External Sales Policy, Procedure, Contract, Amendments Updates April 30th, 2014 University of Minnesota Agenda • • • • • • • • • Policy & Procedure Update Risk Assessment Survey Contracts Library Terms & Condition on Invoice Approval Form Service Agreement Short Form Amendments Other process considerations Questions & Answers anytime during the presentation 2 Policy University Administrative Policy: “Selling Goods and Services to External Customers” http://policy.umn.edu/Policies/Finance/Accounting/EXT ERNALSALES_PROC04.html 3 Procedures University External Sales Procedures: • Conducting External Sales • Establishing an External Sales Accounting Structure • Establishing External Sales Rates • Establishing External Sales Agreement • Unrelated Business Income Tax Procedures, and Collecting and Remitting Minnesota Sales Tax on External Sales Transactions 4 Policy Update – Risk Based Approach Use the on-line risk assessment survey to determine whether a sales transaction is classified as low, medium or high risk. • Defines the accountability • Operating procedures • Oversight • Monitoring procedures Handout provided: Risk Profile of sales Transactions (Roles and Responsibilities) 5 Low Risk • Self-monitor and provide local oversight regarding pricing decisions and financial implications. • Discretion as to the method used to process sales activity. – Units may choose to either use a University-approved contract – Bill customers via the EFS billing system. • Management of compliance activities (e.g. collecting and payment of sales tax) • Controller's Office will review low-risk sales activities every 4-5 years for compliance with the policy • Controller's Office will keep a repository of all external sales contracts 6 Medium Risk • Units will work with the Controller's Office: – to complete a business plan for sales activity – formal rate development – contract • Controller's Office will provide: – pricing assistance for units requesting the service – responsible for monitoring and providing oversight – review medium risk sales activities every 2-3 years for compliance with the policy 7 • Units will work with the Controller's Office: – Business plan for sales activity – Formal rate development – Contract – Market pricing – Financial stability of customer • Controller's Office will provide: – Pricing assistance for units requesting the service – Responsible for monitoring and providing oversight – Review high risk sales activities every 1-2 years for compliance with the policy 8 Risk Assessment Survey This survey (on-line risk assessment survey or External Sales Risk Assessment) is designed to help units conducting external sales determine if their sales activity with a given customer is , or risk. 9 , Risk Assessment Survey The survey is located at : Selling Goods and Services to External Sales: Assessing the Risk Profile of Sales Transactions, Use of Contracts, Appendices Conducting External Sales Activity: Applying risk based factors, Evaluate risk category, Establishing External Sales Rates: Applying risk based factors Establishing External Sales Agreements: Introduction External Sales website: Risk Assessment 10 Risk Assessment Survey Example of using the Risk Assessment Survey online To begin the survey, please fill out the following information fields Full Name Email Address Department Name DeptID # Choose the answer to each characteristic that best describes your activity. FORM: OGC-SC102 Form Date: 01.29.02 Revision Date: 11.16.10 11 Risk Assessment Survey Questions that are asked on the survey: 1) 2) 3) 4) 5) 6) 7) 8) What is the anticipated revenue on this transaction? What is the customer type? What is the payment history? Does the customer contribute to the design or manufacturing? Customer’s main line of business? Service provided by the unit? Taxes or fees as a result of transaction? Shipped outside of United States? FORM: 12 OGC-SC102 Form Date: 01.29.02 Revision Date: 11.16.10 Risk Assessment Survey Results that are provided: Your activity is considered to be “Low, Medium, or High Risk” based on the answers you have selected. Will provide a summary of what it means to be at “Low, Medium or High Risk” activity. Important: You must click submit to finish this survey. FORM: OGC-SC102 Form Date: 01.29.02 13 Revision Date: 11.16.10 Contract Library Utilize standard U of M agreements whenever possible, available at OGC website: www.ogc.umn.edu/ Standard Agreement • If standard agreement is used, OGC does not review Non-Standard Agreement • If non-standard agreement is used, OGC must review, and usually negotiate with customer’s counsel FORM: OGC-SC102 Form Date: 01.29.02 Revision Date: 11.16.10 14 Contract Library Go to “Contracts” http://www.ogc.umn.edu/contracts/index.htm Standard Contracts Library http://policy.umn.edu/contracts/ External Sales & Purchasing Agreements Used for external sales and purchasing. 15 Terms & Condition on Invoice If customers are billed via the EFS billing system. Provide customer with the terms and conditions provided on the back of the invoice in advance of starting work. FORM: OGC-SC102 Form Date: 01.29.02 Revision Date: 11.16.10 Handout provided: Terms & Conditions 16 External Sales Activity Form Internal/External Sales Approval Form UM 1699 Updated: External Sales Activity Form UM 1799 FORM: OGC-SC102 Handout provided: External Sales Activity Form UM1799 Form Date: 01.29.02 Revision Date: 11.16.10 17 Service Agreement Short Form UNIVERSITY SHORT FORM SERVICES AGREEMENT Current criteria: • Use with low risk transactions • Should not be used in lieu of an existing standard service agreement template, unless ALL of these criteria are met: • Value of services being provided must be $5,000 or less; • No additional terms, conditions, services, activities or modifications of the agreement Handout provided: Short form and Guidelines 18 Amending a Service Agreement Contract has been identified as an agreement that can be modified • An amendment can change the compensation or term sections of the services Agreement. • Increases the compensation, add services or extending the term of an agreement without having to start a new agreement. • Once an agreement has expired it can no longer be amended. • Extend the term for up to three years. • Consider collection issues, services provided and terms. • Original agreement will be included in the amendment. Handout proved: Amendment and19 Instructions Other Considerations Customer presents their company contract to University, these steps may help to speed up the contracting process: • Offer the University Standard Contract as a counter offer. If they accept it and sign it, then the negotiations are complete. • If they choose to "mark-up" or "take exception" to parts of our standard agreement, then it would need to go through OGC for review • If they reject our contract and insist on using their company contract, negotiations on terms & conditions will generally take longer than starting with the University agreement me offering, these steps may help to speed up the contracting process: 20 Contracting Tips Tips Unit to help speed up a medium or high risk contract through OGC: •Use the latest revision of the standard contract. •Supply any background information and/or related contracts with customer. •Provide standard rate sheet or rate development. •Provide the contact information for the customer's legal representative. 21 Contracting Tips - Cont. Additional tips: •Provide a date when you need the contract to be ready for customer signature. •Provide any changes to the insurance clauses. •Provide information is work for a foreign entity, services will be provided in or is coming from a foreign entity. •Supply DeptID # and approved ESAF #. 22 Contract Review Questions and Answers Contact Information: Keith Jansen Russ Bakke Steve Brandeen 4-5540 kkjansen@umn.edu 4-8835 extsales@umn.edu 4-9014 extsales@umn.edu 23