506.2 Advance Payments - Purchasing of Equipment
1. Overview
The University is often required to advance the cost of goods and/or services
to overseas suppliers. Payments in advance of receipt of equipment
is generally discouraged. For large purchases of equipment, it is
suggested instead that the use of a Letter
of Credit be considered rather than advancing the supplier a sum of
money prior to receipt of equipment.
Where a Letter of Credit can not be used, then the alternative methods
of advancing payments to suppliers are bank draft or telegraphic transfer
for overseas suppliers or cheque or Electronic Funds Transfer to domestic
suppliers.
2. Bank Draft or TT to Overseas Suppliers / Cheque
or Electronic Funds Transfer to Domestic Suppliers
This method of advance payment is discouraged as this method place the
University at risk in every instance until the goods or services are actually
received.
When it is considered necessary to effect settlement by this means,
irrespective of amount and regardless of whether there have been previous
satisfactory transactions with the supplier or not, the claim shall be
accompanied by a written request from the supplier for an advance (this
method of payment must never be offered).
Where the University has not had previous dealings with the supplier,
it may be advisable to obtain a Business
Report of the supplier to ensure the financial viability of the supplier.
All advance payments are recorded as assets until transactions are fully
acquitted. Progress payments, e.g. for building projects, are excluded
from this treatment. The acquittal of an advance payment to a supplier
is important, as the related expenditure or asset acquisition is not recognised
in the University's ledger until this action is taken. Separate advance
accounts are to be used for equipment, non-equipment, travel, and fieldwork
advances. Consult the Chart
of Accounts for full details of account numbers and descriptions currently
available.
3. Follow-Up Action
Business Officers or equivalent officers are responsible for follow-up
action on advance payments made to
suppliers and staff. To assist in this responsibility, the Accounts
Receivable officer of the Division of Finance and Business Services will
reconcile advance accounts each period and provide a listing of uncleared
advances detailing:
-
related account code of advance;
-
expected clearance date of advance and resulting ageing of advance;
-
suppliers name; and
-
description and amount of the advance.
When the equipment is received, a memo with supporting documentation evidencing
receipt of the equipment, should be forwarded to the Accounts Receivable
officer, Finance and Business Services, to facilitate acquittal of the
advance. The memo should indicate the account code that the advance
should be acquitted to.
Feedback: Please direct all comments to FBS-BusinessSolutions@anu.edu.au
The information on this page was updated on 17 Jun,2008.
This page has been authorised by Director, Finance and Business Services as the relevant officer.
URL: http://www.anu.edu.au/finance/manual/500/506_2.htm
ANU CRICOS # 00120C
