Updated March 2013
Updated April 2015 – references to ‘original’ removed, plus minor edits
MINNESOTA STATE COLLEGES AND UNIVERSITIES
SYSTEM OFFICE
Payments and Disbursements Procedure
Part 1: Objective
To ensure that all payments are processed accurately and in an appropriate and timely manner.
Part 2: Goals
Payments are to be made to vendors in a timely manner (ie: within 30 days), in accordance with
Minnesota Statute 16A.124. https://www.revisor.mn.gov/statutes/?id=16A.124
Payments are to be made to the correct vendor/recipient from the correct funding sources (cost
centers).
The liability date (record date/occurrence date) is to be recorded accurately to ensure payments
are recorded in the proper fiscal year and liabilities at year-end are accurately presented in the
state’s financial statements.
Part 3: General Guidelines
Most payments will be processed against Purchase Orders. See Board Policy on Purchasing at
http://www.mnscu.edu/board/procedure/514p5.html. Refer to Part 5 below: “Exceptions to the
Purchase Order requirement/Direct Pays” for when a purchase order is not required.
Payments will only be issued from invoices. Invoices must include vendors name and address
and complete description/itemization of service and product charges. Statements which provide
identical information as an invoice may be submitted. Please note that most statements do not
provide adequate detail.
Each invoice must document payment approval. For Contracts, authorized payment approval
must be done by the person who has delegation for the cost centers involved. If the authorized
representative for the contract is not the person with delegation of authority, a process should be
established where the person with delegation has verification from the authorized representative
that the vendor is in compliance with the terms of the contract before authorizing payment. The
Business Office recommends that both the authorized representative and the delegated authority
sign the contract invoice. For all other purchases, approval should be made by the person with
delegated authority over the cost center(s) involved.
Monitoring encumbrance balances is critical. Please set up a system of your choice to track
remaining balances. Always refer to it before taking on obligations or submitting invoices for
payment in order to verify that adequate funding exists. If the encumbrance is short of the billed
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obligation, then take appropriate steps to rectify. Please refer to the 16A provision under the
Board Policy on Purchasing. http://www.mnscu.edu/board/procedure/514p5.html. The 16A
form is located at http://www.finance.mnscu.edu/contractspurchasing/contracts/forms/index.html. If a 16A infraction is identified, then payments will be
delayed until a copy of a fully signed 16A form is received in the Business Office. Unique
situations should be addressed with the Business Office Manager.
Additional information to provide on/with each approved invoice.
 Attach “Payment Approval” sticker. Printed stickers can be acquired in the supply room
at WFP location.
PO#__________Date________
Approval__________________
Rec’d_____________________
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Items such as cost centers and dollar amounts that don’t fit on predesigned stickers
should be written directly on invoice.
(PO#) Purchase order number. If no Purchase order, then see Part 5 below: “Exceptions
to the Purchase Order requirement/Direct Pays.”
(Date) Approval date. This is the date the approval signature was made. This is not the
invoice date, the date invoice was received, or date product received.
(Approval) Each invoice must document an authorized signature.
(Rec’d) Provide the dates the products were received or the dates services were
provided/received. Some invoices/billings clearly indicate the service dates. For
invoices where vendor does not provide those dates, then please indicate those dates on
the invoice. If you attach a packing slip (packing slips are recommended, but not
required), be sure the received date is indicated on the packing slip or invoice. (These
dates are required during the payment process.)
If the Purchase Order has multiple cost centers, then indicate the dollar amount to pay
against each cost center.
If the Purchase Order has multiple object codes, then indicate the dollar amount to pay
against each object code.
Any reimbursement (travel/expenses) with a Contract billing should be supported by
appropriate documentation and itemized paid receipts. (Please review the Contract
language for specific instructions on expense reimbursement.) For further clarification
see Part 6 below: “Travel/expense reimbursements”.
If the billing is for catered food service and the Purchase Order is for multiple meetings,
then please include the appropriate agenda. Please include the list of attendees with the
agenda, unless the attendees are basically the same as the list submitted with the
requisition. Please see “Special Expense Guidelines” and “Purchasing Checklist” at:
http://www.finance.mnscu.edu/accounting/businessoffice/Purchasing.html .
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 Document any unusual circumstances, such as paying an amount different than indicated
on the purchase order or payment of amount different from the billed/invoice total. This
documentation can be noted directly on the invoice or on a separate document that must
be attached and filed with the invoice.
 MNSCU has a Sales Tax Exemption. Purchases of meals, lodging (under 30 days), waste
collection and disposal services, or purchases or leases of motor vehicles are taxable and
sales tax should be charged. If sales tax has been added to an invoice, be sure the tax is
appropriate. If not, please contact the vendor. Sales tax information is provided at:
http://www.finance.mnscu.edu/taxinformation/salestax/index.html. The Minnesota
Revenue Certificate of Exemption (ST3) is at:
http://www.finance.mnscu.edu/taxinformation/salestax/form_st3.html.
 If this will be the final payment for the purchase order and you wish to have any
remaining encumbrance released with the payment, then write FINAL PAYMENT on the
invoice. If the remaining encumbrance is not released with the last payment, then you
must contact the purchasing technician via email if you wish to return the remaining
encumbrance to the Budget balance. Until remaining encumbrances are released, you
will not have access to those funds for other purposes.
 Please indicate any special handling requests associated with the payment request such
as:
o Do you want an attachment to go with the payment?
o Is there a change of address the payment will be mailed to?
o Are you requesting that a warrant be picked up?
Please note: Do not send a special handling request with a requisition to the purchasing
technician. Include your instructions when you have received the Purchase Order and are
submitting invoices for payment to the disbursement staff. Please remember that many
payments are sent to vendors as Electronic Funds Transfers (EFTs) eliminating some of
the handling requests.
ALSO NOTE: Minnesota Management and Budget requests that these special handling
requests be kept to a minimum.
Part 4: Prepayments
Minnesota Statutes Ch.16A.41, Subdivision 1, prohibits the System Office (SO) or a college or
university from paying in advance. Minnesota Statute 16A.065 authorizes a few exceptions.
The System Office and colleges and universities can only make prepayments for software or
software maintenance contracts for state-owned or leased computer equipment, sole source
maintenance agreements, exhibit space, subscription fees for newspapers and magazines,
registration fees where advance payment is required or advance payment discount is provided,
and the Library of Congress services. Please see
http://www.mnscu.edu/board/procedure/514p5.html
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Examples:
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Registration fees when advance payment is required or when an advance payment
discount is offered. Department to verify vendor’s required advance payment.
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Airline tickets-pay when the reservation is made.
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Pay up to 30 days in advance for subscriptions and memberships.
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Wireless phone services/pager services/answering services.
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Advertising-if prepayment terms documented.
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Sponsorships where Special Expense is authorized and a prepayment is required by
vendor. Prepayment must be supported by vendor documentation.
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Where referenced in a Contract’s payment terms (a very unique circumstance).
Please contact the Business Office to review special circumstances.
Part 5: Exceptions to the Purchase Order requirement/Direct Pays
The Business Office does allow for users in certain circumstances to make a choice of whether
or not they want an encumbrance established. However, we do recommend that a PO be
established for every obligation.
Circumstances:
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Purchase orders are not needed for memberships, subscriptions and the Library of
Congress, if under $100.00.
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Purchases within the MnSCU System.
Payments within MnSCU (campuses and SO) which are:
 one-time
 do not have a controlling document, ie. Contract, intra-agency agreement, etc.
 less than $5,000.
Payments within MnSCU which are:
 one-time
 do not have a controlling document
 above $5,000.00,
require approval by the Business Office Manager.
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Employee business expenses, advances, and relocation expenses paid to any employee
through SEMA4.
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Expenses such as Agency Indirect Costs, Statewide Indirect Costs, or Attorney General
Costs.
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Interest paid to vendors on late payments.
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Formula Grant payments authorized by Statute or Session Law to units of local
government or payments made under laws providing for assistance to individuals. To
comply with the Minnesota Laws of 2007, Chapter 148, Article 2, Section 34, all other
grant payments shall be encumbered.
Invoice submission for Direct Pays: Follow the same guidelines and check list as indicated in
Part 3: “General Guidelines”, except instead of providing a Purchase Order number indicate the
cost center(s). Since the amount of payment has not been encumbered, it is imperative that the
budgets for any cost centers involved be reviewed for adequate funding. All budget concerns
should be addressed to the SO Budget unit.
Part 6: Travel/expense reimbursements
A: Contract
Travel will be reimbursed according to the language specified in the contract. If the contract
does not reference any reimbursement, then the vendor only receives payment for services.
Current contract language typically references reimbursement in accordance with the
Commissioner’s Plan.
Expense reimbursement is initiated by the contractor submitting the “Expense Reimbursement
Form, Commissioner's Plan” located at http://www.finance.mnscu.edu/contractspurchasing/contracts/forms/index.html. This form needs to be included as an attachment when
drafting contracts for services or guest lecturers which involve reimbursements. An exception
will be made, if the vendor chooses to and does provide clearly and concisely the same
information directly on an invoice. When the reimbursement form is submitted as a stand-alone
billing document, then the vendor should sign where required. If the reimbursement form is
included as a backup document to an invoice, then that vendor signature is not required.
Please review the reimbursable documents submitted for compliance with the contractual
language.
Please note: For expenses that require receipts, receipts must be attached to the Expense
Reimbursement form or invoice.
B: Individuals not employees of the State of Minnesota and not under a Contract
These individuals are paid as a vendor and the travel reimbursement is guided by the language in
the Commissioner’s Plan. The System Office does not pay expenses directly for these
individuals. Please have the individual complete the Reimbursement form located at
http://www.finance.mnscu.edu/accounting/businessoffice/forms/index.html. (This form is
currently under construction. Please use the employee expense report until new form is posted.)
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Please note: Periodic meetings involving non-state employees should have a blanket PO for
non-state employee participant’s reimbursements.
C: Employees of Other State Agencies
Expenditure reimbursement requests for employees of other State Agencies can be made either
one of two ways:
1. The other agency can reimburse their employee and bill the SO for those expenditures.
The Agency must support the billing with copies of processed Expense Report(s). When
the Agency seeks reimbursement for additional costs directly paid on behalf of their
employee, then the Agency must support the billing with copies of those bills directly
paid.
2. The employee fills out an employee expense reimbursement form and submits it along
with the receipts to the respective SO department for reimbursement. The individual in
the department with delegated authority reviews, approves by signing expense report as
‘Supervisor”, and forwards to the Business Office. The Business Office will work with
the other Agency to reimburse the expenses through the employee’s payroll with the
reimbursement charged back to the SO.
D: Employees of MNSCU Institutions
Expenditure reimbursement request for campus employees working at the System Office can be
made either one of two ways:
1. The campus can reimburse their employee and bill the SO for those expenditures. The
Campus must support the billing with copies of processed Expense Report(s). When the
Campus seeks reimbursement for additional costs directly paid on behalf of their
employee, then the Campus must support the billing with copies of those bills directly
paid.
2. The employee fills out an employee expense reimbursement form and submits it along
with the receipts to the respective SO department for reimbursement. The individual in
the department with delegated authority reviews, approves by signing expense report as
‘Supervisor”, and forwards to the Business Office. Please see the Campus Staff
Reimbursement Processing form and detailed instructions located at
http://www.finance.mnscu.edu/accounting/businessoffice/BusinessExpenses.html .
E: Questions: Unusual situations should be addressed to the Business Office.
Part 7: Year-end Process
Please engage in the following, beginning in May, in order to make the transition from one fiscal
year to the next as smooth as possible.
 Review the open encumbrance report (AC0519CP) for all your cost centers and collect
any outstanding invoices. Please submit all outstanding invoices to the Business Office
for payment as soon as possible. Be sure to indicate FINAL on the invoice when there
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will be no other payments against the purchase order. Then any remaining funds will be
released to the cost center(s) and the purchase order will be closed. The last date to
submit invoices for payment inclusion in previous fiscal year is defined each year. Email
notice of year-end timelines is sent to all SO employees by the Business Office.
 The Business Office encourages releasing funds throughout the year from purchase
orders no longer needed. Contact the Purchasing Technician with your request. Anyone
from the unit/department may request the release via e-mail. As example: You have a
$200 PO for registration for two for a seminar that was held the previous October. Only
one was able to register and attend and that $100 invoice for the registration fee has been
paid. The PO still has $100 that will not be used and should be released to the cost
center, freeing it for other purposes.
 Plan ahead for contracts/purchase orders that overlap fiscal years. Please contact and
inform vendor that our fiscal year (FY) ends on June 30. To expedite the payment
process, billings should be sent for one fiscal year’s activities. For example, if a vendor
has provided services from June 15 through July 14, there should be one invoice for
services performed from June 15 through June 30. Then there should be another invoice
for services provided from July 1 through July 14. Once all obligations have been paid in
current FY, then contact purchasing technician about moving the purchase order into the
next FY. The purchasing technician will move the purchase order once Budget is loaded
and adequate for the new FY. Please see the ‘Carry Forward’ procedures at
http://www.finance.mnscu.edu/accounting/businessoffice/procedures/docs/carryforwardg
uidelines.pdf. Please note that moving the PO forward is a separate process from ‘Carry
Forward’.
Please note:
1. Do not submit invoices for payment in the new FY until the purchasing technician has
been contacted and confirmed that the purchase order has been moved forward.
2. Including a contract balance on the carry forward request does not result in the
purchase order being moved forward. Moving a purchase order into the new FY is
done by the purchasing technician. Moving budget into the new FY is done by the
Financial Planning & Analysis unit.
 Expense reports should be submitted timely. The deadline for processing expense reports
is the earliest year-end closing deadline. On June 15, please submit all travel and
expense reimbursement requests up to that date. Then on July 1, submit your final
expense report for the current fiscal year. Please advise all affected MnSCU campus
employees of SO’s year-end deadline. Please see Business Expense Guidelines at
http://www.finance.mnscu.edu/accounting/businessoffice/BusinessExpenses.html
After the year-end deadlines for processing payments and expense reimbursements have expired,
obligations should be handled as follows:
Payments: If you find that after the FY closes for payments, you still have unpaid obligations,
then contact the purchasing technician to move the relevant purchase order into the next FY. If
the encumbrance is not adequate to cover the unpaid obligations, then provide instructions to the
purchasing technician of needed increase and why it is being requested. After the purchasing
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technician has confirmed the purchase order is moved, then submit invoice(s) to accounts
payable staff. If an invoice will be the last payment against the purchase order, then indicate
FINAL on the invoice. Please note that these payments will be charged against the current FY
and will reduce your available funds from the current FY budget. Please note: Do not use a
current year purchase order to pay for a prior year obligation. Prior year obligations should be
paid from the prior year purchase order. Generally accepted accounting principles require that
we match up the relevant purchase order with the obligation.
Expense reports: Employee expense reports submitted after the processing year-end deadline
will require a written justification as to why it is being submitted late and will be charged against
the new fiscal year.
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All travel reimbursements for the fiscal year (ending June 30) must be submitted by July 12
(or as defined in year-end deadline notification) and processed to ensure prompt payment
from the proper fiscal year. Minnesota Management & Budget issues fiscal year close
deadlines each spring/summer.
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An employee expense report submitted after July 12 requires a written explanation signed by
the agency head (or agency head designee) and will be paid from current fiscal year funds.
(For example, an employee submits an expense report for fiscal year-ending June 30, 2010,
on July 13, 2010. July 12, 2010 was the deadline for fiscal year 2010. A written and signed
explanation must be attached to the expense report before the payment can be processed, and
it will be paid from 2011 funds.) When the Business Office receives a report submitted after
the deadline, an explanation is necessary. We will email the employee and the employee’s
supervisor to request an explanation. The employee replies to email, copying their
supervisor and provides the explanation. This will be reviewed by the Business Office
Manager before processing in SEMA4 to the current fiscal year.
PLEASE NOTE: WHILE THE BUSINESS OFFICE HAS MADE EVERY ATTEMPT TO
ADDRESS ALL ISSUES; HOWEVER, THERE MAY STILL BE SPECIAL CIRCUMSTANCES NOT DETAILED IN THESE PROCEDURES. PLEASE CONTACT THE
BUSINESS OFFICE IF YOU HAVE ANY QUESTIONS. THANK YOU.
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