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ROYAL HOLLOWAY

VIEWS: 28 PAGES: 15

									ROYAL HOLLOWAY
UNIVERSITY OF LONDON

DEPARTMENTAL PURCHASING CARD MANUAL

Departmental Purchasing Card Manual

Contents Page About Purchasing Cards Administration of the scheme Cardholders' responsibilities VAT Using the Purchasing Card Completion of the Purchasing Card Log and monthly reconciliation procedures Hyperlink to; Purchasing Card log example 3 4 5 6 8 11

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Departmental Purchasing Card Manual

About Purchasing Cards Purchasing Cards are credit cards issued to named staff of the College and are used for low value, routine College purchases including using the internet. The cards may also be used for booking delegate places at conferences and for booking travel. The College's cards are issued by National Westminster Bank with the VISA badge and have the College's name embossed on them together with the name of the member of staff who holds the card. Liability for the transactions incurred using the card rests wholly with the College: printing the name of the cardholder on the card identifies the person as the authorised user of the card on behalf of the College. The purpose of the cards is to save time and cost in the purchase of routine supplies by eliminating the need for a purchase order to be raised and for an invoice to be processed for each transaction. As with a normal credit card, the supplier receives payment through the VISA system and the College pays a monthly statement of purchases at the end of each month. Each individual card holder must register themselves to receive their monthly statements online. The Head of Purchasing will give instruction on how to do this. As an added security measure card holders must register their card with the “NatWest secure” service, as soon as they receive their card. This is in addition to any other security measure and gives added security when ordering online The link can be found as follows; www.natwest.com  Choose “Day to day”  Click on Credit cards  Scroll down to “What is Natwest secure”  Click on “visit Natwest secure” Follow the instructions on the screen from there The purchase order and purchase invoice routines have well established controls and procedures associated with them. For purchasing cards more responsibility is placed with the cardholder and in particular the cardholder must ensure that a purchase log of transactions is kept, reconciled to the monthly statements and submitted for processing in the financial ledger.

In brief the main stages in the cycle are:  the cardholder orders by telephone, providing the card details to the supplier  the cardholder completes the transaction log for the purchase  goods are supplied as normal  the supplier receives payment from VISA within four working days  the College is debited a single monthly amount for all the purchasing card transactions within the College's scheme  the log is reconciled to the monthly statement and then submitted to Payments to process in the ledger

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Departmental Purchasing Card Manual

Administration of the Scheme The College's scheme is managed by Susan Fielding, Head of Purchasing, who is the Card Administrator. Nat West has nominated a relationship Manager. Lynne Rouse has responsibility for certain Finance related aspects of the scheme. Card Administrator Susan Fielding, Head of Purchasing, ext 4288, Room FW12, s.fielding@rhul.ac.uk       manages and implements the scheme assists with supplier relationships maintains a register of cardholders' details and controls the issue and cancellation of cards handles any queries regarding the use of Purchasing Cards and liaises with Nat West. ensures users are appropriately trained and supported monitors the use of the cards and keeps credit and transaction limits under review

Finance Contact Lynne Rouse, Exchequer Accountant, ext 3840, FW15, L.Rouse@rhul.ac.uk Lynne will assist with any queries regarding financial reconciliation and payments, and any VAT queries. Payments staff will process the purchase logs.

Nat West Contacts The College has been assigned a Nat West Relationship Manager. Users should raise problems or queries with the Card Administrator as the principal point of contact with Nat West. Issue of Cards The Card Administrator will issue a Card to staff authorised by their Head of Department and the Finance Director to be a cardholder. The cardholder will be advised of the credit and transaction limits, and any other restrictions for their card, and will receive training in using it. The cardholder will sign a copy of the Cardholders' Responsibilities to indicate that they understand and agree to observe them. When cards are due to expire, a new card will be issued by the Card Administrator approximately 14 days before the expiry date of the old card. As the validity dates do not overlap, the old card should be used until the start date of the new card. If a replacement card is not received on time, the cardholder should contact the Card Administrator. Expired cards must be cut into pieces and disposed of.

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Departmental Purchasing Card Manual

Cardholders' Responsibilities Cardholders must:  keep their card securely at all times  never allow another person to use their card  keep within the credit and transaction limits agreed for their card  only use the card to procure goods and services on behalf of the College, never for personal or non-College purposes  follow the procedures in this Manual, including the deadlines stipulated for the transmission of authorised logs to Finance  inform the Card Administrator immediately of any change of details  on leaving College employment (or changing to a position in the College in which the use of a Purchasing Card is not authorised), hand their card directly to the Card Administrator, and witness that the card is destroyed  cut into pieces and destroy expired cards  in the event of loss or theft, immediately notify NatWest by telephone on 0870 6000 459 (this is a 24 hour, 7 day number) and inform the Card Administrator.

Declaration by the Cardholder and Authorisation to Use the Purchasing Card (to be completed for all new cardholders) I have read and understand the cardholders' responsibilities set out above and I agree to observe them. I understand that unauthorised use of my Purchasing Card shall be regarded as a breach of contract, which may result in the card being withdrawn and in disciplinary proceedings, and that the records will be subject to audit inspection: Employee signature Name (printed) Date

I authorise the issue of the Purchasing Card to the above:
Head of signature Department's

Name (printed)

Date

Finance Director's signature

Name (printed)

Date

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Departmental Purchasing Card Manual

VAT VAT is the most complex aspect of using Purchasing Cards. It is important that the College maximises its recovery of VAT and therefore this must be addressed head on. Direct and Partial Recovery The College’s “outputs” of teaching and research, and supporting activities, are in broad terms treated as VAT exempt activities. This means that VAT is not charged on our income (eg tuition fees) and that VAT on our expenditure has to be treated as a cost (expensed). However some of the College’s activities, including certain categories of research contract, are VATable. The College recovers VAT on the costs of these taxable activities in two ways: from direct recovery and from partial recovery. Direct recovery is initiated by separately coding the amount of VAT to a VAT recoverable code. For example for a research contract with a UK based company (eg BP) the contract is taxable (ie VAT is charged on the contract) and VAT on direct project expenditure is recovered in full. The VAT is not included in the normal expense code but is coded separately to a VAT recovery code on the project (under expense code 87805). In such a case two code lines need to be created in the purchasing card log, one for the expenditure net of VAT and one for the directly recovered VAT. As the College has a mixture of taxable and exempt activities it is called partially exempt. Under the partial exemption recovery a fraction of the VAT which has been expensed is treated as being indirectly related to taxable activities and is reclaimed. To quantify the amount of expensed VAT, ledger postings which include standard rated VAT in the cost are flagged. The value of the flagged items can then be summed and the amount of VAT included in them calculated. VAT and Purchasing Cards Suppliers may be "VISA capable", meaning that they accept VISA, or "VISA Purchasing Card capable". The shorter term VAT capable is used to mean that a supplier is VISA Purchasing Card capable. VAT capable suppliers use higher specification terminals which enable them to provide VAT information to VISA which is then produced on statements and is accepted by Customs and Excise as evidence to substantiate VAT recovery. For suppliers which are not VAT capable, original invoices are needed to support VAT recovery. The College procedure was initially to use only VAT capable suppliers to avoid the need to handle the extra paperwork, but this has proved to unduly limit the use of the cards, and there is now no such restriction. Cardholders need to establish which of their suppliers are VAT capable. They can do this with the College Head of Purchasing who has a list provided by Nat West. For suppliers which are not VAT capable a VAT invoice should be obtained for the purchase card transactions. (Note the monthly statements differentiate transactions between VAT capable and non-VAT capable suppliers, but obviously this is retrospective. Cardholders will quickly get to know which of their suppliers are VAT capable.) If you have any queries regarding VAT contact Lynne Rouse in Finance.

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Departmental Purchasing Card Manual

Retail Purchases Retailers will not normally be VAT capable and therefore VAT evidence is needed. There are special rules about this for retail purchases of £100 or less. In general, most receipts issued by retailers include the required information, ie the name, address and VAT registration number of the retailer, the time of supply, a description of the goods or services supplied and the amount payable, including VAT, for each of the VAT rates applicable. For purchases over £100 a full VAT invoice is required, and the supplier must give it to you if you ask for it. In addition to the details indicated above it needs to include the College’s name and address, as the customer, and an invoice number. Full details of this are available from Lynne Rouse, but basically if you are provided with a sales invoice by a reputable supplier you can assume it meets the requirements. Where the term VAT invoice is used in this manual, it includes other valid evidence for VAT recovery.

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Departmental Purchasing Card Manual

Using the Purchasing Card (See the end of this section for procedures for retail purchases.) When to use the Purchasing Card The Card is used for low value routine purchases, including using the internet, for booking conference places and to book travel. The purchase must be;  within the limits established for the card  for authorised College use only  for goods or services that do not require special terms and conditions  over the counter purchases up to £200 in value may be made by the cardholder in person.

How to make a purchase using the Card Staff in the department will give their requisitions to the cardholder, following procedures established within the department. These will include steps to ensure that good value is being obtained, and that the appropriate supplier has been chosen following established College procurement policies. Consortia preferred suppliers are to be used wherever possible. Staff must ensure that there are funds available for the purchase, and gain authorisation for those funds to be used for the purchase. Procedures may also be established to consolidate purchases from regularly used suppliers to reduce the number of individual transactions. The card is simply a means of payment and the use of it when purchasing goods and services does not negate the need to ensure College purchasing procedure is followed. The Cardholder will telephone the supplier and order the goods or services and provide information as follows:  advise the supplier that the purchase is to be made using the VISA Purchasing Card (the supplier may have established a different College customer account number for this) and quote the card number, expiry date, the cardholder's name, the College's (company) name and any other details requested  quote as an order reference the unique purchase log reference number taken from the purchasing transaction log  the supplier may ask for a "customer code" as well as an order reference, but this is likely to be the same field in their system. The customer code is a reference field up to 16 characters long that will appear on statements. Use the same reference as for the order reference above  request the goods or services and get confirmation of their availability and the total price including VAT and any other costs such as packaging or delivery charges, and confirm the delivery date  ensure that VAT exemption for medical research is applied to the transaction, if applicable (you may be required to fax an exemption certificate)  provide delivery details  for suppliers that are not VAT capable ensure that an original VAT invoice will be provided  ensure that any documentation sent, including an invoice, will be clearly marked as "VISA Purchasing Card Paid"

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Departmental Purchasing Card Manual

You may be asked for a security code when you use the card for purchases. This is the last three digits of the number found on the back of your card within the signature panel. Do not disclose the security code unless it is to enable a purchase you are making to be authorised. Although the normal route will be to order the goods by telephone, they may also be placed by fax or using the Internet (see below). Faxes should contain the same information as for telephone orders and should be signed by the cardholder. Care must be taken to safeguard documentation containing the card details, to prevent them from being misappropriated, and faxes should only be used with trusted sources using proven fax numbers. Purchase orders are not issued for Purchasing Card transactions.

Internet Purchases NatWest will refund losses occurring as a direct result of on-line fraud, but only if the cardholder has not been negligent. The following recommended practice should be observed when purchasing over the Internet:  always check the site being used is secure and will keep sensitive details safe. Pages requiring security, ie taking payment details and or passwords will have an “s” after http in the address bar with a visible padlock symbol in the status bar;  never buy from a company whose trading address is not featured on its web-site;  use only reputable companies;  always print a copy of the order confirmation in case problems arise;  always keep the passwords used online private. Further information can be found on http://www.oft.gov.uk/Consumer and on the web-sites of the major banks. You should ensure that the relevant VAT evidence is provided with Internet purchases as for other purchases.

Declined transactions If a transaction is declined the reason is probably that a restriction on the card is being violated (eg the credit limit) and the cardholder should refer this to the Card Administrator.

Updating the Purchasing Card Transaction Log The cardholder will enter the order details onto the Transaction log for every order placed using the card . See the instructions in the section below for this. Receipt of goods The details of the purchase will need to be notified to other staff in the department if the goods are not to be delivered to the cardholder. Departments will need to establish their own

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procedures for doing this, which may entail the use of internal requisitions or using a print out from the Purchasing Card log, so the delivery can be checked against what was ordered. Goods delivered will continue to be accompanied by a delivery note. The goods should be unpacked, checked and despatched to the end user and matched to the purchase using the requisition or Purchasing Card log. The delivery note and any other paperwork such as the VISA slip, must be passed to the cardholder who will update the Purchasing Card log to show that the goods have been received and retain the paperwork as back up. Supporting paperwork should have the purchase reference number clearly marked on it.

Problems with Supplies Discrepancies or other problems with the goods supplied should be advised by the Cardholder to the supplier immediately and the problems resolved. It is recommended that problems are channelled through the Cardholder rather than being raised by end users with the supplier directly, to enable the Cardholder to retain control of the transaction. If the supplier issues a credit on the card account, this should be entered on the log (see below) as a separate item.

Retail Purchases Retail purchases of up to £200 in value may be made by the cardholder in person. The cardholder must obtain the VISA slip and an itemised till receipt that clearly sets out the goods received and a VAT invoice for purchases above £100.

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Departmental Purchasing Card Manual

Completion of the Purchasing Card Log and Monthly Reconciliation Procedures General The Purchasing Card log is kept by each cardholder and is used to record purchases made using Purchasing Cards and the account codes to which the purchases should be charged. The log is reconciled to the monthly card statement, the expenditure is authorised and the log is sent to Payments to process in the financial ledger. It is recommended that the log is maintained as a multi-sheet workbook, with a sheet set up for each month's worth of transactions. The month will run roughly from the 13th of one month to the 12th of the next, as 12th is the normal statement date. A "blank" sheet should be retained so that a clean format is available. The log is issued by the Finance department with a common format for all users. Changes to the format, if agreed, need to be made by Finance. For an example of the blank log please click here. Completing the Log The fields of the log are completed as follows: Header fields Cardholder Department Card No Transaction Line Fields Purchase Ref

Enter the name of the person who holds the card Enter the department of the cardholder Enter the number of the card that the cardholder has

This is a unique number which identifies the purchase and is the equivalent of the order number. It is expected that suppliers will quote this on delivery and other information they generate associated with the supply, and the reference should be quoted when the purchase is made. The format of the reference is DEP/IN/nnnn, eg FIN/GR/0012, where the first three characters identify the department, the next two after the first slash are the forename and surname initials of the cardholder and the last four after the second slash is a sequence number that the cardholder generates. The sequence number can be kept going by using the drag down fill method in the spreadsheet.

Date of Transaction The date of the purchase, entered in the dd-mmm-yy format, i.e. 19-Sep-05 Supplier Supplier Ref The name of the supplier from which the purchase is made This is an optional field. The supplier may allocate its own reference number to the purchase and this can be recorded here. Alternatively the name of the person at the supplier taking the

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order can be entered. Dept Comment A free field for the department to use. This could be used for such purposes as recording the person in the department making the requisition or to keep a note of problems with the purchase. A suitable description of the purchases that have been made. It is important to remember that this may be your only record of the purchase and you may subsequently need to refer back to it. Unless there is a detailed written requisition to which you can refer, it is in your own interest to ensure that you insert an accurate description. To separate items it is recommended that a semicolon is used. The spreadsheet cannot insert the equivalent of carriage returns in the cell, and it is better to avoid dividing up a single transaction over multiple rows unless it is a multicoded transaction (see below). This is used to track the status of the purchase as follows: O = outstanding which is the initial status when the purchase is made (assuming that it is for delivery) P = Part delivered - this situation should not in theory occur because the card transaction should not be accepted for goods that cannot be delivered at that time Q = Query status - eg for short deliveries or damaged goods - the Dept comment field may be used to describe this further C = Complete - ie all goods and services purchased have been delivered and accepted. The centre, fund and expense codes for the purchase. In order to post the log successfully into the ledger, there should be a separate line for each account code which is to be posted to. See the instructions below on inserting additional lines for a purchase. The amount to be posted against the account code for the purchase. This is the value of the transaction. This defaults (through a preentered formula) to the account code value. Where a transaction has been split into more than one row for multi-coding, the transaction value column should show only one (total) amount for the transaction. Therefore in the Trans £ column delete the formula in the second and subsequent rows of the transaction and modify the formula in the first row to sum all the account code values for the transaction. VAT fields See the section above for information about VAT and to help

Description of Purchase

Status

Ctr Fund Exp

Account Code £

Trans £

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you understand how to complete these fields and the reasons for the procedures. VAT p/rec This field is used to indicate whether VAT can be partially recovered from the purchase. Enter a Y if it can and an N if it cannot. The VAT is partially recoverable if: (a) the amount entered in the Account Code value column includes VAT at the standard rate (and at no other rate); and (b) we have VAT evidence to support the VAT recovery. If the supplier is VAT capable the monthly statement will provide this evidence, otherwise a VAT invoice is required. Note under (a) that if direct recovery of VAT is being made and the VAT is therefore coded directly to a VAT recovery code (with an expense code of 87805), then an N should be entered for all the rows for that item. For direct recovery the VAT evidence in (b) is also required. VAT capable VAT invoice Enter a Y if the supplier is VAT capable, otherwise enter an N If the supplier is not VAT capable and VAT is being recovered directly or partially, a VAT invoice is required. Enter a Y here if one has been received, otherwise leave the field blank. Leave the field blank if the supplier is VAT capable. This field is left blank until a statement is received which includes the transaction. When a statement is received it should be matched to the log and the statement date, eg 15-Dec-00, should be entered in this field for each matching row. Where a transaction has been split over multiple rows each row should have the statement date entered against it.

S/m Date

Inserting Extra Rows If all the rows in the spreadsheet above the blue line labelled "to continue insert rows here" have been used, click on that blue row and insert rows above it. This will ensure that the column totals continue to compute correctly and that the inserted rows have the correct cell formats. For the inserted rows insert a purchase reference and the formula to make the transaction total equal the account total. Where an extra row is to be inserted to multi-code a transaction, insert this above the next transaction row and copy in the transaction reference and the total transaction formula from the previous row. (As indicated above, where VAT is fully recovered, the VAT on the invoice is coded separately and an extra row is therefore required in this case.) The purchase references should then be sub-referenced /1,/2 etc for each of the lines (eg FIN/GR/0010/1 and FIN/GR/0010/2). If a row needs to be inserted to create a credit item for returned goods, then references in the format FIN/GR/0010/1 and FIN/GR/0010/R may be used for the first transaction and the return credit respectively. For additional rows all the columns should be

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completed, but departmental comments may not need to be repeated and purchase descriptions may need to be considered so it is clear what the total purchase comprises.

Month End Procedures Statements for all holders are sent centrally to Finance and separately to individual cardholders by Nat West. On the 12th of each month individual cardholders will receive an email alert from Nat West informing them that their monthly statement is ready, holders can then log on to Cards Online and down load their statement. Cardholders need to agree them and get them authorised. Check the name of the worksheet tab (eg 15-Dec-00) is the correct name for the statement date and amend it as necessary. The items on the statement should be agreed (ticked off) to the items on the log and for matching items the statement date should be entered in the log (see above). Where there are discrepancies between amounts or due to items appearing on the statement not on the log, these should be investigated and queries raised with the supplier. The posting to the ledger must match exactly to the amount charged to the College's bank account, ie to the statement, and therefore the log should be amended to agree to the statement. Any discrepancies that require amendment by the suppliers should then be carried over as extra unmatched lines in the log to the next card statement. Having matched off the items on the log it should be sorted on the Statement Date field (primary) and then the Purchase Ref field (secondary), to bring all the matching items for that statement together at the top of the schedule. A new sheet should then be created by copying the current one as a new sheet. Amend the new sheet's worksheet tab name to reflect the expected statement date for the next statement (eg 15-Jan-01). On the new sheet delete the items matched to the previous statement to leave only the outstanding items. On the sheet for the current statement delete the rows for the outstanding items. The Totals of the Account Total and the Total Trans columns on the current statement sheet should agree to one another and to the value of the transactions on the statement. If this is not the case the reasons should be investigated and the log corrected. The statement identifies which items are from VAT capable suppliers and which are not. The VAT columns in the log should be checked to the statement to ensure they are consistent and the cardholder should collate the VAT invoices which are required as evidence in the same sequence as the log, ensuring the purchase reference is written clearly on each invoice. Use of the Purchasing card for expenses which fall under the College’s Travel, Subsistence and Personal Expenses Policy must comply with this policy. If the log includes entertainment, it must record the purpose of the entertainment, the number of people attending from each organisation and the organisation’s name, and give for each member of College staff their name and role in the context of the business relationship with the external organisation(s). If the cardholder is authorised to make cash withdrawals using the card, these are only permitted on overseas business travel for foreign currency. The log should record the £ sterling equivalent of the withdrawal and a separate expenses claim must be submitted for the

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use of this cash, following the procedures set out for advances and cross-referenced clearly to the log. The reconciled log agreeing to the statement should then be printed out and attached to the statement and the supporting documentary evidence for the purchases (delivery notes, VISA slips etc). The cardholder should sign the log and then it should be authorised by a separate authorised signatory in the department. The authoriser should have line management responsibility for the cardholder and no individual transaction on the log should exceed the signing limit of the authoriser. The person authorising the log needs to check that the statement and log agree and are consistent, and that transactions listed are valid purchases for College business. Supporting documentation should be reviewed to ensure it is adequate and supports the entries on the statement and log. If the log includes travel and related expenses of the authoriser (e.g. air fares or hotel reservations), those items should be highlighted and the line manager of the authoriser should also sign the log.

The submission to Finance is in two parts: an electronic version is required to create the ledger posting, and the authorised hard copy is needed together with the VAT invoices for non VAT capable suppliers. (a) To submit the electronic version e-mail the file to the Payments Office using the e-mail address “Purchasing-Card-Logs” (this is a shared address that is accessible to staff in the Payments Office). It is helpful if the file sent can contain only the sheet for the relevant month, and the filename can identify this (eg PC_GR_15Mar02.xls). (b) The authorised log with the original invoices of non VAT capable suppliers should be sent to the Payments Office. For expenses which fall under the College’s Travel, Subsistence and Personal Expenses Policy supporting original invoices and receipts, as set out in the Policy, should also be sent to the Payments office. The remaining documentation should not be sent to Payments but should be retained centrally in the department with the VISA statement for a period of two years following the end of the most recent accounting year to which they relate. The electronic and hard copies of the log need to be sent to Payments within 5 working days of receiving the statement to ensure the transactions are processed in the accounting period in which the statement date falls.

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