Purchasing and Payments

When will my Purchase Order/Purchase Requisition get paid?
How often does BYU send out checks?
When and how do I use Check Requisitions?
When and how do I use an Independent Contractor form?
Miscellaneous Procedures Performed By Accounts Payable Department


Following are answers to frequently asked questions regarding payments to vendors:

When will my Purchase Order/Purchase Requisition get paid?

Once Purchasing has set up a purchase order that corresponds with a purchase requisition, goods or services will be paid when the following conditions are met:

• The items purchased must be received. Purchase Order instructions direct all goods to be sent to central receiving. Central Receiving is responsible for verifying the shipment and will enter the receiving information into the system. Items received by departments will not be paid for until the department contacts Central Receiving.
• The Accounts Payable Department (B-280 ASB) must receive a copy of the invoice. If the vendor sends the invoice to the department by mistake, please send it to Accounts Payable ASAP! Once the invoice is entered against a PO that has been received, the system will automatically remit the payment when the terms on the PO expire.

Return to the Top

---

How often does BYU send out checks?

Accounts Payable does a daily check run. Checks are printed in the morning and mailed in the afternoon. Vendors who want to pick up their check must inform Accounts Payable previous to the due date. They may pick up their check at the front desk in D-148 after 1:00pm. Please bring a personal ID to pick up a check made out to an individual and a company ID for a check made out to a company. If a department wants to pick up an item directly from the vendor and the vendor insists on receiving the check at the time of pick up (the preferable way to do this would be to use your Purchasing Card), the person from the department, who is picking up the check, must receive authorization to pick up the check and take it to the vendor (receptionist desk, D-148 ASB). In order to do this on a purchase order, arrangements have to be made with purchasing for a prepayment. When an invoice/1099 IC/Check Requisition is entered into the system, a voucher is created. The system holds the voucher until the payment terms expire. Checks will be issued one day before the due date. If the due date is on a Saturday, Sunday, or Monday, then a check will be issued on the Friday before the due date. If the due date is the day of a holiday or the day after, a check will be printed the day before the holiday. If the vendor is offering a terms discount, the check will print and be mailed one day before the expiration of the discount date in accordance with standard industry practice.

Return to the Top

---

When and how do I use Check Requisitions?

In many cases a University Purchasing Card may be used in place of Check Requisitions for more convenient and efficient purchase of products. Purchasing Cards generally will allow for purchases up to $2,000 per day or $20,000 per month. Check Requisitions may be used to purchase material goods under $500.00. If a Purchasing Card is not used, purchases exceeding this amount need to be initiated using a Purchase Requisition. A Check Requisition may be used when negotiating purchases with off campus suppliers for the following types of items:

• Conference registration fees (include travel application number if applicable)
• Subscription fees
• Dues and memberships
• Advertising (except for radio and Utah/Salt Lake County newspapers)
• Orders for published pamphlets and articles
• Livestock, grain, and hay
• Works of Art (Fine Arts College use only)
• On-site repairs of office equipment

When requesting payment using a Check Requisition form:

• Complete all information on the form
• All transactions require approval of at least two department-authorized people who have knowledge of the transaction and approve its execution.
• If the payment is travel related (e.g. conference registration), please be sure to include the Travel Application number for the trip
• Documentation such as invoices, receipts, registration forms, needs to be obtained and attached to the form.

In special circumstances when access to this documentation is limited, a typed inter-office memo will be accepted. In the case of student award payments, a memo may be the best form of documentation but needs to contain the following criteria:

• Reason for giving the award
• A detailed explanation of the contest/event the student participated in.
• Selection criteria used in determining winner or recipient
• Who was eligible to participate
• Award amounts
• Listing of award recipients' names and social security numbers
• Any additional information that would be pertinent to a Financial Services employee being able to determine what exactly we are paying and why

All reimbursement requests to individuals are required to have attached receipts for all expenditures as documentation.

• Any documentation that is smaller than half a page should be neatly taped to a full sheet of paper. Multiple receipts can be taped to a single sheet
• Department keeps the pink copy of the form for their records
• White and yellow copies should then be sent on to Accounts Payable for payment

The research accounting office must review all check requisitions, 1099 independent contractor forms, or any other payment request forms that are charged to Rxxxxxxx speedtypes (Research projects).

Frequent problems with check requisitions include:

• Missing Travel Application number (when travel related)
• Missing Authorized signature (University policy requires that check requisitions and all invoices without purchase orders have two departmental authorization signatures)
• Missing proper documentation for purchase
• Tax amount is added into total and not applied to the Utah Sales Tax line that is provided
• Missing Tax Identification Number (social security number or federal identification number) for 1099 payments

Independent Contractor vs Employee status:

Questions have arisen recently regarding factors to be considered when determining when a person is considered an independent contractor and when he or she should be considered to be an employee. Payments to independent contractors are reported on form 1099. Payments to employees are reported on form W-2.

The distinction is important because the university is obligated under IRS regulations to withhold payroll taxes from wages paid to employees, and to pay the employer's share of the FICA and other taxes depending on the state where the activity is taking place. In addition there may be legal and other risks associated with employees that are not present for employment of independent contractors.

The following factors are characteristic of an employee/employer relationship:

1. A worker is required to comply with others' instructions on when, where, and how to work.
2. The worker needs to be instructed or trained in his duties.
3. The worker's services are an integral part of the business operations.
4. The right to hire, fire, and supervise others on behalf of business.
5. There is a continuing relationship.
6. Full time engagement.
7. All or most of the work is performed on the business premises.
8. The business furnishes tools and equipment.
9. The worker has a right to terminate his relationship without liability.

The following factors are characteristic of an independent contractor relationship:

1. Investment by the worker in tools and/or facilities.
2. The ability to realize a profit or loss from the business activity.
3. Services are available to the general public on a regular and consistent basis.
4. Working for multiple firms or businesses.

It should be noted that there are no "magic number" of points that define an employee or an independent contractor. The fact and circumstances of each situation must be analyzed. Depending upon the circumstances, some of the above factors will be more or less relevant in some arrangements than in others.

Return to the Top

---

When and how do I use an Independent Contractor form?

Contractor Criteria. The Independent Contractor form may be used to make payment for services provided by an individual or entity who is not acting as a university employee. An individual may be an employee if the employer controls who performs the job, what is to be done, with what tools and supplies, and how, where, or when work is to be done.

Although an employee may not be expressly directed in the manner to accomplish an employment task, this alone does not qualify the person as an independent contractor. Usually, when the University retains the right to discharge, furnish tools and supplies, set the location of work, set hours or train the individual, the status of the individual is more likely to be that of an employee. In addition, where work performed is similar to that of other employees, it is less likely the individual will be classified as an independent contractor. Normally, the reason for contracting work out to an independent contractor is to achieve something not ordinarily within the usual functions of the regular University employees and completion of the work is dependent upon the unique skills of the independent contractor.

There are two types of Independent Contractors and both have tax implications:

1. 1099 independent contractor is one who is a U.S. citizen with a U.S. social security number. For 1099 independent contractors it is mandatory that we have a social security number and current U.S. address.

2. 1042 S independent contractor is one who is a non-U.S. citizen but has performed the work in the U.S. Because more tax-related information is needed for a 1042 S independent contractor, the department should contact Samuel Gardner (422-6101) in Regulatory Accounting and Reporting, as well as the International Office (for 1042S) as soon as they know that the independent contractor will be coming. All 1099-related payments (e.g. non-employee compensation, rents, royalties, etc.) to a non-U.S. citizen must be viewed and initialed by Samuel Gardner before payment will be made.

Approvals. When filling out the Independent Contractor form (available from Accounts Payable, B-280 ASB, 422-3845), please be sure to include all the information requested. The form should be completed and sent in prior to the work being done. If the contract amount is greater than $500, the form must be approved by both Purchasing and Human Resources. If the contract amount is less than $500, it will be approved by Human Resources only. After Purchasing and/or Human Resources have approved the form, it will be returned to the department. Then the department, by signing in the bolded box, certifies that work has been completed. At this point the form should be returned to Accounts Payable for payment.

Installment payments. Independent Contractor form provides an option for payments to be made to the independent contractor in installments. When this is done, only the first form requires the approval of Purchasing and/or Human Resources. In order to pay in installments, the department simply needs to check the line next to Installments in the middle of the form. Next, determine which installment of the total number of installments this is. Finally, include the Independent Contractor form number of the original installment. The first form, which requires the approvals, will act as the first installment. Therefore, the amount reflected at the bottom of the form should be the amount for that installment, not the total amount of the contract. If a social security number is used for the ID, then the person name must be furnished. We can still issue a check to the Company, but need to have the individual name for tax reporting purposes.

Frequent problems with Independent Contractor forms include:

• Procedure is not followed and the contract is made after the service has been performed
• Missing SSN or EIN
• Missing speedtype and account information and amount at the bottom of the form
• Missing mailing address- Independent contractor forms must always have a current mailing address, even if the payment is going to be held for pickup.
• The address is needed to mail the IRS form 1099 at the end of the year
• 5000-series account codes are for payroll use only and cannot be used for check requisitions or independent contractor forms

Return to the Top

---

Miscellaneous Procedures Performed By Accounts Payable Department

• Requisitions used for foreign drafts and wire transfers are first approved in Accounts Payable and then given to Terry Freek (422-4759) for processing
• Donations made by BYU to outside organizations should be reviewed by the director of Financial Accounting and Reporting
• Maintenance agreements being submitted for payment on a check requisition must be approved by Purchasing
• Travel Study check requisitions, or any travel related requests not referencing a travel application number must be approved by the Travel Office.
• Legal services or payments made to law firms must be approved by General Counsel

Return to the Top

---