As fiscal year end approaches, it is important to clarify the procedures that we follow in processing invoices at the end of the year. The INVOICE DATE is used to determine which fiscal year that invoice is charged against regardless of the year of the PO creation. The invoice date is the date presented on the first page of an invoice that has been assigned by the vendor.
All invoices received by AP up to and including Friday, July 5 with an invoice date of June 30 or before will be processed in the Fiscal Year 2019 accounting books. Invoices dated July 1st or later will be processed in the Fiscal Year 2020 accounting books.
KFS utilizes a post-back logic that books Fiscal Year 2019 expense for invoices dated June 30 or before and processed by Friday, July 5. The post-back period ends on July 5. General ledger expenses book to Fiscal Year 2020 regardless of the invoice date beginning July 6.
June or prior invoices billing service and/or maintenance contracts with period begin dates of July 1, 2019 or later will be processed as received. Similarly, membership billings for Fiscal Year 2020 memberships that expect payment in advance of June 30, 2019, will be processed as received. Accounts Payable will tabulate the invoice and accounting detail so that a financial reporting adjustment can be made to the Fiscal Year 2019 reports.
Beginning with invoice processing on July 1, 2019 invoices billing FY19 purchase orders will be processed in KFS and invoices billing FY20 purchase orders will be processed in BUY.IU. The invoice date may be edited from billed when processing payment in KFS for service contracts and memberships for periods beginning on or after July 1. The procedure to amend invoice date applies to payment processing in KFS between July 1 and July 5. Otherwise the billed invoice date will be processed.
Here is a reminder for subscription and membership payments from the Financial Management Services Newsletter, March, 2016. (Note procurement card payments are permitted in addition to DV payment processing. Check with Purchasing if you have questions.):
- Subscriptions should be processed on a DV or procurement card (unless they require a contract signature or are software subscriptions). The billing notice is typically generated through a renewal reminder rather than through an invoice; therefore, a DV or procurement card is the appropriate method for payment.
- Memberships should be processed on a DV or procurement card if the membership does not require an agreement or ongoing services/data sets (such as Cloud) which would require a security review.
The $1,000 limit on Disbursement Voucher transactions applies to "Compensation for Services" and "Payments for Contractual Agreements" and not to subscription / membership payments.
As an additional reminder, units requesting memberships in External Organizations are required to submit a membership application to University Administration. Detail for Sponsorship & Membership Applications is located on the Indiana University Brand Guidelines webpage.
The procedure documented above has been followed for the past seven fiscal years.
Goods, or merchandise, are rarely pre-billed. If you order equipment or supplies in the month of June and ask for a delivery of July 1 or later, the vendor may ship your product early and issue an invoice on the date shipped. In this case, the invoice will be processed in FY19. Please keep this in mind when placing orders for products that you do not wish to take delivery of until after the fiscal year end. Invoice processing on FY20 purchase orders in BUY.IU will be held until July 1.
Funding Recurring Purchase Orders:
At times throughout the year, but especially at fiscal year-end, recurring Purchase Orders (POs) could run out of encumbered funds. You must encumber funds for all billing expected to be paid on your recurring order through the end of the fiscal period so that payment processing is not delayed.
KFS PURAP does not allow the processing of invoices against a PO that is not funded. Indiana University receives invoices that must be paid but the payment is delayed until funds are encumbered on the PO.
The practical result of the recurring Purchase Orders being unfunded is:
- Multiple communication occurs between Accounts Payable and the Department and Purchasing; and
- Payment delays are created at no fault of the vendor.
To avoid these consequences, please review all recurring POs to ensure funds are available.
Purchase Order encumbrance clean up in KFS
Purchase orders in KFS should remain open until billing is received and payments have been processed. To manage your open KFS POs:
- Request billing so payment can be made.
- Do not close a PO upon receipt of goods. The PO must remain open in order to pay the bill.
- If the PO is completely paid and no additional payment processing is expected, then close the PO to release any remaining encumbrance.
Guide to Accounts Payable Liability Object Code 9041
Accounts Payable object code 9041 is the offset object code for invoice expenses, credit memo credits, and cash disbursements. Reports are written and published in IUIE to study 9041 activity and status throughout the year as well as at fiscal year-end. The Guide to Accounts Payable Liability Object Code 9041 explains the reports available and their use.