Effective with the December 18 Oracle FINDINI release, receiving thresholds in HCOM will be adjusted to only require receiving (3-way match for payment) for all purchase orders (sponsored and non) $2,500 or greater. This change is consistent with several peer institutions and presents an opportunity for departments to realize greater administrative efficiencies for low dollar purchase order transactions. The new process has been reviewed and approved through Central Administration’s Financial Administration (including Strategic Procurement, Accounts Payable, Office for Sponsored Programs, Risk Management and Audit Services, and the Office of the Controller). Below is a list of FAQ's.
When will the change occur?
- Both the system and official process change will be effective November 17, 2017.
Does $2,500 refer to the requisition, purchase order, or the invoice?
- Purchase Order
Will I still be required to receive invoices < $2,500?
- If your PO total is ≥ $2500: Yes
- If your PO total is < $2500: No, unless a different type of mismatch applies (Qty, Amt, etc)
- Example: A PO totals $3,499. An invoice comes into AP for $250. This invoice will require a receipt because the PO total is ≥ $2,500.
Can I enter receipts for POs <$2,500 for local business purposes?
- Yes, but it is not required and will not affect payment.
What happens if a PO is closed?
Receiving is no longer available if the PO is closed at the header level. The header level of a PO is closed when:
- All lines have been received and matched to an invoice
- The Purchase Order is manually closed by AP due to a request from the department
- Receiving is no longer available if the PO is closed at the header level. The header level of a PO is closed when:
What are the various types of “closed” related to purchase orders?
- Closed for invoicing: when the quantity/amount of the PO is fully invoiced.
- Closed for receiving: when the quantity/amount of the PO is fully received.
- Closed at header: when the total amount of the PO is both invoiced and received.
How will this receiving change affect standing orders?
- Standing orders should continue to follow the same process as today, which for most departments involves receiving the related invoice locally prior to processing with AP.
- If the invoice is sent directly to central AP and the PO totals < $2,500 it will be processed as a two-way match (invoice and PO) and get paid (same as a PR).
Will a freight charge affect the $2,500 amount that triggers the requirement for receiving?
- Freight will not affect the receiving requirement unless it is added as a line item to the requisition. This is not recommended. Freight should typically be left off of a requisition, and it will be added to the payment from the vendor invoice at the summary level.
How will the change affect reports?
- Committed Funds – No change
- HCOM Receiving Details and Purchase Order Summary – No change
- Detail Listing – No change
- OBI Vendor Invoice Listing – No change
- AP Holds - POs under $2,500 will no longer go on hold for receiving, and therefore will not show on the holds report for receiving holds.
When does an amount come off of the Committed Funds Report and move to the Detail Listing?
- When an invoice is matched to a PO
Will these new two-way match POs fall off of the Committed Funds Report in the same way that they do today?
Is there a report that can tell me whether or not something has been received?
- New HCOM Audit Report for Receiving will be available in the October 31 Oracle release.
How can I best report on early payment discounts that have been taken?
- OBI Vendor Invoice Listing
- New: OBI Early Payment Discount Report (Release date TBD)
What is the difference between a 2-Way and a 3-Way Match?
- 2-Way Match looks for a match between two elements before payment is scheduled: PO + Invoice
- 3-Way Match looks for a match between three elements before payment is scheduled: PO + Invoice + Receipt
Will a hold using new Manual Hold process show up on the holds report?
Payment Terms: When does an invoice get paid?
- Payment Terms are set at the vendor level, with a default of Net 30
- Information regarding payment terms and the timing of payments can be found at: https://oc.finance.harvard.edu/university-standard-payment-terms-and-change-requests
Does this change how we handle Returns?
- Returns still require Receipts. Lines should be properly received and marked as returned in Oracle iProcurement in order to notify AP that a Credit is expected.
How can I prevent an invoice being paid in error?
- The invoice is paid based on payment terms. Departments have 6 – 10 days for early payment discount vendors and 26 – 30 days for regular vendors to address issues or put an invoice on hold via the Manual Holds process.
- AP Manual Holds process allows departments to put an invoice on hold if there is a legitimate concern. Note: The individual requesting the hold must be connected to the order, ie: shopper or listed within the approval workflow.
What if an invoice is paid in error? What is the issue resolution process?
- Vendor is managed by Strategic Procurement: If a payment has been made and the vendor is not cooperating with the return process, departments should reach out to the Strategic Procurement Sourcing Manager who manages the vendor relationship. For a list of vendors and related managers, please go to http://internal.procurement.harvard.edu/home.
- Vendor is not management by Strategic Procurement: Follow your local error resolution process within your department/school. If the issue continues, please contact Accounts Payable at firstname.lastname@example.org.
What if a vendor is a repeat offender who regularly causes issues with invoicing prior to shipment?
- If the vendor is part of the Marketplace/managed by Strategic Procurement, contact email@example.com to report the repeating issues.
What about back-order items?
- Vendors typically invoice at time of shipment, after a back-order is released. Should you determine that an invoice was paid in error, see previous question “What if an invoice is paid in error? What is the issue resolution process?”.
Who can release an invoice that has been put on Manual Hold?
- Anyone with Oracle HCOM permission and knowledge of the invoice in question can request the hold or request that it be released.
How does this affect Fiscal Year-End?
- Departments should see a drop in effort for year-end receiving needs.
What will happen with POs under $2,500 already in the system on receiving hold?
- These POs will remain on hold until released as they are today. The system change only affects new POs as they are created.
Does the federal government require receiving on all orders for audit purposes?
Do I have to keep paper receipts or track receiving in a shadow system now?
- No, receipts are no longer required for POs < $2,500.
Where can I find the policy that has been changed?
- http://internal.procurement.harvard.edu/files/procurement/files/harvardprocurement_manual.pdf. The relevant language in this manual will be updated at the time of the change on November 17, 2017.
What are other universities doing about this?
- OSP, RMAS, and Strategic Procurement contacted various other schools including Yale, Caltech, Stanford, JHU, Princeton and MIT. All have similar 2-way match policies with no receiving under a specific dollar threshold, often higher than $2,500.
Will auditors still ask me for receipts (system or otherwise)?
- Receipts are no longer required for POs < $2,500. You will only be asked to provide proof of receiving in HCOM for POs ≥ $2,500.
Does this change our PO terms and conditions?
What is presumed receipt? How does the system know that this order is “okay-to-pay”?
- Standard matching criteria (quantity, amount, etc.) will apply to all purchase orders.
- Presumed receipt is a common purchasing and accounting practice where receipt is presumed unless otherwise stated. It is the responsibility of the purchaser or a designee to bring issues to the attention of Accounts Payable within the stated payment terms.
Can departments opt out of this change for POs < $2,500?
- No, both policy and systematic changes must be universal for all Harvard University departments and users.
- Reminder: Receiving is still an option for POs < $2,500, but it will not affect payment. It can be used for local business purposes/tracking if needed.
What about payments made after the end-date of a federal award where proof is needed that delivery happened prior to the closing of the award?
- Receipts can still be used for tracking purposes if needed, but they will not affect payment.