PaymentA purchase transaction is complete only after the goods or services have been received and the supplier has been paid. When a Purchase Order is issued, the department/school assumes responsibility to make sure the vendor is paid within an appropriate period of time. By issuing a Purchase Order through NUFinancials in advance of the purchase, funds are properly encumbered and set aside to pay these obligations. The encumbrance is not a contract, but ensures that the required funding is available. Accounts Payable pays invoices for the University including those for external vendor purchases, employee reimbursements, and payments to U.S. independent contractors.
Vendors are instructed to send invoices directly to Accounts Payable for proper processing. This is the best way to ensure invoices are paid in a timely manner.
NU's preferred method for receiving invoices is mail. Accounts Payable does not accept faxed invoices. Vendors can send their invoices in PDF format to Accounts Payable via e-mail to firstname.lastname@example.org. Note that many of the vendors included in iBuyNU will send their invoices to NU electronically.
In order to maintain a good payment record and to encourage the proper use of Purchase Orders, Accounts Payable will give the highest payment priority to original invoices supported by properly issued and approved Purchase Orders, and confirmation of receipt of goods and services. The goal for processing payments is within five (5) days of receipt and confirmation of properly completed paperwork in Accounts Payable.
Alternative Payment Method Guidelines
PRS has identified some exceptions for certain transaction types that are considered low dollar and low risk, where a formal Purchase Order may not be as necessary. These guidelines are only meant to clarify payment options for certain services: they do not change any other Northwestern or department/school policies and procedures. Please review the Alternative Payment Method Guidelines (PDF).
Payment Terms & Penalties
Every vendor's invoice is due for payment within some period of time after it is generated. This is normally computed as the number of days after the invoice is received. The University's standard for payment of vendor invoices is within thirty (30) days after receipt of the invoice. This is referred to as payment terms of 'NET 30.' The University must pay its obligations in a timely manner. Failure to comply with payment terms often leads to:
- Credit hold, where a vendor refuses to fill any subsequent orders until the outstanding obligation has been paid.
- Less favorable terms, where a vendor charges a late payment penalty or even demands payment in advance.
- Higher prices on future purchases.
A vendor may impose one or more of the above actions on the entire University even if the dispute involves only one department/school within the University. The Accounts Payable department does what is necessary to prevent any of the above from happening while acting within sound financial controls. Departments/schools must ensure that purchases are properly accounted for in NUFinancials to enable the invoice to be paid once it is received by Accounts Payable.
The 90-day Rule
All University expenditures and costs should be charged to their proper source of funds within 90 days of their occurrence. Expenditures and costs over 90 days will be posted only on an exception basis. Processing of all reimbursement requests, on both sponsored and non-sponsored accounts, should adhere to the 90-day rule. Departments/schools must use the 90 Day Exception Form to process transactions that are more than 90 days old.