Payments to Vendors

Advance Payments
Allowable and Appropriate
Direct Pays
Documentation
Improper Expenditures
Prompt Payment
Purchase Order Invoices
Special Handling or Rush

Advance Payments

Advance Payments are those that are made prior to receipt of goods or services. After an agency or institution makes an advance payment, there is no absolute guarantee that the vendor will deliver the goods or perform the requested services, placing the Commonwealth's assets at risk. 

However, advance payments are allowed for expenditures normally prepaid as a standard industry practice or where such prepayments are considered cost beneficial to the Commonwealth. Documentation should be retained within the agency and made available for review upon request to substantiate the decision to make advance payments.

The following describes those payments, which under certain terms and conditions, may be prepaid. These lists are not all inclusive. All allowable miscellaneous advance payments are subject to a maximum prepayment period of 90 days

  1. Legal Services
  2. Media Services
  3. Specialized Pharmaceutical Supplies and Rare Medical Drugs
  4. Mechanical, Electrical and Equipment Repair & Maintenance Contracts
  5. Computer Hardware and Software Maintenance Contracts
  6. Licensing Agreements
  7. Specialized Equipment Purchases
  8. Real Property & Equipment Rentals
  9. Insurance Premiums

 In addition, Allowable advance payments pursuant to written contracts, leases, or agreements are subject to a maximum prepayment period of one year, where delivery, performance, or refund is assured based on written obligations. Vendors should be encouraged to invoice the agency on a monthly or quarterly basis in the absence of a sufficiently reduced annual pricing arrangement.

Allowable and Appropriate

Expenditures charged to all College of William and Mary (CWM) accounts must be both allowable and appropriate. Department designees are ultimately responsible for ensuring that charges to accounts are allowable, appropriate, and in the best interest of the department and the College as a whole.  All funds administered by the College are considered public funds, and accordingly, must be expended only for items resulting in public benefit. Public benefit must be apparent on all transactions.

  • ALLOWABLE expenditures that are charged to College accounts must have a business purpose and be adequately documented.
  • APPROPRIATE expenditures should be charged when they are necessary and beneficial to the College.

Direct Pays

A direct pay occurs when an item or service is purchased outside the Procurement system (eVA) and an invoice is presented to Accounts Payable for payment. 

 Allowable direct pays are:

  • Advertisements
  • Conference fees
  • Catering from on-campus dining services vendor
  • Honoraria
  • Moving and relocation expenses
  • Professional organization membership dues
  • Scholarships and fellowships
  • Supply Room (excludes furniture)
  • College-owned vehicle & boat licenses/tags/decals

Purchase of any other type of good or service as a direct pay is not allowed.

Departments or individuals requesting an ineligible direct pay will be given one warning.  Subsequent requests will be forwarded to the Vice Presidents for Finance and Administration for review and payment approval.

Documentation

One of the most important underlying principles for allowable and appropriate expenditures is ensuring transactions are adequately documented. Adequate documentation includes an invoice or receipt that identifies:

  1. Who purchased it
  2. What was purchased,
  3. When it was purchased,
  4. Where it was purchased, and
  5. Why it was purchased.

If any of this information is not contained on the receipt or invoice itself; it needs to be included in the explanation on the reimbursement or written on the receipt/invoice. Requiring complete documentation for all payments makes Accounting’s job of determining whether an expense is allowable and appropriate much easier.

A review of vouchers revealing "why something was purchased or needs to be purchased" is the item most often missing.

For example, assume a CWM employee buys books while at a conference and submits a Visa or MasterCard receipt, which shows the total charged to her credit card but does not include the itemization of books purchased. The Visa or MasterCard receipt shows where the purchase was made but does not indicate for audit purposes what was purchased or explain the business purpose (why).

Improper Expenditures

Agency purchases must be considered essential to the operation of the agency and in support of the agency’s mission to justify the use of State funds. Since all State-funded expenditures are subject to public scrutiny, agencies should consider the appearance of unusual purchases in general prior to authorization. Since individual circumstances vary widely, adequate documentation for unusual purchases should always be included with the voucher.

The following lists contain examples of expenditures considered to be improper uses of State funds. These lists are intended to provide general guidance to agencies in judging the appropriate use of State funds. However, any State-funded expenditure may be questioned, even those which are not included on the following lists.

Employee personal expenses such as—

  1. Books for classes (unless they remain property of the State)
  2. Snacks or refreshments
  3. Baby sitting
  4. Non-business related newspapers or magazine subscriptions
  5. Personal articles that are lost or stolen
  6. Tuxedos or other formal wear
  7.  Clothing (non-uniform) or repairs to clothing damaged in the work- place
  8. All expenses related to personal negligence of the employee, such as traffic fines.

 Agency-sponsored event expenses incurred which do not clearly support the agency mission such as—

  1. Retirement parties or employee going away parties
  2. Holiday decorations
  3. Alcoholic beverages
  4. Charitable contributions
  5. Gifts and flowers

Prompt Pay

State agencies are required to acquire goods and services, or conduct business through contractual agreements with nongovernmental and privately owned businesses, to pay by the "required" payment due date for delivered goods and services. 

The required payment due date is established by the terms of the contract; or if a contract is not in existence, thirty calendar days after the receipt of a proper invoice, or thirty days after the receipt of goods or services, whichever is later.

  • All payments to nongovernmental and privately owned businesses for the purchase of goods and services must be due dated. Departments should assign a payment due date of 30 calendar days after the receipt of the goods, services, or invoice whichever is later; or the due date specified in the vendor's contract.
  • Generally, in cases involving disputed invoices, assign a due date of 30 calendar days following the date the payment dispute is resolved with the vendor.
  • However, in circumstances where an invoice has already been delayed more than 30 calendar days, and a contractual agreement exists with the vendor, or vendor relations are in jeopardy, an earlier due date may be assigned to expedite the payment.
  • In the event an original invoice has not been received, the agency should contact the vendor and request a copy of the original invoice. The agency should annotate the invoice copy as "Certified Copy." The "required" payment date should be calculated from the date the invoice copy is received from the vendor. Each vendor is considered a separate payment and should be due dated and processed independently of other invoices.
  • Disputed Invoices- Disputed invoices must be documented in writing by the agency.  The vendor must be contacted within 15 calendar days after the receipt of the vendors invoice.  Payments are due 30 days from the resolution date of the dispute.

Purchase Order Invoices

Vendor transactions are initiated at the campus department level.  The vendor must send the original detailed invoice to the ordering department.  The department must immediately stamp the invoice with the received date.  The department should then prepare the Vendor Payment Form, obtain all approval signatures, attach original invoice, enclosed the Purchase Order number and send to the Accounts Payable Office for processing.  The expectation is that the department forwards this information with enough time for the invoice to be paid in accordance with the Prompt Payment Statutes.

Special Handling or Rush

Special handling payments are often needed for vendors who must be paid immediately or for emergency purposes. These payments are relatively costly to prepare due to the manual controls and processing required. Therefore, such requests must be made only when absolutely necessary. Such payments will not be made earlier than the required payment due date.

 To expedite the processing of special or rush vendor payments, adhere to the following parameters:  address all requests for special handling by using the updated form posted on our website.  This form provides a designated area to communicate Special Handling Request.  All departments must use this area to provide the reason for request, department contact and phone number.  Failure to use this designated space may result in the staff missing your request.