Invoicing Sponsors & Receiving
Payments
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Introduction - Invoicing Practices and
Collection of Cash
Every sponsored project needs to have language in the agreement that explains
- how sponsor plans on paying for the agreement
- where sponsor wants University bills to be mailed and who at the agency can be called for questions regarding billing format
- who at the sponsoring agency is responsible for making
payments: information should include name, address and phone number and
email address
- what type of information is to be included on billing
Research Accounting has the responsibility of billing
all sponsors except pharmaceutical companies. Billings are done through
letter of credit drawdowns three times a week for many federal agencies.
Billings are also done for installments and cost reimbursable agreements
on a monthly basis.
Federal agency contracts, state and local governments and foundations and
companies are billed through the Research Accounts Receivable system depending
on the terms of the sponsored project agreement. Monthly, automatic installment
invoices are printed the third business day of the month and automatic cost
reimbursable invoices are printed the day after month end close. Once invoices
are reviewed
by the Research Accountant in Research Accounting they are mailed directly
to the sponsoring agency. Should invoices require the PI's signature, the
invoice is sent to the department. Once the PI signs, the invoice is sent
back to
Research
Accounting, signed by the financial officer for the institution and mailed.
All payments from sponsors are mailed to the Research Accounting lockbox
at:
University of Pittsburgh
P.O. Box 371220
Pittsburgh,
PA 15251-7220
Cash receipts are delivered to Research Accounting
daily where projects are
identified for proper
cash application. Any unidentifiable payments are temporarily placed
in the Research Accounting holding account.
Departments managing pharmaceutical projects (project numbers
90XXXX) send invoices directly to the pharmaceutical companies as
milestones are
reached
in the studies. Payments are generally sent to the Research Accounting
lockbox address listed above. In some instances departments receive
payments and
hand deliver to the Research/Cost Accounting office within 24 hours
of receipt.
The Research/Cost Accounting Sponsored
Projects Billing Process
Preferred method of payment from sponsors - when writing an agreement with a sponsor, most desirable payment methods in order of preference are as follows:
- Full payment at the beginning of project
- Installment payments either monthly or quarterly
- Cost reimbursable monthly payments
- Cost reimbursable quarterly payments
Receiving as much funding ahead of time as possible reduces the financial burden on the University for financing research.
Installment Invoices
Sponsor agreements that are paying in installments are set up in the RA Research Accounts Receivable (RAR) system with method of payments 20, 21, 41, or 51. A schedule is set up for the installment payment times in order for an invoice to print timely. The method of payment code is listed on the RPAR105 Account Activation report mailed to the department at activation time.
When the invoice is generated, an automatic journal entry is made to debit subcode 1200 on the project to record the receivable and to credit subcode 4XXX to record the revenue. This information is listed on the monthly financial report RPAR001.
Cost Reimbursable Invoices
Sponsor agreements that are paying on a cost reimbursable monthly or quarterly schedule are set up in the accounts receivable system with method of payments 30 or 31. Invoices calculate and print according to the set schedule. The method of payment code is listed on the RPAR105 Account Activation report mailed to the department at activation time.
When the invoice is generated, a journal entry is made to debit subcode 1200 on the project to record the receivable and to credit subcode 4XXX to record the revenue. This information is listed on the monthly financial report RPAR001.
Pharmaceutical Billings
The 90XXXX pharmaceutical study (drug studies) projects are set up with a method of payment 22. The total amount of expected funds for the study are budgeted into subcode 8120 unless some cash is received upfront. The amount of upfront cash is budgeted in expense categories and the remaining expected budget is placed in subcode 8120.
The University department bills the pharmaceutical company as milestones
are met in the study. Check payments received by the departments must
be delivered to Research Accounting within 24 hours of receipt. When cash
is received, it is deposited to subcode 4342 of the project. A budget
modification is forwarded to the Research/Cost Accounting office crediting
subcode 8120 and debiting expense subcodes to redistribute budget.
A department can determine monthly how much cash has been recorded
in the University financial system by reviewing the dollar amount in subcode
4342 of the projects monthly RPAR001 report.
Letter of Credit Projects
Federal government projects paid through letter of credit are set up
with method of payment codes 05 through 19 depending on the agency.
A process is run three times a week to calculate expenses that can
be drawn from
the federal government. Every time this process is run, a credit to
revenue subcode 4300 is posted on the project account.
The Research/Cost Accounting Cash Collection Process
Agencies are given a rating from A to D, when invoice schedules are
set up, according to their payment history with the University of Pittsburgh.
Collection letters print out every Friday in Research Accounting according
to set time frames
if payment
has not been made on a particular invoice. As many as three collection
letters will generate for one invoice that has not been paid over a
period of time.
The letter generation for each rating is as follows:
| Rating |
Letter 1 | Letter 2 | Letter 3 |
| A | 90 days | 120 days | 180 days |
| B | 90 days | 120 days | 150 days |
| C | 70 days | 110 days | 150 days |
| D | 40 days | 61 days | 91 days |
Letter 1 is mailed to the sponsor.
Letter 2 and letter 3 are mailed to the sponsor and a copy is sent
to the PI and the department administrator. Research Accounting
depends on the department PI
and department administrator to help provide pertinent information
to the Research Accountant to assist in the collection effort.Assistance
may include contacting key personnel at the sponsoring agency as
to why
payment has not been received, informing Research Accounting of
problems or deliverables that have to be met before payment will
come, or informing Research Accounting of
any sponsoring agency financial problems.
Research Accounting has a staff person dedicated to collecting on unpaid
invoices over $30,000 and over 90 days old. All Research Accountants work
on collection of unpaid invoices under $30,000 and over 90 days old.
Serious collection problems are referred to legal counsel when determined
appropriate by Research Accounting.
Expenses incurred on uncollectible invoices due to lack of technical
reports from the department PI will become the responsibility of the PI's
department.
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