External Sales Approval
Introduction to Staff
o Keith Jansen - Manager
o Steve Brandeen - Finance Professional
o Russ Bakke - Finance Professional
Email address - extsales@umn.edu
Agenda
• Objectives
• Approval Form (UM 1608)
• Business Proposal Outline (UM 1741)
• Subject Matter Experts (SMEs)
• Rate Development
• Contracts
• Classification
Q & A anytime during the presentation
Objectives
 Approve new internal/external sales activity
 Review internal/external sales rates
 Review external sale contracts
 Validate compliance to policy and procedures
Objectives
 Apply best business practices
 Risk assessment
 Analyze tax implications
 Assist with rate development and cost allocation
External Sales Policy and
Procedure
 University Administrative Procedure:
“Conducting External Sales Activity”
 University Policy:
“Selling Goods and Services to External
Customers”
Internal/External Sales Approval
• Check with Internal/External Sales to validate
what has been approved for the department
• Send a brief description of services that will be
offered
• Define a complete list of services to be provided
Internal/External Sales Approval Form
IESAF - (Form UM1608)
• Combined form for approval of Internal/External
Sales
• Standardized responses to Yes/No questions
• New streamlined review process (2 pages)
Internal/External Sales Approval Form
IESAF - (Form UM1608)
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Purpose
Identify dept., key personnel, chartfieldstring
Approvals section
Sales activity type
Description of activity
Type of customer
Activity Risk characteristics
Business Proposal Outline
(Form UM1741)
A key part of your application to conduct
internal or external sales
General business considerations:
– Describe the department and its activities
– Describe the proposed external sales activity
– How does the activity relate to the department and the
University mission?
– Who will be responsible for the activity?
Business Proposal Outline
• Sales and Marketing Considerations:
– Consider the potential customers
– Consider how to reach those customers
– Are there other entities at the University that provide the
same or similar services?
• Production considerations
– How will the product or service be produced?
– How will you determine production costs?
Business Proposal Outline
• Budgeting and forecasting
– Prepare a financial forecast for the current year
• Detail estimated revenue, expenses, and sales volume
– Prepare a projection of expenses
New streamlined review process (2 pages)
Subject Matter Experts
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Risk Management: Ann Martin
Tax Management Office: Heather Broneak
Office of the General Counsel (OGC): Elizabeth Anderson
Sponsored Projects Administration (SPA): Amy Rollinger
Office for Technology and Commercialization (OTC):
Andrew Morrow
• Environmental Health and Safety (EHS): Joe Klancher)
• Institutional Review Board (IRB): Andrew Allen
• Controller’s Office (IES): Keith Jansen
Internal Sales Rate Development
Steps to setting an Internal Sales rate:
• Determine the measurable unit for goods and services (e.g.
hours, units, tests)
• Determine all direct and indirect costs
• Determine the breakeven volume
• Determine annual output
• Exclude unallowable costs
• Determine the activity per-unit rate
• Rates should be reviewed and updated each year
External Sales Rate Development
Steps to setting an External Sales price:
• If you have a Recharge Center, start with an Internal Sales rate
– Add unallowable costs for internal sales
• If no Recharge Center activity, determine actual cost of external
sales activity
• Goal is to match market rate for similar activity
• Add additional revenue to match market rate, if market allows
• Submit rate with initial approval form and with contract
• Create standard unit rate sheet, if applicable
External Sales Rate Development
What can surplus revenue be used for?
• Fund 1026 Unrestricted Funds can be used to subsidize
recharge centers, training of staff, FTEs, equipment, etc.
• Set up the account structure with internal revenue and
expenses separated from external revenue and expenses
through the use of Fund 1026 for external activity and funds
1150/1151 for internal sales activity
Market Driven Pricing
The following method should be used to price based on
market:
• Compare price to a similar good or service from an outside
vendor used by your department or another department at the
University
• Call and request a quote from outside vendor
• If activity is not available outside of the University, determine a
similar effort with similar skill levels and request quote from an
outside vendor
• Request information about pricing from the University of
Minnesota Purchasing Department
Approval Process
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Send to extsales@umn.edu:
Internal/External Sales Approval Form
Business Proposal Form
Rate Development
Any other supportive documents
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Int/Ext Sales will review and return
Sign Internal/External Sales Approval Form
Int/Ext Sales will sin on behalf of the Controller
Will send notification of approval in e-mail
Contract Review Process
• Utilize standard U of M agreements whenever possible,
available at OGC website: www.ogc.umn.edu/contracts.html
• Always get a copy from the OGC library to ensure the latest
revision is used
– If non-standard agreement is used, OGC must review, which will
lengthen approval time
• OES reviews contracts for:
– Appropriate type of service (matches initial approval)
– Appropriate rate structure
– Related concerns, such as export controls issues, product liability
concerns, currency validation, etc.
Classifications
When determining if a transaction should be a Gift,
Sponsored Project, or External Sale:
• Review “Fund Bucket Definitions” Guide (see handout)
If still unsure:
• Send information regarding transaction to the classification
group at: classification@umn.edu
Classifications
Approval of an External Sale does not mean that a followon contract will not be a Sponsored project.
Factors that could create a Sponsored project:
• Type of customer (federal or state agency, etc.)
• Change in activity (creating new intellectual property,
prototype, research, clinical trial)
• Sub-contractor status pushed down from prime contractor
• Consulting (who has the decision-making power?)
Summary for External Sales
• Use market rate in costing model based on internal costs
• Use market driven pricing model to determine actual
price
• Use standard contract and the latest revision whenever
possible
• All contracts are reviewed by External Sales office
• Cost must be segregated for internal and external sales
• Use our email address: extsales@umn.edu
Summary
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Go to website for forms, job aids, policies and training
Fill out forms with as much detail as possible
Use classification email, identification tool
Send draft to us for review before securing signatures
Call or e-mail us early in the process
We are here to help you in any way that we can
extsales@umn.edu