Appendix: Advance Payment To Vendor 

  1. Advance Payment Situations
  2. Basic Requirements
  3. Receipt and Documentation Requirements
  4. How the Payment is Handled

 

What to KnowFilter
Advance payment situations

Here are examples of the types of situations in which making an advance payment is appropriate:

  • Orders with foreign vendors where making advance payment is customary
  • Large-value equipment manufactured to meet unique specifications.
  • Food and beverage orders associated with large official University functions in which the caterer requires a deposit.
  • Low-value payments made to human subjects involved in sponsored research projects
  • To take advantage of a substantial prepayment discount offered by the vendor.
Basic requirements

Important information to know.

  1. An advance payment is authorized as part of a purchase order process.
  2. University policy strongly discourages making payments to vendors before receiving a good or service from a vendor.
  3. Advance payments greater than $500 must be charged to a special vendor advance payment FOAPAL.
Receipt and documentation requirements

A proforma invoice from the vendor must accompany the payment request. It must include the following information:

  • The full amount of the advance payment due
  • The item(s) being purchased
  • The total cost of the order including tax and shipping,
In addition, the payment requestor must provide the following information
  • The reason for requesting an advance vendor payment
How the payment is handled

The specific handling of a request for an advance vendor payment depends on the amount to be paid.

  1. Amount is less than $500.
    • The payments is charged to the departmental expense FOAPAL.
  2. Amount is $500 or more.
    • The payment is initially charged to a campus vendor advance payment account; it will not be reflected on the departmental ledger
    • When the good is received, a ledger adjustment is processed to record the full amount due against the departmental expense FOAPAL, including the amount of the advance payment.