10/18/2019 Purchasing and Receiving Shannon Soja, Jen Abinette, Moet Slaughter, Deb Shoemaker (OSC) Paul Kalinowski (SFS) Kristi Kilmartin (OMH) Erick Hankle and Angela Dambrowski (BSC) 1 1 Roadmap • Purchasing • Receiving • Office of Mental Health: Lessons Learned 2 Roadmap ‐ Purchasing • Procurement Card Use • Purchase Order Best Practices • Purchase Order Policy • Early Pay Discounts 3 1
10/18/2019 Learning Objectives ‐ Purchasing • How to comply with PCard and purchase order requirements and best practices. • How to properly structure a purchase order. • How to take advantage of early pay discounts. 4 Scenario • Your agency needs to order 20 boxes of pens. Each box of pens costs $5. • How would you procure the pens? 5 Procurement Card Use 6 2
10/18/2019 Procurement Card (PCard) Policy • Agencies are required to use the PCard to purchase goods and services less than $500 when a vendor accepts the PCard for payment. – Agencies cannot use the PCard to make purchases from agency‐specific contracts. GFO: XI‐A.4 – Procurement Card Use 7 Discussion 8 Purchase Order Best Practices 9 3
10/18/2019 Purchase Orders • Must be used as the ordering document for all planned purchases. • Authorizes the vendor to provide goods or services. • Communicates critical information to the vendor. 10 Properly Structured PO • Enables downstream processes such as receiving, invoicing and vouchering to be completed more accurately and timely. • SFS developed the Procure to Pay (P2P) Best Practices for setting up purchase orders. 11 PO Detail • Agencies must include adequate details in the PO line(s). – Quantity ordered and the related price(s). • Agencies should indicate whether receiving is required on the PO. 12 4
10/18/2019 Quantity Based PO Lines • Quantity based lines allow an agency to receive up to the specific quantity and unit price of goods or services at a particular measure. – Can be used for security guard services, nursing services, hourly based IT services, etc. 13 Amount Based PO Lines • Amount based lines allow an agency to receive based on the aggregate cost of the goods or services provided. – Can be used for services that are not ordered on a specified unit or measure basis (e.g., copier repair services). 14 Payment Tolerances and Matching • Tolerances are applied during the matching process and allow for slight variations in price between purchase orders and vouchers. – Quantity based purchase order lines. – Amount based purchase order lines. 15 5
10/18/2019 Electronic PO Dispatch • Purchase orders can be electronically dispatched to vendors through email. – Default email address or one‐time email address. GFO: XI‐A.7 – Electronic Purchase Order Authorization and Purchase Order Dispatch 16 Confirming PO • Agencies cannot use a confirming PO for planned purchases. – Can only be used for emergency‐related purchases where the agency is unable to create a PO prior to purchase. 17 Scenario • Your agency needs to purchase new laptops, which you estimate to cost $20,000. • How would you communicate this purchase to a vendor? 18 6
10/18/2019 Purchase Order Policy 19 Purchase Order Policy • Agencies are required to use a PO for: – All single purchases of $10,000 or more. – Where the PO is required by the contract. – All purchases from an agency contract. GFO: XI‐A.3 – Purchase Orders 20 PO Policy Exemptions • Bulkload PCard purchases • Utilities • Interagency bills • Petty cash replenishment • Postage meter replenishment • Courier services • Arbitration services • Legal settlements • Centralized contract purchases made outside of the SFS GFO: XI‐A.3 – Purchase Orders 21 7
10/18/2019 Discussion 22 Early Pay Discounts 23 Early Pay Discounts • State Finance Law § 179‐f requires agencies to pay vendors within 30 days after receipt of an invoice (15 days for certified small businesses). • So why pay early? 24 8
10/18/2019 Early Pay Discounts • Agencies should request early pay discounts from vendors when feasible. • In the SFS, discount terms can be established by vendors at the location level, or by agencies at the contract, purchase order, or voucher level and will default in the SFS in this order. GFO: XII.5.F.4 – Selecting the Appropriate Payment Terms 25 Early Pay Discounts • If early pay discount terms are included in a contract, the awarding agency should add the payment terms to the contract’s PO defaults in the SFS. • Early pay discounts must not be used as a factor to evaluate proposals/bids. GFO: XI.11.H – Early Pay Discounts for Procurement Contract Purchases 26 Roadmap ‐ Receiving • Receiving Best Practices • Procure‐to‐Pay (P2P) Receiving Model Process • Entering Receiving Details in the Statewide Financial System (SFS) • Office of Mental Health (OMH): Lessons Learned 27 9
10/18/2019 Learning Objectives ‐ Receiving • How to implement receiving best practices. • How to receive against a purchase order and enter receiving details in the SFS. 28 Receiving Best Practices 29 Title 2, Chapter I, Part 6.6 of the New York Code Rules and Regulations • Requires an agency to maintain adequate internal controls over the voucher process to support the validity of payments made. • Receiving is an important control. 30 10
10/18/2019 Develop Written Policies • Proper receiving procedures guard against inherent risks. • Ensure staff have a clear understanding of their responsibilities and access to the proper tools necessary to perform receiving. 31 Receiving Goods and Services • Ensure purchases for goods and services are properly received by verifying: – Date of delivery. – Quantity of goods/services. – Description of goods/services matches description of goods/services ordered. – Condition of goods/services received matches quality of goods/services ordered. 32 Receiving Goods and Services • Goods and services received from agency specific contracts should be reviewed by the program area for compliance with the terms, conditions and specifications of the purchase agreement. 33 11
10/18/2019 Separation of Duties • Agencies should maintain sufficient separation of duties in order to reduce the risk of error or fraud in their purchasing program. • Incompatible duties are segregated (e.g., purchasing, receiving, invoice/voucher approval). 34 Blind Receiving • Is facilitated when the receiver is provided with a purchase order/ordering information that does not include the quantity or amount of the goods/services ordered. • Independent verification. 35 Blind Receiving • When an agency purchases goods and services without a purchase order, it hinders the ability to practice blind receiving. • Blind Receiving Report available in the SFS. 36 12
10/18/2019 Discussion 37 Acceptance Period State Finance Law § 179‐F • Requires the agency to notify the vendor within 15 days (7 days for self‐certified small business) of the receipt of an invoice about any defects or improprieties in the delivered goods or invoice. 38 Receiving vs. Accepting Receiving Accepting • • The act of taking possession of The act of “testing” what is goods purchased is in accordance with the purchase agreement • Return to vendor • Adjust the MIR date 39 13
10/18/2019 Recording Receiving • Receivers should record receiving information in the SFS or agency’s accounting system at the time the goods or services are received. – Best practice to record receipts within one business day after receipt of goods. – Best practice to record receipts within one business day of the end of the billing periods for services. • Inspection results should be recorded in the SFS within one business day of the determination. 40 Recording Receiving • Accurate receipt dates ensure proper matching of receipts to invoices. • The receipt date is the date goods or services are actually received or contractually due . – If multiple dates or billing periods are included on a single invoice, use the latest date. 41 Recording Receiving • For agency specific contracts, the agency should have a process for tracking and validating vendor performance. GFO: XI.11.F – Contract Monitoring 42 14
10/18/2019 Record Receiving Timely • The agency should ensure vendors provide enough information on receiving documents. – Packing slips contain purchase order number, description, serial numbers, and/or other identifying information from the purchase order. 43 Recording Receiving Timely • Timely entry of receipts supports downstream efficiencies in the procure‐to‐pay process. – Reduce late payments and increase discounts. 44 P2P Model Process: Receiving 45 15
10/18/2019 Receiving Model Process A properly structured purchase order (PO) is setup, communicating all necessary information about the goods or services Receiver verifies Vendor fulfills shipment of goods or Receiver enters receipt the order receives confirmation of information in SFS (goods or services) services delivered The vendor provides The agency user verifies Entering the receipt records goods and services. the goods or services that the delivery of goods or were received, which may services. include an inspection. 46 Proactive Receiving is Essential 47 Entering Receiving Details in the SFS 48 16
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