Accounting - Accounts Payable Procedure
Accounting Department Procedure on Accounts Payable
I. Introduction
This procedure has been developed to ensure the security of College funds, business is conducted according to the principles of accountability, completeness, timeliness, and accuracy. Guided by these principles, HCCC endeavors to 1) make timely payments of appropriate invoices in an efficient manner; and 2) report outstanding liabilities in accordance GAAP. Further, the College expects all members of the community and all vendors conducting business with the College to follow this policy.
The below procedures pertain to payments to vendors only. For additional procedures related to the following categories, please refer to:
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- Travel and Business Reimbursement Procedures
- Stipend Procedures
- Refund on Student Accounts Procedures
II. Entites Affected by These Procedures
The below procedures affect all departments and offices of Hudson County Community College.
III. Definitions
Accounts Payable is a type of short-term debt that typically represents the amount owed by an organization to its suppliers or vendors for goods and services purchased on credit. The College incurs obligations to suppliers and vendors to purchase goods and services used in the ordinary course of business. The Accounts Payable Department (“AP Department”) is responsible for auditing and processing invoices and verifying invoices on behalf of the College.
The AP Department performs the following duties associated with this objective:
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- Invoice receipt
- Electronic payments
- Monitoring vendor credits
- Handling payment inquiries from vendors and the College community
- Oversight of document matching
- Processing payments
- Accounting system interface
- Archiving documents and payment history
Accountability – The AP Department ensures that all purchases are appropriately authorized prior to disbursing payments, that invoices are paid only once, and that College assets are safeguarded from fraud. Further, the AP Department ensures that transactions are properly documented for auditing purposes.
Accuracy – To properly report both the College's outstanding liabilities and expenses, the AP Department records vendor data in the voucher process and general ledger accounts.
E-CHECKS Transactions – Electronic financial payments made to employees in lieu of a check.
Budget Check –The procedure by which the Department ensures that the College’s financial commitments and expenses do not exceed their respective budgets.
Completeness – Specific, necessary information about all agreed-upon goods provided and services performed to permit payment. This should include the following information:
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- Invoice number and date.
- Purchase order number.
- Vendor name, address and other pertinent contact information.
- “Bill To” and “Ship To” addresses.
- Date(s) of delivery of goods or services.
- A detailed description of the goods purchased or the services performed, and the location where the goods were delivered or the services provided.
Purchase Order (PO) – A Purchase Order is a document issued by the College to the vendor indicating types, quantities and agreed upon prices for products and/or services that the vendor will provide.
Timeliness – Expenses reported for goods and services in the period rendered, to pay approved invoices in a timely manner (Net 30), and to take advantage of any applicable vendor discounts. For these reasons, the timely presentation of a complete invoice to the AP Department is critical. Vendors should be directed to send all invoices directly to the AP Department and not to the campus contact. Timely certification of receipt by the receiving department at the College to the AP Department is critical to the process of allowing the AP Department to make timely payments to vendors.
Vouchering - The internal intent to make a payment to a vendor. The voucher is a document produced by the College and issued to a vendor after the invoice is received and matched to a purchase order and receiving documents. Approved vouchers, when processed, become checks or E-CHECK payments.
IV. Policy Procedures
The below procedures shall be implemented to comply with the College’s Accounts Payable policy and ensure that accounts payable amounts are correct; recorded properly, accurately, and efficiently; processed only once; and appropriately documented in financial statements. In order to process payments, all invoices must be approved under the College’s procedures. The Accounts Payable Department shall abide by the following procedures:
1. Vendors must be entered into the Colleague Portal System.
2. Vendors shall not be paid unless a completed W-9 is entered into the Colleague Portal System, and a resolution is Board approved (if needed).
3. Invoices received by the AP Department shall be date stamped.
4. Invoices should be submitted directly to the AP Department. If an invoice is sent to the receiving department directly, the department’s responsibility is to forward the invoice to the AP Department immediately after reviewing and acknowledging that the goods are delivered as represented by the vendor, and that services in the invoice have been performed. This will facilitate payment within terms and will mitigate the risk of misplaced, lost or held invoices that cause delays in proper accounting, and avoid higher costs to the College. Invoices should not be kept in departmental offices.
5. Only authorized AP Department personnel may log into the Colleague Portal System and process invoices.
6. Accounts payable vouchers must be supported with an original invoice, the College authorized purchase order and documented receipt of goods and services. The purchase order and the receiving data shall be entered into Colleague by HCCC employees.
7. The invoice must contain a detailed description of the services rendered or goods provided, the date(s) of delivery of the goods or services, and the HCCC location where the services were provided or goods delivered. Payment of invoices that lack sufficient information may be delayed until all required information is provided.
8. If the invoice is for a partial payment, the vendor must clearly indicate the arrangement on the invoice or contract. In these situations, the vendor is required to provide the same level of documentation, as described in IV.7 above.
9. Invoice numbers are entered into the Colleague Portal System exactly as provided by the vendor. Modification of the invoice number could lead to duplicate processing. Modification is strictly prohibited except as permitted by the AP Department.
10. Entry of the invoice information is complete, accurate and valid.
11. All goods and services must be received in the Colleague Portal System by the department. For services and goods shipped directly to the ordering department, the ordering department's responsibility is to notify the AP Department that the services or goods have been satisfactorily received and accepted in the system for the payment process.
12. Differences between the purchase order and the invoice shall be flagged, researched and resolved prior to processing payments. Differences include, but are not limited to, different vendor name, quantity discrepancy or dollar discrepancy.
13. Sales tax should not be included on any invoice because the College is a tax-exempt entity. The AP Department shall provide documentation to the vendor to support the tax-exempt status, including a sales tax exemption number and certificate, if necessary.
14. All purchases of capital assets are processed by the AP Department.
15. The AP Department shall mail all approved payments to the address of record. Any payments involving special handling, such as overnight shipments or in person pickup, require advance approval. The use of overnight shipping and rush processing of payments will be limited to emergency situations.
16. The AP Department processes checks and makes payments twice per week. AP Department Check and E-CHECK payments are processed on alternate days.
17. Student Refunds are processed in the Bursar’s Office, and checks are issued through the AP Department once a week.
18. Check Request payment, as follows, should be used when other forms of payment (e.g., purchase order and petty cash voucher) do not apply. Any order for purchase of goods must be processed by the Purchasing Department.
19. Missing, duplicate and long outstanding checks shall be investigated prior to issuing another check. The AP Department Officer will process all check adjustments in the Colleague System after all investigations are completed.
20. Positive pay data are transmitted to the bank after each check payment batch.
21. Any questions regarding this policy should be directed to the AP Department Officer. Questions may be sent electronically to Accounts Payable at apFREEHUDSONCOUNTYCOMMUNITYCOLLEGE. Alternatively, the AP Department Officer may be contacted at (201) 360-4055.
Approved by Cabinet: July 2021
Related Board Policy: Accounting, Accounts Payable
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