Purchasing and Receiving Shannon Soja, Jen Abinette, Moet Slaughter, - - PDF document

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Purchasing and Receiving

Shannon Soja, Jen Abinette, Moet Slaughter, Deb Shoemaker (OSC) Paul Kalinowski (SFS) Kristi Kilmartin (OMH) Erick Hankle and Angela Dambrowski (BSC)

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Roadmap

• Purchasing
• Receiving
• Office of Mental Health: Lessons Learned

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Roadmap ‐ Purchasing

• Procurement Card Use
• Purchase Order Best Practices
• Purchase Order Policy
• Early Pay Discounts

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Learning Objectives ‐ Purchasing

• How to comply with PCard and purchase order

requirements and best practices.

• How to properly structure a purchase order.
• How to take advantage of early pay discounts.

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Scenario

• Your agency needs to order 20 boxes of pens.

Each box of pens costs $5.

• How would you procure the pens?

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Procurement Card Use

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Procurement Card (PCard) Policy

• Agencies are required to use the PCard to

purchase goods and services less than $500 when a vendor accepts the PCard for payment.

– Agencies cannot use the PCard to make purchases from agency‐specific contracts.

GFO: XI‐A.4 – Procurement Card Use

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Discussion

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Purchase Order Best Practices

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Purchase Orders

• Must be used as the ordering document for all

planned purchases.

• Authorizes the vendor to provide goods or

services.

• Communicates critical information to the

vendor.

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Properly Structured PO

• Enables downstream processes such as

receiving, invoicing and vouchering to be completed more accurately and timely.

• SFS developed the Procure to Pay (P2P) Best

Practices for setting up purchase orders.

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PO Detail

• Agencies must include adequate details in the

PO line(s).

– Quantity ordered and the related price(s).

• Agencies should indicate whether receiving is

required on the PO.

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Quantity Based PO Lines

• Quantity based lines allow an agency to

receive up to the specific quantity and unit price of goods or services at a particular measure.

– Can be used for security guard services, nursing services, hourly based IT services, etc.

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Amount Based PO Lines

• Amount based lines allow an agency to

receive based on the aggregate cost of the goods or services provided.

– Can be used for services that are not ordered on a specified unit or measure basis (e.g., copier repair services).

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Payment Tolerances and Matching

• Tolerances are applied during the matching

process and allow for slight variations in price between purchase orders and vouchers.

– Quantity based purchase order lines. – Amount based purchase order lines.

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Electronic PO Dispatch

• Purchase orders can be electronically

dispatched to vendors through email.

– Default email address or one‐time email address.

GFO: XI‐A.7 – Electronic Purchase Order Authorization and Purchase Order Dispatch

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Confirming PO

• Agencies cannot use a confirming PO for

planned purchases.

– Can only be used for emergency‐related purchases where the agency is unable to create a PO prior to purchase.

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Scenario

• Your agency needs to purchase new laptops,

which you estimate to cost $20,000.

• How would you communicate this purchase to

a vendor?

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Purchase Order Policy

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Purchase Order Policy

• Agencies are required to use a PO for:

– All single purchases of $10,000 or more. – Where the PO is required by the contract. – All purchases from an agency contract.

GFO: XI‐A.3 – Purchase Orders

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PO Policy Exemptions

• Bulkload PCard purchases
• Utilities
• Interagency bills
• Petty cash replenishment
• Postage meter replenishment
• Courier services
• Arbitration services
• Legal settlements
• Centralized contract purchases made outside of the SFS

GFO: XI‐A.3 – Purchase Orders

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Discussion

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Early Pay Discounts

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Early Pay Discounts

• State Finance Law § 179‐f requires agencies to

pay vendors within 30 days after receipt of an invoice (15 days for certified small businesses).

• So why pay early?

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Early Pay Discounts

• Agencies should request early pay discounts

from vendors when feasible.

• In the SFS, discount terms can be established

by vendors at the location level, or by agencies at the contract, purchase order, or voucher level and will default in the SFS in this

• rder.

GFO: XII.5.F.4 – Selecting the Appropriate Payment Terms

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Early Pay Discounts

• If early pay discount terms are included in a

contract, the awarding agency should add the payment terms to the contract’s PO defaults in the SFS.

• Early pay discounts must not be used as a

factor to evaluate proposals/bids.

GFO: XI.11.H – Early Pay Discounts for Procurement Contract Purchases

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Roadmap ‐ Receiving

• Receiving Best Practices
• Procure‐to‐Pay (P2P) Receiving Model Process
• Entering Receiving Details in the Statewide

Financial System (SFS)

• Office of Mental Health (OMH): Lessons

Learned

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Learning Objectives ‐ Receiving

• How to implement receiving best practices.
• How to receive against a purchase order and

enter receiving details in the SFS.

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Receiving Best Practices

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Title 2, Chapter I, Part 6.6 of the New York Code Rules and Regulations

• Requires an agency to maintain adequate

internal controls over the voucher process to support the validity of payments made.

• Receiving is an important control.

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Develop Written Policies

• Proper receiving procedures guard against

inherent risks.

• Ensure staff have a clear understanding of

their responsibilities and access to the proper tools necessary to perform receiving.

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Receiving Goods and Services

• Ensure purchases for goods and services are

properly received by verifying:

– Date of delivery. – Quantity of goods/services. – Description of goods/services matches description

• f goods/services ordered.

– Condition of goods/services received matches quality of goods/services ordered.

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Receiving Goods and Services

• Goods and services received from agency

specific contracts should be reviewed by the program area for compliance with the terms, conditions and specifications of the purchase agreement.

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Separation of Duties

• Agencies should maintain sufficient separation
• f duties in order to reduce the risk of error or

fraud in their purchasing program.

• Incompatible duties are segregated (e.g.,

purchasing, receiving, invoice/voucher approval).

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Blind Receiving

• Is facilitated when the receiver is provided

with a purchase order/ordering information that does not include the quantity or amount

• f the goods/services ordered.
• Independent verification.

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Blind Receiving

• When an agency purchases goods and

services without a purchase order, it hinders the ability to practice blind receiving.

• Blind Receiving Report available in the SFS.

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Discussion

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Acceptance Period

• Requires the agency to notify the vendor

within 15 days (7 days for self‐certified small business) of the receipt of an invoice about any defects or improprieties in the delivered goods or invoice. State Finance Law § 179‐F

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Receiving vs. Accepting

Receiving

• The act of taking possession of

goods

Accepting

• The act of “testing” what is

purchased is in accordance with the purchase agreement

• Return to vendor
• Adjust the MIR date

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Recording Receiving

• Receivers should record receiving information

in the SFS or agency’s accounting system at the time the goods or services are received.

– Best practice to record receipts within one business day after receipt of goods. – Best practice to record receipts within one business day of the end of the billing periods for services.

• Inspection results should be recorded in the

SFS within one business day of the determination.

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Recording Receiving

• Accurate receipt dates ensure proper

matching of receipts to invoices.

• The receipt date is the date goods or services

are actually received or contractually due.

– If multiple dates or billing periods are included on a single invoice, use the latest date.

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Recording Receiving

• For agency specific contracts, the agency

should have a process for tracking and validating vendor performance.

GFO: XI.11.F – Contract Monitoring

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Record Receiving Timely

• The agency should ensure vendors provide

enough information on receiving documents.

– Packing slips contain purchase order number, description, serial numbers, and/or other identifying information from the purchase order.

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Recording Receiving Timely

• Timely entry of receipts supports downstream

efficiencies in the procure‐to‐pay process.

– Reduce late payments and increase discounts.

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P2P Model Process: Receiving

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Receiving Model Process

A properly structured purchase order (PO) is setup, communicating all necessary information about the goods or services Vendor fulfills the order (goods or services)

The vendor provides goods and services. The agency user verifies the goods or services that were received, which may include an inspection. Entering the receipt records the delivery of goods or services.

Receiver verifies shipment of goods or receives confirmation of services delivered Receiver enters receipt information in SFS

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Proactive Receiving is Essential

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Entering Receiving Details in the SFS

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• This scenario demonstrates receiving against a

PO created from a requisition for basic office supplies from a preferred source vendor.

• The requisition uses the procurement card

(PCard) as the payment method.

Scenario #1: Commodity

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Commodity: Selecting PO Lines to Receive Against

For commodity purchases, the PO line description must be clear. The receiver will indicate all PO lines to receive against by checking the appropriate line boxes.

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Commodity: Entering Receipt Lines and Rejections

Enter the Receipt Date as the date the goods were received. The receiver will enter the quantity of units delivered for each PO line for quantity‐based lines.

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Commodity: Entering Rejections on Receipt Lines

Any goods that are rejected should be indicated in the Reject Qty. The Net Receipt Quantity will indicate the net of what goods were received and rejected.

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Commodity: Key Takeaways

• The PO should provide adequate information for the

vendor and receiver.

• Receiving for POs to be paid using a PCard can be

completed similar to POs that are not being paid with a PCard.

• The receipt created is the official document to

support the receipt of commodities for payment purposes, and receivers may add attachments.

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Scenario #2: Medical Staffing

• This scenario demonstrates receiving hourly

services for two individuals providing staff augmentation using a temporary services contract.

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Medical Staffing: PO and PO Lines

Indicate Receiving Required as either “Required,” “Not Required,” or “Optional.”

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Medical Staffing: Entering of Receipt

1 Include clear descriptions on the PO lines

Receivers will indicate which lines they are receiving against

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Medical Staffing: Entering of Receipt

Use the week ending dates as the Receipt Date for hourly services that are being received and invoiced weekly. The PO line description on the receipt line allows the receiver to enter received amounts for the correct line(s). When matching occurs downstream, the quantity entered is evaluated against both the amount available on the PO line and the amount being invoiced on the voucher line. 1 2 3

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Medical Staffing: Entering Comments and Attachments

Add comments to provide downstream processors additional information to clarify any discrepancies. Add attachments, such as a copy of the timecard submitted by the individuals, in the Associated Document section. Attachments are not required and can be added later. 1 2

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Medical Staffing: Key Takeaways

• Structure PO lines for accurate and timely

receipt creation by the receiver.

• Align receiving with the vendor’s invoicing

schedule to ensure accurate matching processes.

• PO lines can have multiple receipts.
• Receiving should be a proactive process.

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OMH: Lessons Learned

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Pilot – Receiving Benefits Realized

• Timeliness of receiving improved (for

quantity‐based invoices)

– May 2018 > 13 days on average – March 2019 = 7 days on average

• Process reduced receiving to close to one

business day

– May 2018 7% of OMH facilities – March 2019 27% of OMH facilities

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OMH Strategies to Improve Receiving

• Expanded receiver role in the SFS to new users.
• Required receivers to enter the actual date received

in the SFS through use of Receipt Date Entry role.

• Added new Ship To locations.
• Hosted receiving training sessions.

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OMH Strategies to Improve Receiving

• Reviewed receiving data and performance metrics on

a weekly basis.

• Distributed facility‐specific dashboards.
• Performed targeted outreach to facilities not

showing improvement over time.

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Implementing the Receiving Model Business Process Within Your Agency

• Review the list of agency users with the PO Receiver

role in the SFS.

– Work with your ASA to role map additional users, as needed.

• Review existing Ship To locations in the SFS.

– Add Ship To locations in the SFS, as needed.

• Communicate the model business process to all

receivers within your agency.

– Receiving is best performed by agency staff, at the location where receiving occurs.

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Implementation Consideration: Ship To Locations

• A Ship To location is included on each PO, to

identify where goods should be delivered or services provided, and to whom/where a vendor should report.

• Ship To locations should represent the actual

locations receiving the goods and services.

• Ship To locations can be added and/or

updated.

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Takeaways

• Use the PCard to make purchases < $500.
• Use a PO for purchases >= $10,000.
• Properly set up POs to enable a smoother and

more efficient P2P process.

• Record receiving information when the goods
• r services are received (or within one day).

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Resources

• OSC Guide to Financial Operations (GFO)

– Chapter XI‐A, Section 3 – Purchase Orders – Chapter XI‐A, Section 4 – Procurement Card Use – Chapter XI‐A, Section 9 – Receiving – Chapter XI‐A, Section 8 – Payment Tolerances – Chapter XI, Section 11.F – Contract Monitoring – Chapter XI, Section 11.H – Early Pay Discounts for Procurement Contract Purchases – Chapter XII, Section 5.F.4 – Selecting the Appropriate Payment Terms – Chapter XII, Section 8.B – Matching

• SFS Coach
• SFS Secure

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Contact Us

• For inquiries related to policies or voucher

processing, please contact voucherauditmailbox@osc.ny.gov or stexpend@osc.ny.gov.

• Statewide Financial System Help Desk

– (518) 457‐7737 or (877) 737‐4185 – HelpDesk@sfs.ny.gov

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Questions