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Cash Management – Non-Letter of Credit Invoicing

About this Policy

Cash Management – Non-Letter of Credit Invoicing

Policy Number: 27007


Effective Date:
Dec 12, 2017

Last Updated:
Jan 01, 1970

Responsible Office:
UM System Controller’s Office

Responsible Administrator:
UM System Controller

Policy Contact:

Campus Sponsored Programs Office

Categories:

  • Finance

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Scope

For non-federal sponsors, and federal sponsors with whom the University does not have an LOC or other Federal drawdown relationship, Campus Sponsored Programs Office (SPO) submits invoices for an award. This policy pertains to cash requests for federal awards paid through invoicing.  The specific requirements for billing (invoicing) and cash management are unique to each federal program and are found in the laws, regulations, and the provisions of the award agreements pertaining to the program.

Reason for Policy

To provide guidance for the monitoring and collection of cash and accounts receivable on sponsored awards in accordance with federal and other non-federal sponsor requirements.

Policy Statement

Funding Methods
Payments are made based upon the terms of the award. The following are typical payment mechanisms:

  • Periodic billings are submitted to the sponsor as soon as practical (usually monthly) after the incurred costs are paid unless the terms of the award provide otherwise.
  • An advance may be provided to cover working capital needs, followed by periodic billings for incurred costs that have been paid. The advance is normally applied to the final billing.
  • The entire award amount may be prepaid in advance and any unused funds returned to the sponsor at the conclusion of the award.
  • Amounts are paid on scheduled dates. The sponsor may automatically send payments or the University may invoice the sponsor on the scheduled dates as determined in the award.
  • Sponsor reimbursement may occur upon completion of established milestones. The Principal Investigators (PI) will collaborate with the SPO to notify the sponsor of milestone or progress information necessary for reimbursement.

The SPO is responsible for managing the cash position of the respective projects to maximize the University’s cash balance. Excess funds plus interest must be remitted to the sponsor per the terms and conditions of the award.

Other payment methods for an award may exist and are based upon the terms and conditions noted in the award agreement (such as milestones, deliverables, or scheduled periodic payments). These types of payments may require an invoice be submitted by SPO to the sponsor. SPO will monitor the award and funding on an on-going basis to ensure that payments are received from the sponsor in a timely fashion, and are in accordance with the terms of the award agreement. Final payment is normally based upon submission of the final work product.

End of the Award
The SPO must obtain certification of final expenses from the PI at the end of the award. The PI will certify that all expenditures charged to the award were allowable, reasonable, and allocable in accordance with the provisions of the award and accounting corrections have been or will be made

Funds remaining at the end of a Cost Reimbursable award may need to be returned to the sponsor. The SPO will verify the final expenses with the PI and departmental administrator before refunding unspent funds to the sponsor.

Definitions

Cost Reimbursable - reimbursement is made by the sponsor for expenditures paid by the University, not to exceed the award amount.

Fixed Price - the University negotiates a firm price with a sponsor for the completion of a project regardless of the expenses associated with the project.

Accountabilities

Sponsored Programs Office (SPO):

  • Prepare, certify, and submit invoices in accordance with terms and conditions of the award agreement.
  • Conduct managerial review and certify that invoices are in accordance with the provisions of the award.
  • Monitor receivables to ensure payment is received and properly recorded.

Departmental Administrator:

  • Make necessary corrections for unallowable, unallocable, or unreasonable expenditures as directed by the PI.
  • Work with SPO to ensure all expenditures not yet posted are captured on final invoices.

Principal Investigator (PI) or Delegate:

  • Identify and direct necessary corrections for any errors detected or the need to clear deficits.
  • Monitor award activity on a timely basis for allowable and allocable expenditures.
  • Certify expenditures annually and at the end of the award in accordance with Uniform Guidance.

Additional Details

Forms

 

Related Information

 

History

Formerly Accounting Policy Manual 60.16 - Billing - Non-Letter of Credit (revised 4/1/2009)

Procedure

Reviewed 2017-12-06