Best Practices: Departmental Sales and Services

BestPractices

Departmental Sales and Services

Goals

To provide information and resources on how to conduct departmental sales/services in compliance with University policies and procedures.

Why are these best practices?

Ensures compliance with University policies and procedures.
Establishes key internal controls over the departmental sales/services activities.
Enables the departmental sales/services activities to be performed in a consistent and efficient manner.
Provides management tools to monitor and evaluate current operations.
Ensures compliance with Federal Uniform Guidance, where applicable.

Best Practices

Billing rates should be set to fully cover costs and to break even. Other considerations when setting rates, for external customers, include an evaluation of the competitiveness of open market rates and rates charged by other university units and/or peer and aspirational institutions providing similar services. Billing rates should be reviewed at least annually.
Retain documentation related to billing rates in accordance with the USG Record Retention Schedules. This includes supporting documentation for how billing rates are calculated and periodically reviewed.
Ensure that billing rates are applied uniformly to customers/similar customers if internal and external customer rates are established.
Perform a financial ‘break-even’ analysis of the sales/service activity at least annually to determine if the billing rates charged are reasonable and cover all necessary costs.
Adjust billing rates as necessary. Ensure costs charged to DSS activities are reasonable and necessary to the operation of the activity. This analysis should be used by management as a tool to monitor and evaluate current operations.
Prepare an annual budget for the sales/service activity. Consider a historical analysis of the sales activity if applicable and estimate revenues and expenditures. Analyze projections periodically throughout the year and adjust the budget as needed.
Independently and timely reconcile revenue received. For example, reconcile event revenues posted to the general ledger with program rosters at the conclusion of each event.
Establish written Standard Operating Procedures related to the sales/service activity to ensure consistency in operations. For example, customer billing procedures or accounts receivable follow up procedures should be documented.
Ensure that revenue is properly classified as deferred (unearned) revenue or carry forward (earned) revenue at fiscal year-end.
Establish an internal policy and guidelines for documenting the planned use of carry forward funds annually and the related management review process.
Utilize the functionality of the PeopleSoft AR/BI module to invoice external customers and track aged receivables. Request that customer checks are sent directly to the University Lockbox to eliminate the risks inherent with handling cash/check receipts at the unit level.
Document all collection efforts and customer communications to provide verification that the University prescribed minimum collection efforts on past due accounts have been met and to help alleviate any customer disputes.
For service centers subject to Federal Uniform Guidance, there should be no discounted rates, and the lowest published rate (break even rate) is applicable to federal grants.

Examples

Unit level Carry Forward Funds Policy that provides guidelines for documenting and internally reviewing the planned use of carry forward funds to ensure break even.
Standard Operating Procedures for accounts receivable follow-up procedures.
Standard Operating Procedures for documenting and periodically reviewing billing rates.