CHAPTER 13
PAYMENT PROCEDURES

OVERVIEW
Due to the large number of document processed by the Finance Department, it is extremely important to promptly verify all goods received and prepare payment documents as soon as possible. This prompt receipting of goods and the subsequent preparation of the payment documents ensures that the payment will be processed timely and in a manner allowing the City to maximize discount terms. Payment documents that include discounts should be special handled by both the department receiving the goods and the Finance Department to ensure that payments will be processed in time to receive the discount.

Generally, invoices are sent by the vendor to the Finance Department. The requesting department verifies that all goods have been received and compares any packing slips or shipping documents with the purchase order. If the goods received agree with the purchase order, the receiving copy of the purchase order is processed for payment.

If there is a problem with the merchandise, i.e., damaged items, an incomplete order, incorrect items received or any other problem, the vendor should be notified and the problem corrected before the payment document is prepared (this does not apply to partial shipments).

If the problem cannot be corrected, contact Purchasing for assistance.

VENDOR RESPONSIBILITIES

1. Packing Slip: A packing slip should be included with each shipment. The related purchase order or contract number and the purchase order line item numbers should be referenced.
   
2. Invoices: Should refer to the purchase order number. Invoices which do not show a valid purchase order number should be directed to the vendor. Invoices should be mailed to the "Billing Address" shown on the purchase order.
   
3. Invoice Errors: Invoice pricing, terms and conditions must be consistent with the purchase order. Incorrect invoices should be credited by the vendor in their entirety and re-issued. Contact the Finance Department Accounts Payable Division for assistance,

PAYMENT PROCESS
Advance payments by the City are legally permitted, but discouraged and shall be made only when necessary (refer to procedures for Request for Check in this Chapter). So the City may realize income through investment of temporary excess monies, contracts or agreements containing provisions for advance payments shall provide for small periodic payments which are tied to delivered goods or services, rather than total contract price or lump sum advances.

The following details the major steps in the payment process, which by necessity is related to the receiving procedures. Questions not answered in this section should be addressed to Purchasing.

REGULAR PURCHASE ORDERS
The blue copy of the Purchase Order serves as the receiving report. After the Purchase order has been printed and prior to being returned to the department, the blue copy will be stamped by Purchasing with a payment record and a receipt record.

1. Receiving Requirements - The person receiving the delivery of materials or services shall, immediately upon receipt of goods, complete the receiving report by verifying the actual count of the items delivered. The payment record should be completed and the count should be recorded on the receiving report, along with the date of receipt, and then signed-off by the receiver. The invoice should be authorized for payment by the Department/Division Head and attached to the receiving report prior to sending to Purchasing for pre-audit.
   
2. Routing the Receiving Report - When the information has been added to the receiving copy (blue copy), it should be forwarded to the Purchasing Division, along with the packing and freight slips (if any) and the invoice. (Note: All invoices should be date stamped upon receipt by the department) Delays in routing the receiving report may result in a loss of discounts or the City being charged a finance charge. Both instances are unacceptable. Purchasing will forward the receiving report and invoice to Accounts Payable for payment after pre-auditing the documents.
   
3. Partial Shipments (receipts) - There will be instances when partial shipments are received. In these cases, the department should record the receiving and payment information on the receiving (blue) copy of the P.O. and forward a photocopy of the receiving report, with any packing and freight slips and the invoice. The original copy of the receiving report will be retained by the department until the final shipment is received and then it will be forwarded to Purchasing with the final invoice, to be processed for payment as detailed in item #2.

PURCHASING CARD
The Purchasing Card Transaction Log should be filled out each time a purchase is completed using a Purchasing Card. The receipt should be placed in the Purchasing Card envelope. At the end of the month each employee holding a Purchasing Card will receive a statement. It is the employee’s responsibility to reconcile the statement to the collected receipts. After reconciliation, the employee shall certify by signing the statement in the appropriate place, that the purchases were true, valid and strictly for City use. The Purchasing Card Transaction Log, Statement and receipts should be forwarded in the Purchasing Card envelope to the employee’s Approving Official who will review the purchases prior to forwarding the packet to the Finance Department Accounts Payable Division.

BLANKET PURCHASE ORDERS
The person receiving the materials or services under the provisions of a Blanket Purchase Order shall obtain at the time of purchase or delivery, a fully itemized invoice. This invoice will be stamped for payment by the department and routed to the Accounts Payable Division by the next working day.

DEPARTMENT PURCHASE ORDERS
Department Purchase Orders should be processed for payment in the same manner as Regular Purchase Orders. Once the item has been purchased, the signed and itemized invoice should be attached to the receiving copy of the Department Purchase Order, authorized for payment by the Department or Division Head and forwarded to Purchasing for pre-auditing. Purchasing will forward the audited documents to Accounts Payable for posting to the Financial Management System and payment.

CONFIRMING AND EMERGENCY PURCHASES
While the need for an occasional confirming or emergency purchase is recognized, the practice shall be limited as much as possible by anticipating needs in time for the use of regular purchasing procedures. Emergency orders differ from confirming orders in that informal or formal contract procedures are often dispensed with in emergency situations (i.e., dollar limits, bidding process, etc.). Ordinary confirming POs are limited to the $1,000 amount unless three quotes have been obtained prior to requesting the P.O. number.

Procedure for Confirming Purchase Orders

• In those times when a confirming P.O. is necessary, the department shall contact Purchasing and obtain a purchase order number. The department shall still be required to complete a requisition for the purchase (referencing the P.O. number), which will subsequently be converted to a P.O. by entering it into the FMS. The P.O. number must be referenced on the requisition. The requisition must be prepared no later than the following working day and shall contain the phrase "CONFIRMING ORDER - DO NOT DUPLICATE". The department will then follow the procedures for payment outlined for "Regular Purchase Orders".

Procedure for Emergency Purchase Orders

• During regular working hours, the using department must call the Purchasing Division, advising of the emergency which has arisen, and shall request a purchase order number. Purchasing shall confer with the using department to determine if bidding/quote procedures and P.O. dollar limits can be waived. On the day following the emergency, the requisition shall be prepared and processed as usual. The requisition shall contain the phrase "CONFIRMING EMERGENCY PURCHASE". The P.O. number must be referenced on the requisition.
  
• During other than normal working hours, the using department shall obtain the material or service needed. On the day following the emergency, a requisition shall be prepared and processed as usual. The invoice or delivery slip shall accompany the P.O. receiving report. The requisition. shall contain the phrase "CONFIRMING EMERGENCY PURCHASE". A brief report including the date, time and nature of the emergency shall accompany the receiving report and invoices when routed for payment.

Problem Areas in Payment Processing
A number of problems on a payment document can cause a payment to be delayed. For example:

• No authorized signature included on the payment document. All invoices must be signed-off for payment by the Department or Division Head. All receiving documents must be signed-off by the person receiving the goods.
• No contract on file and efforts to locate a copy of the contract are unsuccessful.
• Incorrect or no contract or bid number on payment document.
• Invoices or other source documentation do not match the payment documentation. This can include missing invoices, missing invoice pages, invoice totals do not match the receiving report, the vendor name on the receiving copy of the P.O. does not match the vendor name on the invoice.