Business Office
AA Round Up
Wednesday March 27, 2008
Topics of Discussion
Accounts Payable Timeline
 Consequences of late payments
 Account code definitions and
examples
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Local Vendor Payment
Timeline (current)
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STC employee receives notice that purchase order and/or credit card
available at Purchasing department at beginning of month
STC employee purchases item from local vendor within a few days of
receiving purchase order and/or credit card
STC employee receives original invoice from local vendor
AP receives statement from Vendor at the beginning of the following
month
As soon as statement is received, the Accounting Assistant requests
copies of the invoices from the vendor.
As soon as copies of the invoices are received, the Accounting
Assistant faxes the invoice to the Administrative Assistants for FM
approval
At this point the invoice is approximately 45 days past the invoice date
If Administrative Assistant unable to return original invoice within 3 days
(due to FM or STC employee not being available), this delays the
payment further.
Local Vendor Prompt
Payment Timeline (Goal)
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STC employee receives notice that purchase order and/or credit
card available at Purchasing department at beginning of month
STC employee purchases item from local vendor within a few
days of receiving purchase order and/or credit card
STC employee receives original invoice from local vendor
STC employee turns in original invoice to Administrative
Assistant
Administrative Assistant has FM approve original invoice
Administrative Assistant forwards original invoice to AP
Accounting Assistant within 3 working days from invoice date
AP Accounting Assistant processes payment within 2 weeks of
invoice date (dependent on AP check cycle deadlines)
Possible consequences for STC
of late payments to Vendors
Holds on STC account
 Reduction of credit limit
 Placing STC on cash only basis
 Credit rating effects
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Hold on STC Account
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Most vendors require payment within 30 days of invoice
date, local vendors included.
Examples:
 HEB
 Wal Mart
 Exxon
Reminder: Many departments use our local vendors,
when an invoice is not turned in, and vendors place a
hold on the STC account, NO departments can
charge even with a valid purchase order.
Authorized purchaser should submit invoices to AA and
AA in turn should forward approved original invoice to
Accounts Payable.
Reduction of credit limit
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Does not happen often, however, it is a possibility
This would be caused by consistent delayed payment to
vendor
This would increase the possibility of not being able to
purchase the items you wish because another
department could use up our line of credit more quickly
Placing STC on Cash Basis
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Another situation that does not happen often, however, it
is a possibility
Many local vendors depend on consistent cash flow to
stay in business and expect prompt payment from STC
Perhaps you have a favorite vendor that you like to use
for purchasing certain items for your office, or student
events. STC needs to keep a positive payment
relationship with their vendors
Placement on cash basis requires planning ahead for
event, prepayment, and AP check cycle deadlines, as
well as confirmation with Purchasing and AP that all
proper paperwork received (contracts, prepayment
request forms, etc)
STC Credit Rating effects
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STC, like other businesses, has a credit rating report with
Dun and Bradstreet
These ratings tell other vendors how quickly STC
processes payments to their vendors
If vendors do not like STC’s credit rating they will not do
business with STC
This creates problems with Sole Source vendors, or
vendors who provide the best services but will not be
available for STC due to our Credit rating
At this time, STC’s credit rating is a 2 (the best rating is a
1). This means we have a low to moderate risk of severe
payment delinquency within the next 12 months.
AP is constantly striving to change our rate to a 1, but we
need your help
Account Code Definitions
and examples
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Website for the Account codes:
http://www.southtexascollege.edu/businessoffice/forms/Account_Classifications.pdf
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Most commonly questioned account codes:
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710002 – Consumables
713005, 713010, 713015, 713020, 713025, 713030,
713035, 713040 – Non Inventory and Inventory
Furniture/Equipment/Computer Equipment Software and
licenses
714030 Hardware/Materials/Parts/Supplies
714035 Telecommunication parts/supplies
714505 Purchased contracted services
714525 Consultant Services
716505 Penalties/Fines
710002 Consumables
To record payment for supplies that
cannot be categorized as office
supplies, computer supplies and
janitorial supplies. This code includes
paper cups, napkins, and paper
plates.
 Use this account code if no other
account code available and items are
disposable
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713005 Non-Inventory
Furniture & Equip $0-$999.99
To record payment for the purchase of
furniture and equipment whose unit
value is below $1,000.
 These items will last more than one
year, such as 10 key calculators,
chairs, bookshelves, tables, magazine
racks, date stamp machines, file
cabinets, etc
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713010 Non-Inventory
Computer Equip $0-$999.99
To record payment for the purchase of
microcomputers and computer
printers whose unit value is below
$1,000.
 These items will last more than one
year such as printer, scanner,
computer items purchased separately
(monitor, keyboard, speakers)
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713015 Inventory Furniture &
Equip $1,000-$4,999.99
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To record payment for the purchase of furniture
and equipment whose unit value is greater than
$1,000 and less than $5,000. These items are
considered controlled by Planning &
Construction and must be secured and tracked
due to their nature.
Items such as Fireproof file cabinets, safes,
CPR items (testing mannequins, nursing
equipment)
713020 Inventory Computer
Equip $1,000-$4,999.99
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To record payment for payment for the
purchase of microcomputers and computer
printers whose unit value is greater than $1,000
and less than $5,000. These items are
considered controlled by I.T. and must be
secured and tracked due to their nature.
Items such as servers, computers (when
everything purchased as one unit – computer,
monitor, keyboard speakers), printer/fax/scan
machines, etc
713025 Inventory Software
$1,000-$4,999.99
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To record payment for the purchase of
computer software whose unit value is
between $1,000 and $5,000. These
items are considered controlled by I.T. &
must be secured and tracked due to their
nature.
These are software items that STC
owns, we have purchased the software
to keep, and item description will say
“software”.
713030 Non-Inventory
Software $0-$999.99
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To record payment for the purchase of
computer software whose unit value is
below $1000.
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These are software items that STC
owns, we have purchased the
software to keep, and item
description will say “software”.
713035 Non-Inventory
Software License $0-$999.99
To record payment for the license to
use specific software whose unit value
is below $1000.
 This is permission to use someone
else’s software – does not belong to
STC. The description will say
“License”.
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713040 Inventory Software
License $1,000-$4,999.99
To record payment for the license to
use specific software whose unit value
is greater than $1,000 and less than
$5,000.
 This is permission to use someone
else’s software – does not belong to
STC. The description will say
“License”.
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714030
Hardware/Materials/Parts/Supplies
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To record payment for hardware, materials,
parts and supplies. This code includes
countertops, caulking compound breaker
boxes, electrical outlets, lumber, siding, door
jams, door locks, wire, paint, copper tubing,
cement, pipe adapters and bolts. (Maintenance
department only).
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These items will be mostly used by the Facilities
department. However, there are exceptions allowed (IT,
Purchasing), most other departments should ask prior to
using this account code
714035
Telecom parts/supplies
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To record payment for parts and
supplies for telecommunications
equipment. This code include
replacement parts, telephone
headsets, telephone cables,
telephone jacks, telephone cords, cell
phone batteries and telephone
receivers.
714505 Purchased contracted services vs
714525 Consultant services
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714505 –
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To record payment for contracted services not listed in
account codes below. This code includes moving services,
collection agency services, officiating services,
extermination services, and entertainment services.
714525 –
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To record payment for consultant services. This code does
not include computer consultant services.
716505 Penalties & Fines
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To record payment for fines and
penalties.
No longer “other fees”