406: Vendor Invoice Processing

Fiscal Operations Manual
Section 400: Expenditures
Effective: 01/01/2003
Revised: 11/18/2011

An invoice from the vendor must have the following to be processed by OSU:

  • Vendor’s name
  • Vendor’s mailing address
  • Billed to Oregon State University at OSU building or location

If the documentation/vendor invoice is addressed to an individual employee and their home (or non-OSU) address, payment cannot be made directly to the vendor by OSU. The individual must pay for the product or service themselves, and then request reimbursement from OSU if it is a qualified business expense. This request for reimbursement is made using a Reimbursement Request Form with proof of payment attached.

Banner invoices will route through unit approval queues before routing to the appropriate Business Center or Business Affairs for approval. Invoices are received, reviewed, and approved in the ordering unit. If they have authority to do so, the unit enters the information into the FAAINVE screen in Banner. If they do not have Banner access for this entry, the unit sends the invoice to the Business Center. Back-up documentation is scanned into Nolij. The invoice is electronically routed to the following approval queues:

1.      Unit approver, if unit approval is still needed;

2.      Property Administration, if paid on account code 40101 “capitalized equipment”; and

3.      Business Center or Business Affairs for final approval.

Payments $5,000 or greater must have a P.O. reference in Banner or prior approval from PaCS. For additional information, see PaCS 303: Purchase Orders.

Invoices are audited for accuracy, compliance, allowability, use of proper account code, payment amount, appropriate discounts taken, correct vendor, and payment address. For expenditures on indexes connected with gifts, grants, and contracts, OPAA also reviews these documents for specific sponsor requirements, policies, or limitations. Banner invoices with errors will be disapproved on-line and routed back to the originator for correction. The reviewer will specify what needs to be corrected. There is a requirement for an additional special review/approval when a check is greater than $300,000. No approvals should be done without the required invoice/documents (paperwork).

Travel advances, Departmental (Non-travel) advances, and the associated settlement reimbursements are approved by the appropriate Business Center and Business Affairs. Exception: Moving Expenses should be sent directly to Business Affairs.

406-01 Trade-In of Capital Equipment

Fiscal Operations Manual
Section 400: Expenditures
Effective: 01/01/2003
Revised: 12/27/2012

When there is a trade-in of capital equipment, the invoice for the new asset must be processed for the full amount of the asset (including trade-in credit) even though the invoice from the vendor will probably be reduced by the value of the trade-in allowance.  In order to pay the correct amount, a credit memo must be created in Banner for the amount of the trade-in allowance.  Be sure to process the invoice and credit memo simultaneously (cross-referencing the document numbers in the text field of both).  This allows the proper payment to the vendor.

The credit memo for the amount of the trade-in must be recorded/posted to fund 095880 (Asset-Undistributed Income Clearing) and Account Code B5801.

Related Frequently Asked Questions

406-02 Vendor Invoice Number Guide

Fiscal Operations Manual
Section 400: Expenditures
Effective: 01/01/2003
Revised: 11/11/2010

Banner has a feature that will “catch” duplicate payments to the same vendor if the same format is used for all payments.  Banner looks for an exact match in the invoice number field, so even an extra space will make the number unique.  The standards are listed below:     

Guideline when Paying by Regular Invoice:

1. Enter invoice number exactly as provided by vendor. Do Not Add:

  • Extra spaces or characters to the number,
  • Extra characters to indicate a credit memo,
  • Department name, account number, your information

If the vendor has started recycling their invoice numbers, add the year following the invoice (Example 12345/02).

When entering an invoice into Banner and an error message is given that the invoice number is a duplicate:

  • Click on the icon at the end of the vendor invoice number field.
  • You can also go directly to FAIVNDH from the direct access menu to check for duplicate payments.

Guidelines when regular invoice numbers are not used:

Some vendor invoices do not have invoice numbers.  When that is the case, another identifier that is unique and meaningful to the vendor must be referenced.  The number can only be used once, and has a maximum length of 15 characters.

Types of identifiers that can be used:

  • Job Number
  • Work Order Number
  • Account number/Customer Number and month/year
  • Any other unique number on the vendor’s invoice that identifies payment for the vendor

Utility Payments

  • Utility bills are paid referencing the account number assigned by the vendor followed by the month/year.                  

Telephone Payments

  • Telephone bills are paid referencing the Invoice Number Assigned by the vendor.
  • Use Telephone number or Account number followed by the month/year. 
  • Mail remittance stubs with the check.           

Vendors who cannot identify payments by invoice number alone are:

  • PGG-Pendleton Grain Growers - needs to have the invoice number followed by the account number.
  • Albertson’s – payment should be from the monthly statements using the last nine digits of the Advantage card “space” mm/yy as the reference number (example: 100160693 04/11)
  • Safeway - needs to have store number.

Guidelines when Paying By Statement:

  • Enter account number exactly as provided by vendor and include month/year in the invoice number field.
  • Only current charges may be paid.  If not paying all current charges, a Notice of Invoice Change must be submitted with the document.
  • When something needs to accompany the check, Business Affairs will print out the scanned CTA document from Nolij at the time the check is processed.

406-03 Separation of Duties

Fiscal Operations Manual
Section 400: Expenditures
Effective: 01/01/2003
Revised: 08/26/2010

See Section 1100, Banner Processes - FIS 1108 Approval Routing.

406-04 Signatures

Fiscal Operations Manual
Section 400: Expenditures
Effective: 01/01/2003
Revised: 7/1/2013

The signature represents the payment is an appropriate allowable expense within the current budgetary authority.  Do not use signature stamps. If you have the authority, sign your own name and print your name under the signature.  Signature stamps are not accepted in lieu of an original signature.  Do not sign other people names; this is forgery.   Remember the separation of duties still applies.  Original signatures are required on reimbursement requests for both the claimant and the department approver. A properly authenticated eSignature meets the threshold of an original signature. See FIS 1403-13 e-Signature.

The person signing the document must be able to answer questions concerning the document, if additional information is required. 

406-05 Invoice Adjustments

Fiscal Operations Manual
Section 400: Expenditures
Effective: 01/01/2003
Revised: 11/11/2010

Price discrepancies requiring alteration of the vendor’s invoice must be documented with a Notice of Invoice Change Form.  Common errors include extensions, overcharges on quotes, freight charges on FOB Destination, short shipments, returned merchandise, or damaged goods on FOB Destination orders.  The Notice of Invoice Change should be submitted with the corrected invoice to the Business Center and mailed with the check to the vendor.

406-06 Credit Memos

Fiscal Operations Manual
Section 400: Expenditures
Effective: 01/01/2003
Revised: 11/11/2010

Credit memos are issued by the vendor to adjust a previous invoice; to refund an overpayment or adjust for returned merchandise.      

The credit memo must be matched with the original invoice to determine whether the credit should be processed.  When a credit is due for a previously paid invoice, process the credit memo in the same manner as an invoice.  Click on the Null Credit Memo field, otherwise a check will result instead of a credit being taken.  A cross-reference to the original invoice must be noted in the text section on the BANNER invoice form.  If a credit memo involves a previously discounted invoice, the credit memo should be reduced to reflect the original amount paid.

Equipment credits must have the word “credit” in the commodity description.

The credit memo will be posted to the unit’s operating ledger immediately (the offsetting entry resides on the fund balance sheet as a reduction of accounts payable liability, until new invoices from the same vendor satisfy the credit memo.)

If the vendor has not assigned a number to the credit memo, use the original invoice number with the letters CM, otherwise the BANNER system will consider it a duplicate invoice.

Many vendors submit credit memos to balance their accounts receivable, and the credit memo is for information only and should be retained in unit files. A refund check should be requested from the vendor for credit memos not applied to a vendor payment within a year.

406-07 Discounts

Fiscal Operations Manual
Section 400: Expenditures
Effective: 01/01/2003
Revised: 08/26/2010

Discount terms are usually counted from the date the invoice or the merchandise is received, whichever is later.  Check each invoice and purchase order for discount terms and take the larger discount if there is a difference.  Take the discount only on items purchased, not on shipping or handling charges.  Discounted invoices should be given priority processing

If a vendor disallows a discount already taken, verify with the original documents and BANNER system information.  Create a BANNER invoice for the disallowed amount.  Use the original vendor invoice number with a suffix DD.  Explain in text the reason for the payment.

406-08 Interest Penalty on Overdue Accounts Payable

Fiscal Operations Manual
Section 400: Expenditures
Effective: 01/01/2003
Revised: 11/11/2010

Allow time for approval routing and check processing.  Vendors deserve to be paid promptly. Many vendors are billing finance charges on unpaid bills after 30 days.  Interest penalty (finance charges) billed to OSU should be reviewed for validity and permissibility per ORS 293.462.  In most cases, these charges are computer generated and the vendors will forgive them.  However, if the invoice is paid over 45 days late, and the vendor demands payment of the finance charge, count the 45 day period from the date the invoice was received by OSU to the date the check was issued in payment of the original claim.  Interest may begin to accrue on the 46th day.  Late payment charges are limited to 2/3 of 1% per month, not to exceed 8% per year, and cannot exceed the usual charge assessed by the vendor.  Date all invoices when received by the unit to establish the received date.  Do not construe this procedure to mean there are 45 days to initiate the payment process.

406-09 Prepayments (Cash with Order)

Fiscal Operations Manual
Section 400: Expenditures
Effective: 01/01/2003
Revised: 08/26/2010

Some vendors require advance payment before providing goods or services.  All prepayments require documentation for audit purposes and clear communication to the vendor.  Documentation may be provided by one or more of the following:

  • Vendor invoice specifying required prepayment
  • Purchase Order
  • Registration Form
  • Vendor Quote
  • Customer order form/work order/job order
  • Contract

406-10 Paying Taxes

Fiscal Operations Manual
Section 400: Expenditures
Effective: 01/01/2003
Revised: 08/26/2010

State of Oregon agencies are exempt from paying federal taxes on purchases of gasoline, oil, etc.  If an employee paid for a product and is seeking reimbursement or if the product was purchased and possession is taken in another state, taxes may be paid.  The appropriate account code is 28703.  These are taxes related to the operation of the University.  Agencies are exempt from paying State, city or county taxes in some instances.  OUS is subject to real and personal property taxes on property owned but not used for institutional purposes, such as miscellaneous rentals.  See OUS Fiscal Policy Manual, Procurement & Contracting, Purchasing and Accounts Payable 70.400.

406-11 Payment Terms (i.e. Net 30)

Fiscal Operations Manual
Section 400: Expenditures
Effective: 01/01/2003
Revised: 08/26/2010

The Payment Due Date default on FAAINVE has been set to NET 30 Days. The Discount code shows "03"; this is Net 30. This discount code tells the Banner system to automatically calculate the Payment Due Date as 25 days after the vendor invoice date. DO NOT CHANGE this default unless the vendor requires their payment within a specific time period or there is a discount.

406-12 Lost or Stolen Checks

Fiscal Operations Manual
Section 400: Expenditures
Effective: 01/01/2003
Revised: 11/11/2010

If a vendor contacts your unit to report checks that may be lost or stolen send a completed "Request for Replacement Check" form to the vendor for signature.  When the signed form has been returned to the Office of Business Affairs, a replacement check can be issued.   The Business Affairs office will work with the Business Center to reenter the invoice and issue a replacement check.

406-13 Vendor Maintenance

Fiscal Operations Manual
Section 400: Expenditures
Effective: 01/01/2003
Revised: 02/15/2013

A vendor must be established in FIS Banner before a purchase order can be processed or an invoice paid. New vendors are set up in Banner FIS at the request of the ordering department. If the unit cannot find a specific vendor in Banner through a tax identification number (TIN) or name search, the appropriate Vendor Maintenance Form should be completed and sent (usually by fax to 541-737-2069) to Business Affairs, Vendor Maintenance. The Business Affairs staff performs research to make sure the vendor does not exist and, if it does not, enters the information into Banner as appropriate.

Reminder: Whenever there is a change of address for a vendor (other than an OSU employee or an OSU Student), a Vendor Maintenance Form should be completed. A copy of an invoice showing the new remit-to address needs to be attached to this form and forwarded to Vendor Maintenance. A Substitute W-9 Form must be completed and signed for any terminated business entity vendor that needs to be reactivated (foreign entity reactivation requires a W-8 Form).

406-14: One-time Vendor Refunds

Fiscal Operations Manual
Section 400: Expenditures
Effective: 01/01/2003
Revised: 02/15/2013

Full or partial refunds for fees that were received for Parking Citations, Parking Permits, and/or Athletic Camp or other Registrations may be done through a modified or one-time vendor set-up process. To qualify, the vendor must not already be set up in Banner as a vendor, must be an individual (not a business or company), payment must be $750 or less, and the payment cannot be considered an expense to OSU.

The refund should be paid out of the same fund and revenue account code where the original payment or cash was received so it is recorded as a reduction of revenue. Note: a refund for a payment that was originally made on a credit card must be processed as a credit against the same credit card.

When a refund is processed that contains a known service fee that will be retained by a unit, the accounting should be done to show the refund amount plus the service fee amount as a deduction to the original revenue account code and a second line item which reflects a deduction or credit for the service fee amount to account code 06997 Return and Allowance.

To request a one-time vendor refund – completely fill out the Payment Request  form with the required information and signatures, the “F” document number from the original receipt, and the reason for the refund. Please explain in the Business/Refund Purpose section of the Payment Request form if the request is for a partial refund or service fees are withheld. Submit the form for refunds related to Parking items to Facilities Services and for all other refunds submit a copy only to Financial Accounting & Analysis, Business Affairs.

Once received, the data from the Payment Request form is entered into FIS Banner. The requesting OSU unit will be notified with the “I” document number so they can route the original document to the appropriate Business Center for approval, scanning, and filing.