PO Process

Purchase Order FAQs

This page is designed to guide you through the process of understanding and obtaining a purchase order.

 

When do you need a purchase order?

You need a purchase order for all purchases. A PO must be obtained before placing an order; unauthorized purchases may not be reimbursed.

 

Why do you need a purchase order?

A purchase order allows FHU to track who ordered the products or services. This helps us if the order is sent to the wrong department and allows us to bill the correct department when the invoice/bill arrives.

 

Obtaining a Purchase Order

All purchase orders are to be obtained through Paramount Workplace. When all information submitted on a requisition is correct an approved purchase order will be issued.

 

Account to be Used

In order for spending to be properly documented and monitored, it is essential that all charges be made to the appropriate account. Charges should always fit with the nature of the account to which they are charged. Except for special purchases described below, it is not acceptable to charge an unrelated expense to an account simply because it has remaining funding. For example, if the facilities account for service contracts was depleted and funding was still available in the facilities utilities account, it is not acceptable to charge payment for a pest control contract to the utilities account. Budget transfers may be used, as described below.

 

Special Purchases

A special purchase is any purchase that does not fit into the normal (appropriate) use of an account currently available to the requester. For example, a requester would like to buy a piece of furniture, but his/her only account is a supplies account. For a special purchase to be considered, a Special Purchase Approval Form should be submitted.  f approved, Purchasing will use the Special Purchase Approval Form as a basis for generating a purchase order.

 

Operating Within Budget

It is the responsibility of each person submitting a requisition to verify that adequate funds are available in the budgeted account to which that requisition will be charged. If adequate funds do not exist in the budgeted account to which the requisition is to be charged, no additional spending from that line item will be allowed. If you have any issues or questions regarding this, please reach out to the Controller.

 

Variance Between Invoice and Purchase Order

The amount requested in a requisition for a purchase order should always be a good-faith estimate of the cost of the product or service. If the invoice that is received matches the purchase order amount exactly, the invoice will be paid and the purchase order automatically closed.

Some variation between the approved purchase order and invoice is understandable. As long as that variance between the purchase order and invoice is $50 or less, Accounts Payable will adjust the purchase order to match the invoice, the invoice will be paid and the purchase order will be closed.

If the variance between an invoice received by Accounts Payable and the associated purchase order is greater than $50, Accounts Payable will immediately notify the approver(s) of the variance.  It is the approver’s(s’) responsibility to determine the reason for the variance. The approver(s) will provide written notification to Accounts Payable whether an overcharge exists or not. If it is not an overcharge, Purchasing will adjust the purchase order to match the invoice, the invoice will be paid, and the purchase order will be closed. If it is an overcharge, Accounts Payable will wait for a corrected invoice before proceeding.

Except as stated in this section purchase orders may not be changed after they are created. If a purchase order is not going to be used, the requester is to call Purchasing and have the purchase order canceled. Once a purchase order is issued, its function is limited to the parameters of that purchase order.


Payment of Invoices

All invoices supported by and matching approved purchase orders that are delivered to the Accounts Payable Department for Freed-Hardeman University will be paid within the appropriate payment terms.


Purchase Orders Charged to Another Department

Occasions may arise when funds are requested outside of the requester's budget accounts. For example, the Library may occasionally need to order paper for student printing that is paid for by the IT Department. When such occasions arise, the requester must contact the administrative assistant/secretary of the department where the funds are budgeted and ask that person to submit a requisition for the purchase order. When the purchase order is received the purchase order number will be given by the administrative assistant/secretary to the person in the other department who can then use it to place an order.

It is never appropriate for someone to submit a requisition for a purchase order that will encumber an account outside of their department.


Vendors

A list of approved vendors is maintained by Purchasing. Each of these vendors has been notified that an approved purchase order is required before providing any goods or services to be charged to a university account. Request for adding a vendor may be submitted through Purchasing. 

Before payment can be made to any vendor, the vendor's Tax ID number or Social Security number must be on file with Purchasing along with W-9 and certificate of liability insurance.

Vendors are to put the purchase order number on all invoices and submit those to the Accounts Payable Department at Freed-Hardeman University.

All purchases over $1,000 will require multiple quotes (preferably three) before submitting a requisition. All quotes will need to be attached in the requisition process. The chosen vendor will need to be identified within this process with a short summary documenting why they were chosen.


Duration of Purchase Orders

Purchase orders are intended to be short-term in nature. Except for standing purchase orders described in 5.1.14, purchase orders are normally expected to be closed and their respective invoices paid within 30 days of creation.

It is the responsibility of the budget originator whose account the purchase order encumbers to review outstanding purchase orders at least monthly to make sure purchase orders that should have been closed do not remain open. It is the responsibility of Purchasing to audit outstanding purchase orders to make sure they are closed in a timely manner.

 

If you have any questions at any point in the purchase order process, please contact the Purchasing Office at x6916.