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Business and Financial Policies and Procedures

7.3 Purchase Orders

Procurement Systems

The University offers three systems that can be used to purchase commodities and contractual services from external vendors: iBuy, Banner, and the MasterCardTM University Procurement Card (P-Card).

  • The Office of Business and Financial Services (OBFS) recommends using iBuy Requisitions, or P-Card, for most purchases up to $4,999.00.
  • Purchases at or more than $5,000 must be made using either an iBuy or Banner Requisition Form. Banner is the system of record for iBuy Purchase Orders.
  • Departments may use iBuy or Banner requisitions:
    • for purchase requests starting at $5,000
    • for all P-Card prohibited commodities
    • when the vendor does not accept the P-Card for payment

When submitting requisitions, departments are required to follow existing policy regarding substantiation of quotes and competitive pricing (see Section 7.2, Purchase of Goods and Services).

Banner Financial System

The Banner Financial System is a web-enabled system that provides online requisitioning, issuance, and tracking of Purchase Orders to external vendors. Banner is the financial system of record for the University. (For Banner Financial System documentation, training registration, training, and job aids see OBFS Banner Alerts and Resources and the OBFS Web site.)

iBuy Procurement System

iBuy is a web-based system for purchasing goods and services. iBuy provides online requisitioning, issuance, and tracking of purchase orders to external vendors (vendors not within the University), combining Internet technology with procurement best practices to simplify the purchasing process and reduce costs. iBuy is the University's preferred purchase requisition method.

For information about iBuy training or job aids see "Training and Resources" on the iBuy website.

P-CARD Procurement System

See Section 7.6, P-Card.

Exceptions to Purchase Requisitions

A Purchase Requisition is not required for the following:

Regular Purchase Orders

A Regular Purchase Order is issued for a one-time procurement of a commodity or service. When the commodity or service is delivered and paid in full, the order is complete. The Purchasing Division issues these orders based on a purchasing requisition having been submitted by a department to the Banner or iBuy systems. iBuy requisitions to external vendors, when processed, become Regular Purchase Orders in Banner, the University's financial system of record.

Regular Purchase Orders may be issued:

  • For a defined list of items with an accurate quantity and unit price, typically for a one-time payment, although multiple payments may occur when partial quantities of an order are shipped and invoiced.
  • For purchases involving specific multiple-year agreements, and either a single CFOAPAL or limited CFOAPALs with a consistent distribution (i.e., for the entire contract period).
  • For purchases of Fixed Assets with a unit price of $500 or more.
  • For leases, whether they are for a single year or multiple-years; and whether they provide for scheduled payments or individually-invoiced payments.

Invoices received for payment against a Regular Purchase Order must be paid from the CFOAPAL(s) assigned to it when it was established. Departments cannot change CFOAPAL(s) for invoices received against Regular Purchase Orders.

NOTE: There is currently no Receiving function in the iBuy system. Refer to the section below on "Banner Receiving" for information about the Receiving process in Banner.

Standing Purchase Orders

Standing Purchase Orders in Banner may be issued for purchases that require no quantity or unit price (for example, miscellaneous lab supplies "as required"). The Standing Purchase Order has a commodity description and expenditure total, but no quantity total. iBuy does not provide Standing Purchase Order functionality at this time.

The Standing Purchase Order permits departments to place releases for commodities or services on an as-needed basis, via phone or other contact, without having to submit additional requisitions through the Purchasing Division. Since quantities are not specified, and the encumbrance is based on total dollar amount, departments do not have the option to request a Receipt against Standing Purchase Orders. Invoices received against Standing Purchase Orders are imaged, and payments are made according to the payment terms of the orders. Departments can access imaged invoices after payment, for reconciliation.

Individual invoices received for payment against Standing Purchase Orders must be paid from the CFOAPAL(s) assigned to it when it was established. Departments cannot change CFOAPAL(s) for each invoice received against a Standing Purchase Order. Although there is no Receiving for Standing Purchase Orders, any individual invoice in the amount of $20,000 or more requires an email approval prior to payment, in lieu of Banner Receiving.

Limitations of a Standing Purchase Order:

  • Because a Standing Purchase Order indicates no quantity, departments do not have the option to request "Receiving" for these orders.
  • Fixed Assets should not be purchased using a Standing Purchase Order.

Blanket Purchase Orders

A Blanket Purchase Order is a master document that permits tracking of multiple transactions related to a specific vendor and/or agreement. A Blanket Purchase Order may be used to record a multiple-year agreement or contract. A Blanket Purchase Order requires no CFOAPAL(s) at all, therefore does not encumber funds. Because there are no CFOAPAL(s), invoices are not paid against a Blanket Purchase Order.

A Regular Purchase Order must be issued against the Blanket Purchase Order, referencing the Blanket Purchase Order to identify CFOAPAL(s), establish an encumbrance, and make payments. Blanket Purchase Orders are used at the discretion of the Purchasing Division as an internal tool, to manage multiple-year agreements, such as leases. Blanket Purchase Order numbers are not be given to vendors, since payments cannot be made against them.

Multiple-Year Agreements

Regular Purchase Orders

If a Regular Purchase Order is generated, the terms of the contract should be outlined in the body of the order, although the order is issued for the current fiscal year dollar amount (expenditure). This allows the funds for the current fiscal year to be encumbered.

At the beginning of subsequent fiscal years, departments must submit a new requisition so that a new Regular Purchase Order can be issued. This new requisition can be created by copying the current year's Regular Purchase Order into a new requisition, updating (if applicable) the commodity/service information, and changing the dollar amounts and transaction date, to encumber the funds for the new fiscal year. The new Regular Purchase Order always references the order number from the previous fiscal year.

Standing Purchase Orders

If a Standing Purchase Order is generated, the contract terms should be outlined in the body of the order, although the order is issued for the current fiscal year dollar amount (expenditures). This allows the funds for the current fiscal year to be encumbered.

At the beginning of each new fiscal year, departments must submit a new requisition that references the previous Standing Purchase Order number in "Document Text." Purchasing then creates a new Standing Purchase Order to encumber the next fiscal year's expenditures.

Banner Receiving

When creating a requisition in Banner, departments do have the option to choose whether they want "Receiving." NOTE that when creating a Banner requisition of $5000 or more, departments must select "No Receipt Required," or the Banner system will default to "Receipt Required."

There is no Receiving function in iBuy at this time. However, when University Payables receives an individual invoice of $20,000 or greater on a Regular Purchase Order, and the order indicates a status of "No Receipt Required" or "Unspecified," the Banner Financial System will require a Banner Receiving Document (FPARCVD), in order for the individual invoice to be matched, and payment made.

Should this situation occur, the Receipt Required invoice transaction will appear on the Receiving Report which is published daily on the OBFS website for departments to review and act upon. (See OBFS Banner Alerts and Resources and the OBFS Website for information about Banner Receiving, including training and job aids.) The Banner Receiving Module contains the forms used in the process of Receipt, Adjustment, and Return of Goods and Services on "Regular Purchase Orders."

The Banner "Optional Receipt Required" allows payment of an invoice only after matching invoiced items are correctly received. The Invoiced and Received commodity item quantities must match in order for payment to be made.

Three-way Matching

Information from a packing slip, or other receiving document from the vendor, should be entered into the Banner "Receiving Goods Form" (FPARCVD). The Banner Receiving function requires an exact match of Commodities and Quantities on the "Regular Purchase Order," the "Receiving Goods Form," and the "Banner Invoice." If the numbers do not match, the Banner Receiving process - referred to as Three-way Matching, or 3-way Matching -- cannot be completed.

The Three-way Matching process may delay payment of invoices that require an electronic receipt, when departments fail to complete Receiving requirements. Invoice transactions indicating "Yes, Receipt Required" are not submitted for payment until a matching "Receiving Goods" form is completed.

 

Please send questions regarding this policy manual to OBFSPolicies@uillinois.edu.

Last Updated: April 14, 2009 | Approved: Senior Associate Vice President for Business and Finance | Effective: April 2009

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