARTStream Payables, when saving an invoice in a currency other than the booking currency, the currency function converts the amount of the invoice to the booking currency. Journal entries are generated by SMARTStream Payables in the booking currency. The following example illustrates the currency conversion process that occurs when entering an invoice for a vendor whose transaction currency has been defined as US Dollars. SMARTStream Currency: searches the rate table to determine an effective date that is either equal to or less than the date on the invoice; determines the rate type applied to the conversion and generates the relevant information - the only rate type defined in UO - SMARTStream is T - Taux courant (T - Current Rate); retrieves the rate and ensures that it is valid; checks the transaction tolerance percentages defined for the currency; converts the amount and returns the conversion data to SMARTStream Payables. 6.3 Rates We obtain the rate used for converting US Dollars to Canadian Dollars from the Bank of America. These rates are monitored daily by Financial Services and the required adjustments are made in SMARTStream to reflect an accurate currency conversion rate. The rate used for an invoice entered in US dollars can be seen in the Currency view of the Invoice window. SMARTStream Basic Concepts and Policies 6-5

40 6.4 Payments Payment Controls In order to generate payments, a set of payment controls must be processed. This is done centrally, every time that a cheque run is to be processed. A set of payment controls includes the payable entity, the payment method and the dates for running payments. This information determines which invoices are selected and paid when generating payments. A payment control is established for each payable entity and payment method combination from which payments will be produced Payable Entity A payable entity is a logical unit that allows to group invoices for which a common set of processing rules apply. A more complete explanation of this concept appears below in section Defining Payable Entities. Because a number of entities are defined, payments may be run for each payable entity independently of the other payable entities Payment Methods A payment method combines the type of payment (paper or electronic) with the bank account used to pay our vendors. For instance, a payment method could be a cheque (type of payment) issued in Canadian funds from our account at the National Bank of Canada (bank account). This is the mechanism which allows us to exceptionally generate a separate payment for one invoice when it is entered with a specific payment method - obviously, because of the overhead associated with this process, it should be invoked with extreme discretion. Many payment methods have been created to accommodate the various combinations of bank accounts and types of payment used at the. Code Type of Payment Bank CAN Canadian Cheques Mailed to Suppliers National Bank of Canada CAND Canadian Cheques Returned to Faculty or Service National Bank of Canada CCR Credit Card National Bank of Canada US US Cheques Mailed to Suppliers National Bank of Canada in New York USD US Cheques Returned to Faculty or Service National Bank of Canada in New York MNL Manual Typewritten Cheques National Bank of Canada TRT Bank Drafts National Bank of Canada SMARTStream Basic Concepts and Policies 6-6

41 6.4.4 Payment Terms Payment terms are guidelines that control how the discounts and adjusted discount due dates are determined. They enable the calculation of the discount amount. Payment terms also determine when the final payment is to be made. The following table shows a few examples of payment terms used at the. Term Code Description 1%10 - N30 1% discount applies if invoice is paid in 10 days, otherwise the net amount is due in 30 days 2%10 - N30 2% discount applies if invoice is paid in 10 days, otherwise the net amount is due in 30 days N00 N30 The non-discounted invoice is due immediately The non-discounted invoice is due in 30 days SMARTStream Basic Concepts and Policies 6-7

42 6.5 Purchasing Introduction SMARTStream Purchasing provides the capability to efficiently process requisitions and purchase orders. Through a process entitled 3 Way Matching, SMARTStream Purchasing matches invoices (SMARTStream Payables) with their related purchase orders (SMARTStream Purchasing) and receipt documents (Receiving). This process must be completed to allow SMARTStream Payables to issue and print a cheque for all invoices originating from a purchase order. The matching process includes the following events: entering a requisition, approving the requisition, converting the requisition to a purchase order, sending the purchase order, entering receipt information, entering invoices by matching the information to purchase order lines, running the scheduled matching process, and resolving any matching exceptions resulting from this process. As previously mentioned, the matching process occasionally generates matching exceptions that will prevent cheques from being issued unless they are resolved. Matching exceptions occur when: the quantity received exceeds the percentage over tolerance allowed; the unit price exceeds the established tolerance; the purchase order has not yet been sent. With this receiving function, SMARTStream Purchasing provides a tool for tracking goods ordered and, through policies established for each vendor, provides details on a vendor s performance. For example, a tighter control could be placed on critical goods received from a specific vendor by establishing a lower late days allowed policy. SMARTStream requires that the receiving function take place in order to match an invoice to a purchase order and subsequently pay this invoice. Due to the limited use of purchase orders on campus, there is no need to decentralize the receiving function in SMARTStream and for this reason, Receiving will be considered a central function. It is important to note that this central function (Receiving), would only be initiated after receiving the approved physical invoice from the department to confirm the receipt of goods or services. SMARTStream Basic Concepts and Policies 6-8

43 6.5.2 Integration of the Purchasing Module With Other SMARTStream Products Funds Control SMARTStream Funds Control ensures that funds are available when processing requisitions and purchase orders. Receiving SMARTStream Receiving matches invoices to their corresponding purchase orders and receipt documents. Payables When an invoice is matched against a purchase order, SMARTStream Payables generates journal entries to record the expenses as specified on the purchase order. When an invoice is charged to a ledger entity that is different from the ledger entity assigned to the processing payable entity (Entity A), the appropriate interentity balancing transactions are generated automatically during the posting process. Ledger SMARTStream Ledger validates the accounting information entered on a requisition and a purchase order against the appropriate ledger validation tables. SMARTStream Ledger also posts all journal entries generated by SMARTStream Payables during the invoice matching process Defining Sites In SMARTStream Purchasing, a Site is a logical entity that allows for regrouping transactions with similar characteristics. A Site may correspond to a physical place where you conduct business although that is not necessarily the case. Policies must be established for every defined Site; they specify the primary language, the currency, the first workday applicable, as well as the security privileges required to ensure subsequent Site policy maintenance. Since it is not possible to override the currency at the requisition level, two logical Sites exist for the, one for processing Canadian currency transactions, UOCA, and the other for processing US currency transactions, UOUS. Aside from the currency, all other policies are identical in both Sites Calendar A calendar that is specific to SMARTStream Purchasing allows us to identify the working days applicable to each Site. This procedure also determines which days are to be considered non-working days such as weekends and statutory holidays. As a result, the calendar will not allow a request for delivery of goods on these days. SMARTStream Basic Concepts and Policies 6-9

44 6.5.5 Purchasing Reference Information Purchasing Reference Information includes information about a purchasing process that is used repetitively in a fixed format on purchase orders. Such information includes Ship-To, Deliver-To, Ship-Via, FOB Terms, Freight Terms, Purchase Commodities and Standard Phrases. Their description and usage are described below Requisition Entities Requisition entities are user-defined identifiers for a set of processing options and defaults that control how requisitions are generated and processed. At the, 45 requisition entities are defined to identify various administrative units. These entities were created by using the Unit element of the accounting key as defined in SMARTStream Ledger. The following table shows a few examples of requisition entities with their corresponding descriptions. A complete list can be found in Appendix B of this manual. Requisition Entities Description 0101 Faculté d administration / Faculty of Administration 1301 Bibliothèque / Library 2001 Éducation permanente / Continuing Education 3501 Service des finances / Financial Services 4001 Service des immeubles / Physical Resources 5001 Affaires étudiantes / Student Affairs 7001 Cabinet du recteur / Rector's Office Every requisition entity includes the following defaults: Identifying information: the description of the requisition entity, which is the name of the Unit as defined in SMARTStream Ledger; Ship-to: the value that is most often used with this requisition entity. (see section Ship-to, Deliver-to and Ship-via Codes for a list of default Ship-to codes for each requisition entity); Deliver-to: is not used at the and is therefore left blank; Requisition workflow default: the default is set to the Buyer workgroup; Accounting key information: for every requisition the minimal accounting key information required is the Entity, Unit and Account and the complete accounting key must be validated by SMARTStream Ledger. The items listed above apply to all requisitions but some of these items can be overridden by the requester. When processing requisitions, the requester s SMARTStream User ID determines which requisition entity SMARTStream Basic Concepts and Policies 6-10

45 is associated to his requisitions. The policies specified for a requisition entity apply to all of the requisitions which were created using that entity Requesters A requester can be associated with one and only one requisition entity per Site. When processing requisitions, the requester ID will be picked up automatically from that person s SMARTStream User ID. SMARTStream allows us to define default Ship-to and Deliver-to codes at the requester level; if used, these defaults override those that are defined for the requisition entity. However, at the University, requester based defaults such as the Ship-to codes are not being used since they are likely to change from one requisition to another Ship-to, Deliver-to and Ship-via Codes A Ship-to code is the address used on the requisition and purchase order indicating to the vendor where the ordered goods are to be shipped. At the, most Ship-to codes are identical to the location where the items are used. Ship-to codes have a maximum length of 8 alphanumeric characters. A naming convention was established to help SMARTStream Purchasing users select the appropriate Ship-to code among a list of available values. A partial list of Ship-to codes can be found in Appendix C of this manual. To illustrate the naming convention, refer to the example below: Ship-to code: 01 J 347D First 2 digits of the unit (accounting key) e.g. Faculty of Administration Room number e.g. room 347D First letter of the street name e.g. Jean-Jacques Lussier Deliver-to codes indicate the location where goods are distributed after delivery by the vendor. Since the uses Ship-to codes as the point of use address, Deliver-to codes are not used. SMARTStream Basic Concepts and Policies 6-11

46 Ship-via codes indicate the shipping method used by the vendor. A ship-via method can identify a form of transportation or the name of a specific carrier. Buyers often prefer one ship-via method or one specific carrier, depending on their needs or on the goods ordered. SMARTStream Ship-via codes also have a maximum length of 8 alphanumeric characters. A few examples of the 13 Ship-via codes defined in SMARTStream are listed below and a complete list can be found in Appendix D of this manual. Code Name AIR BES FEDEX Air Bestway Federal Express FOB Terms and Freight Terms Free-On-Board (FOB) terms are important since they are used to pinpoint the location where liability for the goods being shipped is transferred from the seller to the buyer. Establishing who is liable for the goods determines which party should file a claim if the goods become damaged or lost during transportation. A complete list of SMARTStream FOB term codes follows. Note that the code is only 2 alphanumeric characters long. Code Name Description DE FOB Destination The vendor maintains responsibility for the goods until they are physically delivered to the point specified by the buyer. Buyers prefer this term. OR FOB Origin The buyer assumes responsibility of the goods ordered as soon as they leave the vendor s loading dock. Vendors prefer this term. NA N/A Not applicable. SMARTStream Basic Concepts and Policies 6-12

47 Freight terms are used to determine which party must pay for the freight charges. For example, the freight term of Prepaid/Charge back means that the vendor pays the freight on behalf of the buyer and will charge back that cost to the buyer on their invoice. SMARTStream Freight terms have a maximum length of 8 alphanumeric characters and are listed below. Code Name COL INCL NA PPD PPD/CHBK Collect Included Not Applicable Prepaid Prepaid/Chargeback Commodities and Purchase Commodities A commodity can be described as a group of items that share common characteristics. A commodity code is assigned to each commodity and subsequently to each vendor item. For example, when purchasing a Digital Video Disk player (DVD) you would choose the Audio-Visual Equipment & Supplies category. Code 1000 is associated with this category. Other examples of commodity codes appear in the following table: Code Description 1600 Books, Manuals, Magazines 3100 Computers 4000 Furniture 6700 Printing, Forms & Design The complete list of commodity codes currently in use at the University appears in Appendix E of this manual. SMARTStream uses commodities to route requisitions to buyers. Once a commodity is assigned to a specific buyer, the commodity becomes a purchase commodity. For commodities to be used in a workflow, they must be mapped to vendor items. SMARTStream Basic Concepts and Policies 6-13

48 Buyers SMARTStream buyers are defined by Site and are mapped to Purchase Entities. Materials Management Services, Financial Services (using the process, Central invoice entry with a Purchase Order for encumbrance only), and regional buyers represent the buyers defined in SMARTStream Purchasing. With the exception of regional buyers, SMARTStream buyers can process purchase orders for all requisition entities Cataloged Vendor Items and Uncataloged Vendor Item Cataloged Vendor Items are used for repetitive purchases and are usually associated to preferred suppliers for a specified period of time. These items are defined in the SMARTStream vendor item database. They are mapped to a vendor and include the vendor s item or catalog number, a description of the item, the unit price and the unit of measure. The unit of measure is the standard quantity used by a vendor for counting items that can be purchased from this vendor. To simplify matters, the unit of measure EA (each) is used throughout UO - SMARTStream for vendor items. The actual vendor s unit of measure is included in the Vendor Item description field. For example, the description for Vendor Item # with VWRCANLAB is: FILTER PAPER NO.1, /PK. The Unit of Measure for this item would be each (EA) Pack (PK) of 100. All cataloged vendor items are also mapped to a purchase commodity which in turn routes requisitions to the appropriate buyer. However, since purchase orders are not required for purchases under $5, (excluding restricted items), vendor items are mostly used for informational purposes to obtain prices for negotiated contract items. For this reason, all existing contracts with negociated vendor items are loaded in SMARTStream. Uncataloged vendor item is an item that you enter on a requisition or a purchase order but that does not exist in the vendor item database. Uncataloged vendor items can be added automatically to the vendor item database during the purchase order process if the option in turned on in the purchasing entity policy. The option is turned off Description Only Item They represent the high value and non-repetitive purchases of an organization. Description Only Items are frequently used by requesters at the. They qualify as exceptional purchases and for this reason no identifier is attached to the Description Only Items in SMARTStream Purchasing. This results in a requisition line exception for every Description Only Item used on a requisition. Since they are not attached to anything in SMARTStream Purchasing, requisitions with Description Only Items are always routed to the buyer workgroup once approved. Sourcing will usually be done prior to entering the requisition line information. SMARTStream Basic Concepts and Policies 6-14

49 Standard Phrases Standard Phrases are statements frequently used by buyers on documents such as purchase orders. Standard phrases can be shipping instructions, tax information, a legal statement or some other notice. Standard phrases can be assigned to an entire purchase order or to a specific purchase order line. A complete list of SMARTStream standard phrases can be found in Appendix F of this manual. Here are a few examples of standard phrases: Code Description S01 S04 S06 All Items P.S.T. Applicable Items Used Exclusively For Research Purposes All Items Duty Applicable Purchase Entities Purchase Entities include default options and controls required when purchase orders are processed by buyers. Purchase Entities are defined for each Site, which in turn may have their own set of default options and controls. At the, only one Purchase Entity was defined for each Site with the same default options and controls for both Sites. The single Purchase Entity was defined as UOFO; it is mapped to Payable Entity CHQ and is then assigned to all buyers. The default options and controls that were defined are: Payable Entity: CHQ; Allow for requisition date to default to PO; Allow for Description-Only Items; Accounting Key validation in Ledger; Required Accounting Key Elements(Entity, Unit, Account). SMARTStream Basic Concepts and Policies 6-15

50 6.6 Payables Introduction SMARTStream Payables provides the capability to process payment requests and produce payments. It interacts with other SMARTStream products, such as Ledger, Purchasing, Receiving and Funds Control to provide a seamless flow of work from payment request entry to bank payment clearance. A complete set of policies is established within SMARTStream Payables. During processing, the values and options established in these policy components become defaults for all payment requests. In some cases, users can override the defaults when they process a payment request. The following table lists and describes the tasks that can be performed using SMARTStream Payables: Payable Task Adding invoices directly. 1 Adding invoices using a scheduled process. 2 Matching invoices to purchase orders and receipts. 2 Description Using the Invoice window to enter invoices for processing. Setting up parameters for running the invoice scheduled process and using it to enter invoices from an external file. Setting up parameters for the scheduled matching process and using it to match these documents. Approving invoices. 1 Approving or rejecting invoices routed according to the defined approval lists. Managing invoices. 1 Using the Payables windows to set up partial payments, place invoices on hold, and cancel and delete invoices. Producing payments. 2 Setting up controls and parameters for producing scheduled or on-demand payments. Managing payments. 2 Allowing to display, cancel, replace, and re-sequence payments. 1 Task performed by all Faculties and Services, including Financial Services. 2 Task performed by Financial Services only. SMARTStream Basic Concepts and Policies 6-16

51 6.6.2 Integration of the Accounts Payable Module with other SMARTStream Products Ledger SMARTStream Ledger validates the accounting information entered on a payment request against the appropriate ledger validation tables. SMARTStream Payables generates journal entries when a payment request is saved and again when it is paid. The payment clearing process also generates journal entries, which are recorded by Ledger at posting time. When a payment request is charged to a ledger entity that is different from the ledger entity assigned to the processing payable entity (Entity A), the appropriate interentity balancing transactions are generated automatically during the posting process. Purchasing and Receiving When using SMARTStream Payables with SMARTStream Purchasing and SMARTStream Receiving, invoices can be matched to purchase orders and receipts. Successfully matched invoices continue through the approval and payment processes. If an invoice is not successfully matched, the matching process identifies it as a matching exception. Depending on the type of exception, the invoice might continue to be included in each scheduled matching run until it is successfully matched. Refer to section Introduction for details on matching exceptions. Funds Control SMARTStream Funds Control ensures that funds are available when processing invoices. SMARTStream Basic Concepts and Policies 6-17

52 6.6.3 Defining Payable Entities A payable entity is used to maintain processing rules that control the payment and handling of payment requests for invoices that share certain common defining properties. Because we have defined many payable entities, we have the flexibility of running payments for each payable entity independently of the other payable entities. When selecting a payable entity in the Invoice activity, your choice should be based on the type of payment being issued regardless of the currency as well as the type of supplier being paid. Payable Entity CHQ INTL ETUD MCARD Z-EMP Description This payable entity should be selected when entering an invoice from a trade or an individual vendor to be paid by cheque. This entity should be selected whether the invoice entered is in Canadian Dollars or US Dollars. This payable entity is selected by the designated financial officer at Financial Services when entering an invoice from a vendor in a foreign country other that the United States, which needs to be paid with a Bank Draft issued in the vendor s operating currency. This payable entity is selected by the designated financial officer at Financial Services when entering a student s invoice to be paid by cheque. This payable entity should be selected when entering an invoice from any vendor paid with the Mastercard purchasing card. This payable entity is selected by the designated financial officer at Financial Services when entering special payroll requests submitted by the Human Resources Service when a special payroll cheque must be issued to an individual outside of the regular pay cycle. 6.7 Taxes SMARTStream Payables tax policy provides the capability to process, calculate and report on taxes through a set of controls which include tax rate codes, tax reclaimable codes, and tax rules, among others Tax Rate Code A tax rate code represents the tax rate used to calculate tax amounts. The tax rate entered in the tax rate code is the percentage used to calculate the tax on payables documents. For example, both tax rate codes (code 67 and 100) for the GST tax rule have a tax rate of 7 %. There are multiple tax rate codes for every tax rule. SMARTStream Basic Concepts and Policies 6-18

53 6.7.2 Tax Reclaimable Code The tax reclaimable code is defined by a tax reclaimable rate. This determines the amount of a tax that can be reclaimed from a tax authority. There are multiple tax reclaimable codes for every tax rule. For example, the code 100 indicates that the tax is 100% reclaimable while the code 67 has been created to indicate that the GST is 67% reclaimable. For example, when the tax reclaimable code 67 is used, this indicates that 67% of the tax paid can be reclaimed while 33% of the tax paid is non-reclaimable. SMARTStream Payables first calculates the nonreclaimable portion of the tax amount and then calculates the reclaimable portion. The non-reclaimable portion is the tax amount charged to the expense account(s) Tax Rules A tax rule is a set of processing and calculation controls that determine how to apply a tax to purchase orders or payment requests. It is associated with a tax authority, which is the agency that requires you to pay, bill, or report the tax. Every tax rule has at least one tax rate code and may have one or more tax reclaimable code. The following are the tax rules established at the. Tax Rule Description Tax Rate Code Tax Rate Tax Reclaimable Code GST Goods and Service Tax % 100 GST Goods and Service Tax 67 7 % 67 GSTA Goods and Service Tax Self-Assess % 100 GSTA Goods and Service Tax Self-Assess 67 7 % 67 GSTE Goods and Service Tax Exempt 0 0 % none PST Provincial Sales Tax STD 8 % none PSTA Provincial Sales Tax Self-Assess STD 8 % none PSTE Provincial Sales Tax Exempt 0 0 % none When using a self-assessed tax rule to process a payment request, SMARTStream Payables automatically calculates the self-assessed tax for each payment request line and generates a journal entry for the total tax payable. SMARTStream Ledger posts the tax expense (non-reclaimable) amount of the self-assessed tax to the expense account(s) indicated on the payment request and the total tax payable to the self-assessed tax liability account. SMARTStream Basic Concepts and Policies 6-19

54 6.7.4 Tax Defaults After establishing tax rules and tax rates, some of these can be established as defaults for Payable Entities and for Vendors, to simplify the processing of payment requests and purchase orders. When a payment request or a purchase order is entered, any default tax rule can be overridden by entering another valid tax rule. If a default tax rule has been defined for a payable entity and a different default tax rule for a vendor, then SMARTStream Payables always applies the vendor's default instead of the payable entity's default. SMARTStream Basic Concepts and Policies 6-20

55 7. SMARTStream features 7.1 For Purchasing Requisitions allow users to submit requests for goods and services, route them for approval, have orders created and sent directly to suppliers. There are different ways to quickly complete a requisition. Requesters can click on a specific vendor item or select a group of vendor items to have the values associated with each requisition line automatically default onto the requisition; alternatively, the description and the detail for each requisition line can be entered manually. Another feature involves using multiple Ship-To codes on a single requisition. It s also possible to assign multiple accounting distribution lines to the same requisition line if need be. A requisition form can be prepared and used by a requester to simplify repetitive requests. For example, if a user often requests the same type of goods for which many components or details must be identified, for instance when requesting PCs, a form can be prepared to accelerate the requesting process. The requester can simply complete the requisition by selecting the right form and adding or modifying some of the requisition information Requisition Defaults Requisition defaults come from the purchasing policies defined in SMARTStream Purchasing. For instance, the currency in which the requisition is created comes from the Site policy. The Requester Identifier defaults into the requisition from the information entered in the Requester window. The default Ship-To Address and Buyer Workgroup come from the requisition entity associated to the requester. Information such as Site, Requester, Order Type, Ship-To, Currency, Buyer or Buyer Workgroup will default into the requisition by simply accessing the Requisition activity and entering the requisition header key information (Requisition Identifier and Date Needed). Special attention must be given to the Site selection since SMARTStream Purchasing will select the last Site used by the requester as the default Site in a new requisition. Other requisition defaults will vary depending on the types of items requested. The use of vendor items generates all the details about the item requested. When using catalogued vendor items, the only adjustments required may be the quantity and the date at which the item is needed. The use of other items such as description-only items requires that the details (information such as the Description, Quantity, Unit of Measure and Vendor Identifier) related to these items be entered manually. Description-only items are the type of item that will be used most often in SMARTStream Purchasing at the. The table on the next page indicates: which fields of the Requisition window may contain default information; the primary source for this default information; the secondary source for the defaults if none were established in the primary source; whether or not the information in this field can be overridden at entry time by the user. SMARTStream Features 7-1

56 Requisition Defaults Fields Primary source for default Secondary source for default Override Site Last Site used None Yes Requester User ID None Yes Date needed (requisition header) None. Serves as default for the requisition lines None Yes Date needed (requisition line) Requisition Header None Yes Ship To (requisition header) Requester Requisition Entity Yes Ship To (requisition line) Requisition header None Yes Currency Site None No Vendor (requisition header) None. If used, serve as default for the requisiton lines. None Yes Accounting Distribution Defaults not used None Yes Description only item: Description: Quantity: UOM: Unit Price: Vendor: Purchase Site: Buyer or Buyer Workgroup: None None None None Requisition Header Requisition Entity Requisition Entity None None None None None None None Yes Yes Yes Vendor Item(catalogued): Description: Quantity: UOM: Unit Price: Vendor Item ID Vendor: Purchase Site: Buyer or Buyer Workgroup: Vendor Item Definition Vendor Item Price Vendor Item Definition Vendor Item Price Vendor Item Master Vendor Item Master Vendor Item Definition Commodity associated with the Vendor Item None None None None None None None Requisition Entity No Yes Yes Yes Yes No No Yes SMARTStream Features 7-2

57 Requisition Line Exceptions When a requisition line contains incomplete information or when a description-only item is used, SMARTStream Purchasing generates an exception after the approval has occured. When this happens, the message Review requisition line exceptions is sent to the buyer workgroup s To Do List. This workgroup includes all purchasing officers. One of the purchasing officers reviews the exception and adds or corrects the information after its has been approved Requisition Approval Process SMARTStream Workflow is the tool that is used to automatically route business documents to the assigned approver; SMARTStream Purchasing has its very own workflow for requisition approval. At the University, we have elected to implement this Workflow based on user to user relationships or user to workgroup relationships. For example, if the workflow for a particular unit specifies that USER Y is the approver for USER X, then every time USER X forwards and saves a requisition, USER Y will be the designated approver. If USER Y happens to be an approval workgroup then any user that s a member of this workgroup can approve the requisitions for USER X. An approver may also be a requester but no requester can approve his own requisitions. Some users are not normally authorized to process requisitions within their respective units but have exceptionally been granted access to the requisition activities because these activities are included in the security group to which they belong. Granting access to these activities was done to reduce the number of security groups to be maintained; there are minimal risks associated with the approach procedures were put in place to monitor unauthorized activities. For example, if a requisition is entered by an unauthorized user, SMARTStream Purchasing will send a workflow message to a Materials Management Services workgroup. One of the members will, in turn, contact the Administrative Officer responsible for the unit, to advise him of the unauthorized requisition entry. This unit is then required to take appropriate action, to delete the unauthorized requisition. SMARTStream Features 7-3

58 Requisition Statuses The requisition status changes throughout its processing cycle. For each requisition there is a document status and for each line, a line status. The current status of the document or line dictates what actions are available in SMARTStream Purchasing. Possible actions are to approve or reject a requisition and to cancel, delete or close short a requisition or a requisition line. The following diagram illustrates the requisition statuses throughout the purchasing process: Figure 7.1 : Purchase Order Purchase orders offer many features to facilitate the procurement process in SMARTStream Purchasing. Since the use of purchase orders at the is now limited, features like the automatic creation of purchase orders for contracted items, the combination of identical items onto a single purchase order or the use of multiple Ship-To codes for the same purchase order line, will not be used. In SMARTStream Purchasing, purchase orders are printed daily through a scheduled process; they can also be printed on demand to accommodate urgent requests. Other features like direct purchase order entry and purchase order approval are also available but won t be used extensively, if at all. SMARTStream features a workflow that immediately notifies the approver that requisitions are waiting for approval and notifies the purchasing officer when these requisitions are approved. When catalogued vendor items are used, SMARTStream Workflow notifies the buyer (purchasing officer) assigned to that commodity. When description only items are used, SMARTStream Workflow notifies a buyer workgroup instead. SMARTStream Features 7-4

59 Purchase Order Defaults/Overrides Purchase order defaults are more complex than requisition defaults. The processing defaults come from the buyer while the transaction defaults come from the requisition when attached to a purchase order. When accessing the Purchase Order activity, the Site will automatically default to the last one used by that buyer. The purchase order number must first be entered in order to generate the processing defaults for the purchase order. The buyer identifier will subsequently appear along with the purchase entity and Ship-To code for that Site. The purchase entity generates the following processing defaults: the requisition date defaults to the purchase order; taxes (PST & GST). When attaching a requisition to a purchase order, the information about the transaction comes from the requisition. For example, the vendor indicated in each requisition line defaults onto the purchase order header and generates defaults for: the transaction currency; the payment terms; the ship-via; the FOB Point; the freight terms and the send method (Print). If all requisition lines are selected at once, then all requisition lines will default onto the purchase order at once, including all the information associated to each line item as entered in the requisition and the accounting key distribution. The following table indicates: which fields of the Purchase Order window may contain default information; the primary source for this default information; the secondary source for the defaults if none were established in the primary source; whether or not the information in this field can be overridden. SMARTStream Features 7-5

60 Purchase Order Defaults Fields Primary source for default Secondary source for default Override Purchase Site Last Site used None Yes Buyer User ID None Yes Vendor None (defaults from the requisition). None Yes Purchase Entity Buyer None Yes Terms Vendor Purchasing Information None Yes Required Date (Purchase Order) None (serves as default for the Purchase Order lines when used) None Yes Currency Vendor None Yes Ship Via Vendor Purchasing Information None Yes Payable Entity Purchase Entity None Yes Requester User Id (if Buyer is also a requester) None Yes FOB Point Vendor Purchasing Information None Yes Freight Terms Vendor Purchasing Information None Yes Deliver To Not Used Not used Send Method Vendor Purchasing Information None Yes Tax Rule, Tax Rate Code & Reclaimable Code Vendor Payable Entity Tax Policy Yes Entity Tax ID Payable Entity None Yes Purchase Order Defaults (cont.) SMARTStream Features 7-6

61 Fields Primary source for default Secondary source for default Override When attaching a requisition line with a Description Only item: Required Date: UOM: Unit Price: Description: Quantity: Accounting Distribution: Ship To: Purchase Order Header Requisition Line Requisition Line Exception Window Requisition Line Requisition Line Requisition Line Requisition Line Requisition Line Yes No Yes Yes Yes Yes No When attaching a requisition with a Vendor Item(Catalogued): Required Date: UOM: Unit Price: Vendor Item ID: Description: Quantity: Accounting Distribution: Ship To: Purchase Order Header Requisition Line Vendor Item Price Requisition Line Requisition Line Requisition Line Requisition Line Requisition Line Requisition Line Yes No Yes No No Yes Yes No SMARTStream Features 7-7

62 Purchase Order Statuses As is the case for the requisition, the purchase order status changes throughout the stages of its processing cycle. For each purchase order, there is a document status and for each purchase order line, a line status. The current status of the document or line dictates which other actions can be taken in SMARTStream Purchasing. The available actions for a purchase order are cancel, delete or save as incomplete. The following diagram illustrates the purchase order statuses throughout the purchasing process: Figure 7.2: SMARTStream Features 7-8

63 7.2 For Payables In SMARTStream Payables, Payment Request processing is defined as all the processes involved in adding and managing payment requests. A payment request is any paper or electronic document requesting payment. Payment requests can take the form of invoices, other paper documents, or other contractual agreements. At the, the types of payment requests most frequently used are invoices and credit memos Invoices An invoice is a paper document received from a vendor as a request for payment for goods received or services rendered. The total amount of a regular invoice should be positive whereas a credit memo would have a negative balance. Some invoices can be matched to a purchase order and receipt information. Most of the invoices processed at the are direct invoices which are not compared with a purchase order and receipt information and are not included in the scheduled matching process Defaults/Overrides When adding an invoice, SMARTStream Payables provides defaults for some information, although not all available defaults need to be defined. When no default appears in a field of the Invoice window, the information must be entered directly. It is important to note that default information for one source can have priority over defaults from another source. If a default value defined for a lower level of policy is different from the default defined for the same policy at a higher level, the lower level default has priority over the higher level default. To illustrate, consider a default payment term of 2%10 N30 (a 2% discount applies if invoice is paid in 10 days, otherwise the net amount is due in 30 days) defined for a specific vendor. This payment term has priority over the default payment term of N30 (The non-discounted invoice is due in 30 days) that is defined for the payable entity CHQ. Figure 7.3: Available sources of default information on the Invoice window SMARTStream Features 7-9

64 The following table indicates: which fields of the Invoice window may contain default information; the primary source for this default information; the secondary source for the defaults if none were established in the primary source; whether or not the information in this field can be overridden. Fields Primary source for default Secondary source for default Override Payable Entity Control Group None Yes Payment Terms Vendor Payable Entity Policy Yes Transaction Currency Vendor None Yes Payment Method Vendor Payable Entity Policy Yes Tax Rule Vendor Payable Entity Tax Policy Yes Tax Rate Vendor Payable Entity Tax Policy Yes Tax Reclaimable Code Vendor Payable Entity Tax Policy Yes Rate Entity Vendor Payable Entity Policy Yes Rate Type Vendor Payable Entity Policy Yes Rate Date Currency None Yes Exchange Rate Currency None Yes Discount, Freight and Miscellaneous Charges Allocation Accounts Payable Liability Accounting Distributions Tax Accounting Distributions Payable Entity Policy None Yes Payable Entity Policy None Yes Tax Policy None Yes Accrual Effective Date Control Group Payable Entity Policy Yes SMARTStream Features 7-10

65 System Payments SMARTStream Payables automatically generates payments for approved invoices with current due dates. These scheduled payments are generated according to the payment controls established (refer to section Payments) and the time established in Job Scheduler for running the system payment jobs. Producing scheduled payments involves three phases and the following diagram shows the three steps of this process: Figure 7.4: Scheduled payments phases SMARTStream Payables provides the option of producing recurring payments. These are payments of equal amounts produced on a regular schedule, such as monthly or quarterly. Only one recurring payment needs to be entered and then SMARTStream Payables can be prompted to automatically generate the remaining payments. This features meant to be used for payments whose amounts do not vary or whose payment schedule is regular, for example monthly rent payments. SMARTStream Features 7-11

66 On-Demand Payments The on-demand payment process does not use payment controls as defined for the scheduled payment process. For instance, the controls established for processing dates or payment methods are disregarded when on-demand payments are run. For this reason this payment process should only be used when it is not convenient to wait until the next scheduled payment run to issue a cheque. Typical cases where this process might be invoked would be to correct an error or to prevent making a late payment for an invoice entered late into the system. In order to pay an invoice on demand, the type of payment and matching status of the invoice must allow for an on-demand payment. Type of Payment: on-demand payments may be issued for any invoice scheduled for payment using a paper medium. Matching Status: on-demand payments may be issued for any invoice with a status of Awaiting Match but SMARTStream Payables must first include it in the scheduled matching process and update the status to Complete. Should the status be changed to In Exception instead, an on-demand payment cannot be processed for the invoice until all exceptions are resolved. The window used for issuing on demand payments is accessible only to Accounts Payable personnel in Financial Services; users are required to call and request that an on demand payment be issued whenever the need arises. The on-demand payment process overrides certain policy decisions and safeguards built into SMARTStream Payables and should therefore be requested only rarely and with extreme discretion. This process allows us to pay a scheduled payment out of order and to produce a payment when: a vendor is on hold; an invoice requires approval, but has not received approval; an invoice is on hold; a vendor has a negative balance; (the total of debit and credit memos is greater than the total of invoices); an invoice belongs to an unbalanced control group and balancing is required. In order to generate the on-demand payment in any of these situations, SMARTStream Payables requires a confirmation of the override by the Financial Officer before generating the on-demand payment thus reducing the risk of errors. The on-demand payment feature should not be used frequently but only when no other alternatives are available. SMARTStream Features 7-12

67 Statuses The status of an invoice request changes as it moves through the different payables processes. By checking on its status, an invoice can easily be located in the payment process at any time. The available statuses for an invoice are as follows: Awaiting Match: indicates that the invoice contains matched lines that have not been matched to a purchase order and receipt. Payables will include matched lines for the invoice in the next scheduled matching process. Cancelled: indicates that the invoice is cancelled. An invoice is cancelled only after all associated payments are cancelled. Payables automatically reverses the journal entries. After an invoice is cancelled, neither its status or any of its fields can be changed. Complete: indicates that the invoice is balanced, approved (if approval is required), and ready for payment. Incomplete: indicates that the information for the invoice is not complete. The invoice is not ready for payment or posting. In Exception: indicates one of the following: the invoice contains matching exceptions found during the scheduled matching process or the purchase order attached to the invoice was not found during the scheduled matching process. New: indicates that the invoice is currently being added. After the invoice is saved, this status changes. On Hold: indicates that the invoice was put on hold. On-demand payments can be used to override this status. Payables posts the journal entry to Ledger while the invoice is still on hold. Invoices with a status of Incomplete, Paid or Cancelled cannot be put on hold. If an invoice with recurring or partial payments is put on hold, all remaining payments are also put on hold. When the invoice is released, all the remaining payments are also released. On Hold Pending: indicates that the invoice is on hold. Payables posts the journal entry to ledger while the invoice is still on hold. The invoice is also going through the approval process. Payables does not pay the invoice until the invoice is approved and the hold is released. On Hold Rejected: indicates that the invoice is on hold. Payables posts the journal entry to ledger while the invoice is still on hold. The invoice was also rejected by at least one approver. Payables does not pay the invoice until the invoice is approved and the hold is released. Paid: indicates that the invoice was paid using scheduled or on-demand payment processing. Pending: indicates that the invoice is balanced and going through the approval process. Payables posts the journal entry to Ledger. Rejected: indicates an approver on the approval list for this invoice has rejected the invoice. Temp on hold: indicates that an invoice was placed on hold until the next payment run. After the next payment run is completed, the invoice status returns to Complete automatically. The invoice is SMARTStream Features 7-13

68 then eligible for payment during the next payment run. Figure 7.5: Invoice Statuses Throughout the Payment Process SMARTStream Features 7-14

69 8. Documents: verification, printing, distribution and safekeeping This chapter describes the policies and procedures associated with the official documents that are used in the process of acquiring goods and services and then paying the associated invoices. 8.1 Purchase Orders Purchase orders are printed daily, in duplicate, at Materials Management Services. Before mailing the original copies to the vendors, each purchase order is verified thoroughly by the purchasing officer assigned to the transaction. The second copy is kept and filed at Materials Management Services along with the official supporting documents for each transaction. Occasionally, it may be necessary to send a change order to a vendor. These change orders are issued by the purchasing officers as required. 8.2 Blanket Orders There is a Blanket Order activity in SMARTStream but this is not used at the University since it does not correspond to the way we process blanket orders in our environment. Whenever we have a situation where an open order is required in order to reserve funds and to subsequently release these funds with a series of partial payments, we use the standard SMARTStream functions: i.e. a SMARTStream purchase order is prepared in order to encumber a specific sum of money to be expensed over time. This allows for multiple invoicing thus avoiding the need to issue a new purchase order every time. The items purchased through these purchase orders are negotiated in advance with the supplier. 8.3 Cheques There are three types of cheques produced by the UO - SMARTStream system: regular weekly cheques, single-invoice cheques, and urgent cheques. Every Thursday morning, the issues regular cheques printed on special pressure seal forms. These cheques are printed and signed at Financial Services, after a thorough verification. In this process, the system accumulates all payment requests for a particular vendor producing one single cheque for that supplier. These cheques are mailed directly to the suppliers by Financial Services. It may happen that on rare occasions, users need to produce a single cheque for a particular invoice, which they mail to suppliers accompanied by a letter, or a registration form, a subscription form, etc. The use of the CAND or USD payment methods in SMARTStream Payables allows users to circumvent the regular process by producing a single cheque for a specific invoice - in these cases, the cheque will be returned directly to the faculty or service rather than being folded, pressure sealed and mailed to the supplier. Because of the inherent inefficiency of this approach and the ensuing extra processing costs for the University, these payment methods should be used with extreme discretion. Documents : Verification, Printing, Distribution and Safekeeping 8-1

70 It is also possible to obtain a cheque on an urgent basis. In this case, the manager will be required to convey this requirement to Financial Services where the exceptional case received before 3:00 p.m. will be processed on the following business day by 9:30 a.m. 8.4 Bank Drafts Financial Services issues bank drafts and bank transfers every Friday morning, to pay all invoices issued by a foreign supplier. The drafts will be available for mailing or pick up on Friday afternoon. Faculties and services should ensure that all the necessary information reaches Financial Services in time to meet this deadline. By exception only, it is possible to issue a bank draft or transfer at another time during the week, for example to pay an urgent invoice. 8.5 Invoices and Supporting Documentation This section describes the procedures to be followed for the safekeeping of invoices and all other documentation associated with the purchasing/payment process. Note that these guidelines are based on legal principles as well as University policies and must be rigorously adhered to General safekeeping guidelines Faculties and services continue to have full responsibility for ensuring the integrity of the original source documents associated to each and every transaction. This means that: all documents have to be filed rapidly and kept in a secure location where access is restricted to authorized personnel only, all source documents will have to be kept intact for the entire period that applies to their type, the source documents must be made available to internal and external auditors alike, the administrative unit must adopt a uniform and permanent safekeeping method throughout all departments and it must be documented and approved by the Director of Financial Services. The two diagrams that follow illustrate which documents must be kept, as well as the duration and proper location for the safekeeping. Documents : Verification, Printing, Distribution and Safekeeping 8-2

71 Local Invoice Entry With No Purchase Order 3 Original invoices with all supporting documents such as packing slips, internal requisitions, travel authorization and corresponding requests for reimbursement with all receipts, petty cash reports with all receipts, original log book and quotes if applicable. Active Document These documents are to be kept in a secure and controlled location, easily accessible to local administrative staff as well as central services personnel and auditors (internal and external). Semi-Active Document These documents may be stored in an off-site location that is secure and reasonably easy to access. Entities A & C Documents pertaining to the current as well as the preceding financial year. Entity T Documents pertaining to the current as well as the 2 preceding financial years. All entities Documents required to bring to 7 the number of complete years available at any given time (not including the year in progress). Central Invoice Entry With or Without a Purchase Order 4 Copies of the original invoices, packing slips, purchase orders, change orders, internal requisitions and original log book, RFQ and RFP documents, tender documents, vendor quotes and any purchase justification documents. Active Document These documents are to be kept in a secure and controlled location, easily accessible to local administrative staff as well as central services personnel and auditors (internal and external). Semi-Active Document These documents may be stored in an off-site location that is secure and reasonably easy to access. Entities A & C Documents pertaining to the current as well as the preceding financial year. Entity T Documents pertaining to the current as well as the 2 preceding financial years. All entities Documents required to bring to 7 the number of complete years available at any given time (not including the year in progress). Original invoices, paid by Financial Services or supported by a purchase order, will continue to be filed at Financial Services. 3 4 Refer to the Administrative Sections 4.2 and 4.5 in Chapter 4 of this manual. Refer to the Administrative Sections 4.3, 4.4, 4.6 and 4.7 in Chapter 4 of this manual. Documents : Verification, Printing, Distribution and Safekeeping 8-3

72 8.5.2 Lost Invoices Since all invoices are sent directly to Faculties and Services, should you ever find an invoice that does not belong to your unit, please forward it immediately to Financial Services. A financial officer will make inquiries to identify the unit to whom the invoice should have been mailed, and ensure that it be delivered as promptly as possible. Documents : Verification, Printing, Distribution and Safekeeping 8-4

73 - May 1999 Theory - Purchasing and Accounts Payable Appendix A This appendix lists words frequently used in a vendor s operating name which are abbreviated to become part of the vendor identifier. Commonly Used Keywords English Word French Word one letter more than one letter association association A ASSC bank banque B Canada Canada C CA or CAN canadian canadien, canadienne C centre, center centre C college collège C commission commissison C council conseil C corporation corporation C goverment gouvernement G GOUV hospital hôpital H incorporated incorporée I INC institute institut I limited limitée L LTEE (french) or LTD (english) ministry ministère M national nationale N NAT service service S society société S SOC university université U UNIV city ville V or C Commonly Used Keywords A - 1

74 - May 1999 Theory - Purchasing and Accounts Payable Appendix A Commonly Used Keywords A - 2

75 - May 1999 Theory - Purchasing and Accounts Payable Appendix B This appendix lists the 45 requisitions entities, theses entities were created by using the Unit element of the accounting key as defined in SMARTStream Ledger. Requisition Entities Code Unit Code Unit 101 Faculty of Administration 3201 Human Resources 201 Faculty of Arts 3501 Financial Services 220 Centre for Research on French Canadian Culture 3601 Material Management Services 301 Centre for Legal Translation and Documentation 3603 Convention and Reservations 401 Faculty of Education 3701 Computing and Communications Services 501 Faculty of Medicine 4001 Physical Resources Service 601 Faculty of Health Science 4101 Protection Services & Parking 701 Faculty of Sciences 4201 Audio-Visual and Reprography Services 801 Faculty of Engineering 4301 Environmental Health & Safety Service 901 Faculty of Social Sciences 4401 Public Relations & Information Services 1001 School of Graduate Studies 4501 Alumni & Development Office 1101 Faculty of Law, Civil Law Section 4601 Language Services 1201 Faculty of Law, Common Law Section 4701 Archives 1301 Library 5001 Students Affairs 1401 Bureau of International Cooperation 5101 University Centre 1501 Human Rights Research and Education Centre 5201 Financial Aid & Awards Service 1601 Women s Studies Program 5301 Housing Service 1701 Centre for University Teaching 5401 University Health Services 1801 Office of Research Services 5501 Career & Counselling Service 1901 Co-Operative Education Programs 5601 Sport Services 2001 Service for Continuing Education 5701 Student Life Services 3001 Information and Service Centre 7001 Rector s Office 3101 Registrar Requisitions Entities B - 1

76 - May 1999 Theory - Purchasing and Accounts Payable Appendix B Requisitions Entities B - 2

77 - May 1999 Theory - Purchasing and Accounts Payable Appendix C This appendix lists the default Ship to code set up for each requisition entity. Theses codes are the address used on the requisition and purchase order indicating to the vendor where the ordered goods are to be shipped. Ship-to Code Code Requisition Entity Unit Address 01J347D 101 Faculty of Administration 136 J.J. Lussier, P. 347D 02U Faculty of Arts, Department of Geography 60 Université, P C Centre for Legal Translation and Documentation Copernicus 04J Faculty of Education 145 Jean-Jacques Lussier,P S Faculty of Medicine 451 Smyth Road, Room S Faculty of Health Science Dean s Office, 451, Smyth Rd 07L130C 701 Faculty of Sciences, Department of Chemistry 130 Louis Pasteur 08KA Faculty of Engineering 770 King Edward, P. A306 09C Faculty of Social Sciences 550 Cumberland, P S School of Graduate Studies 115 Séraphin-Marion, P L Faculty of Law, Civil Law Section 57 Louis Pasteur, P L Faculty of Law, Common Law Section 57 Louis Pasteur, P U118A 1301 Library 65 King Edward, #118A 14K Bureau of International Cooperation 538 King Edward P L5FL 1501 Human Rights Research and Education Centre 57 Louis Pasteur, 5ième étage 16S Women s Studies Program 143 Séraphin Marion 17K Centre for University Teaching 621 King Edward 18C Office of Research Services Pavillon Tabaret, 550 Cumberland, P T Co-Operative Education Programs 100 Thomas More, P L Service for Continuing Education 139 Louis Pasteur, P L Information and Service Centre Pavillon Tabaret, 75 Laurier, P.117 Ship-to code C - 1

78 - May 1999 Theory - Purchasing and Accounts Payable Appendix C Ship-to Code (cont.) Code Requisition Entity Unit Address 31C Registrar 550 Cumberland, P C Human Resources Pavillon Tabaret Room C Financial Services 550 Cumberland, P L Material Management Services 139 Louis Pasteur 37U Computing and Communications Services 35 King Edward, P KQ Physical Resources Service, Entretien Ménager 720 King Edward, QUAI 2 41KQ Protection Services & Parking 720 King Edward, QUAI 1 42K Audio-Visual and Reprography Services 700 King Edward 43T Environmental Health & Safety Service 100 Thomas Moore, P C Public Relations & Information Services Pavillon Tabaret, 550 Cumberland, P L Alumni & Development Office 178 Laurier 50U Students Affairs 85 King Edward, P U University Centre, Salle de jeux 85 King Edward, P UN Financial Aid & Awards Service 85 King Edwards, P T Housing Service 100 Thomas More, P U Career & Counselling Service 85 University Private, Room UCOMP 5601 Sport Services 125 University, Comptoir 57U Student Life 85 King Edward, P C Rector s Office 550 Cumberland, P K Revue Canadienne d Étude et du développement 538 King Edward, P CEPS 9001 CEPS 559 King Edward, P.10 Ship-to code C - 2

79 - May 1999 Theory - Purchasing and Accounts Payable Appendix D This appendix lists the 13 Ship-via codes. The Ship-via code indicates the shipping method used by the vendor, it can identify a form of transportation or the name of a specific carrier. Ship-via Code Code Description Definition AIR Air Via Air / par avion BES Bestway Your Best Choice / selon meilleur choix FEDEX Federal Exp. Via Federal Express / Par Federal Express N/A N/A Not Applicable / Non applicable PICK Pick-up Customer Pick Up / Enlèvement par nos soins POST Post Via Canada Post or Postal Service of your Country / par Postes Canada ou services postaux de votre pays PRPOST PriorityPost Via Priority Post / Par poste prioritaire PURO Purolator Via Purolator / Par Purolator SHIPS By Sea Via Sea Shipment / Par transport maritime SPECIAL Spec.Carrier Via Special Carrier / Par transporteur spécialisé TRAIN Rail Road Via Rail Road / Par chemin de fer TRUCK Truck Via Truck / Par camion UPS UPS Via United Parcel Service / Par United Parcel Service Ship -via code D - 1

80 - May 1999 Theory - Purchasing and Accounts Payable Appendix D Ship -via code D - 2

81 - May 1999 Theory - Purchasing and Accounts Payable Appendix E This appendix lists the Commodity codes, a commodity code is assigned to each commodity and subsequently to each vendor item. Commodity Code Code Description 1000 Audio-Visual Equipment & Supplies 1300 Bedding & Linen 1600 Books, Manuals, Magazines 1900 Building Materials 2200 Clothing 2500 Commercial & Household Appliances 2800 Communication Devices 3100 Computers 3400 Electrical & Electronic Equipment & Supplies 3700 Food, Glassware & Supplies 4000 Furniture 4300 Property Maintenance 4900 Janitorial Supplies 5200 Laboratory/Scientific Equipment & Supplies 5800 Art Supplies 6100 Office Equipment & Supplies 6400 Paper 6700 Printing, Forms & Design 6800 Promotional Material & Supplies 7000 Safety Equipment & Supplies 7300 Sporting Goods 7600 Vehicles 7900 Visual Arts Supplies Commodity code E - 1

82 - May 1999 Theory - Purchasing and Accounts Payable Appendix E Commodity code E - 2

83 - May 1999 Theory - Purchasing and Accounts Payable Appendix F This appendix lists the Standard Phrases, theses phrases are statements frequently used by buyers on documents such as purchase orders. Standard Phrases Code Phrase S01 S02 S03 S04 S05 S06 S07 S08 S09 S10 All Items P.S.T. Applicable Confirmation Only, Do Not Duplicate All Items P.S.T. Exempt Items Used Exclusively For Research Purposes All Items Duty Exempt (See Declaration) All Items Duty Applicable C.S.A. Approval Required on Electrical Items Prior to Delivery "Cost Included" C.S.A. Approval Required on Electrical Items Prior to Delivery "Cost Extra" C.S.A. Approval on Electrical Items Required On Site "Cost Included" C.S.A. Approval on Electrical Items Required On Site "Cost Extra" S11 Items Purchased For Resale Purposes - Exemption # Standard Phrases F - 1

84 - May 1999 Theory - Purchasing and Accounts Payable Appendix F Standard Phrases F - 2