Purchasing and Business Services Manual (PUR)

Effective: 7/1/1980

Revised: 1/19/2011

PUR 602–04: Prepayment of Purchase Orders and Contracts

Purpose

To establish guidelines for prepayment of purchase orders and contracts

Sources

Arizona Statutes

University policy

Policy

Prepayment of purchase orders and contracts should not occur unless it is standard industry practice or unusual/extenuating circumstances exist. Prepayment may be acceptable, however, for:

1. purchases under $5,000 made via one of the university’s small dollar purchasing methods
2. subscriptions, where usual industry practices require payment in advance, but not to exceed three years
3. memberships in professional associations, where such memberships have demonstrated value to the university
4. equipment maintenance services, where such services are performed within the budget period, except that if the service begins in July, payment may be made late in the prior fiscal year
5. software maintenance and upgrade services, where such services are performed within the budget period, except that if the service begins in July, payment may be made late in the prior fiscal year
6. registration fees required in connection with attendance at conventions, conferences, and official meetings

   and

7. Purchases other than the above for $5,000 or more for unusual or extenuating circumstances, as approved by both the director of Purchasing and Business Services and assistant director (Accounting Services) or associate director or above of Financial Services.

A prepayment authorization form can be downloaded from Financial Services.

Note:

Performance bonds or other guarantees may be required if prepayment is approved.

If the vendor fails to provide the services or goods after any prepayment, the paying department will incur the loss.

In some cases, vendors who request prepayment will negotiate the receipt of progressive payments as services and/or product deliveries are made to ASU instead of a single lump sum prepayment.

Cross-Reference

For information on performance bonds, see PUR 501–03, “Bid Security and Performance and Payment Bonds.”

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