Finance Services

Internal trading

The purpose of this guidance is to set out the parameters and overall principles that make up the internal trading environment.

Internal trading is the term used for the multitude of internal transactions, which take place throughout the University. Essentially, one area, whether it is an academic school or a professional service, charges another area for services performed, goods supplied, work carried out etc. This can range from major repairs and maintenance charged by Property Services to individual cups of coffee charged by Campus Services.

Key principles of internal trading

Effective where a service is available internally or a service area acts as an intermediary to an external supplier.
Administratively efficient processes.
Minimal bureaucracy.
Open and trusting environment.
Professional approach.

Scope of internal trading – customers

The following parties are regarded as internal customers for the purposes of internal trading:

Schools and associated centres located on any University of Exeter campus.
Professional services located on any University of Exeter campus.

The following are not internal customers for the purposes of internal trading and should be treated as any other external customer:

Exeter Enterprises.
The Guild of Students.
Tremough Campus Services (TCS) and Tremough Development Vehicle Limited (TDV Ltd).
Any other associated company.
Members of staff.
Students.

Peninsula College of Medicine and Dentistry (PCMD)

There are specific rules in relation to PCMD. In certain circumstances internal recharging is allowed.

Responsibilities

Customer

Provide an official purchase order number or other unique reference.
Provide either an internal sales ledger customer account or a general ledger cost code as appropriate to the agreed method of charging.
Inform the supplier in writing of any amendments to original orders places (email acceptable).
Accept an estimate on the basis that the final charge may vary.
Process internal sales invoices within 30 days of invoice date.
Authorise recharges within 30 days.
Follow the internal trading dispute policy (below).

Supplier

Use the customer’s reference on all invoices or recharges.
Charge only the code supplied.
Inform the customer in writing of any changes to previously agreed charges (email acceptable).
Where estimated charges are agreed, provide a clear breakdown of the final charge.
Invoice or recharge within 30 working days of supply.
Where a charge has been made in error, process a credit note or reverse the charge within 30 working days.
Follow the internal trading dispute policy (below).

Finance Services

Manage the internal sales ledgers.
Process direct recharge journals.
Advise on appropriate coding.
Advise on automation of recharges.
Review regularly contact for customer accounts.
Oversee unresolved disputes.
Provide training and co-ordination.
Attend Internal Trading Consultation Group meetings.

Placing internal orders

Requests for internal supply of goods or services should follow the procedures specified by internal service providers. Where the provider issues an invoice for the particular service, an official APTOS order is required, the agreed procedures of the Academic School or Service area need to be followed.

Coding of internal transactions

Internal transactions have no impact on the overall financial position of the University and therefore a coding structure specific to internal transactions has been set up and must be complied with to ensure all internal transactions are eliminated from the financial accounts.

Charging for goods/services

There are two basic processes for recording internal transactions.

Use of internal sales and purchase ledgers
Initiating a direct recharge

The method of charging will be determined by the nature of the supply or by the supplier’s standard procedures.

Internal ledgers

A discrete sales ledger has been set up within the financial system to manage internal sales invoices.

A customer account is set up for each area, as specified by the school or professional service. Responsibility for each account lies with the person designated by the school/service. Details of these contacts are held by Finance Services and will be reviewed periodically.

Internal sales invoices are accumulated on accounts within the sales ledger. Schools and other budget units are responsible for clearing these accounts by processing the invoices received through the internal purchase ledger. Instructions can be found on the APTOS web pages.

Finance Services issues a monthly e-mail reminder to the nominated person within each school or service to view their customer account on line. This on-line facility is available at any point in time during the month. Customers are encouraged to access their accounts as frequently as possible in order to ensure prompt payment and keep the number of outstanding invoices to a minimum.

Where an invoice is still outstanding and not in dispute after three months, Finance Services will allocate the invoice to a cost code within the main school/service account.

Where invoices have not been allocated to account codes via the internal purchase ledger by the end of the financial year Finance Services will allocate the charges to a cost code within the main school/service account.

Disputes

Schools/budget units wishing to dispute an invoice must inform both the service provider and Finance Services in writing (email is acceptable) within 10 working days of receipt of the invoice. The person responsible for the customer account must then work proactively to resolve the dispute.

Invoices that remain in dispute after three months will be referred to the head of department (or delegated authority) of both the customer department and service provider, who will be expected to reach agreement on the treatment of the charge. Where this process does not result in a successful outcome, the procedure will depend on the amount in dispute:

Where the amount is less than £100, the invoice will be charged to the customer’s account. The customer may then seek resolution with the supplier, if successful the supplier could agree to provide services without charging up to the value of the disputed amount.
Where the amount is £100 or more, the Assistant Director of Finance (Accounting) or Head of Corporate Accounting, within Finance Services will mediate and ultimately make a final decision.

Corrections and credit notes

Credit notes will normally be issued only for amounts of £20 or more. Where both parties are in agreement that a credit is due against an invoice and the amount due is £20 or more a credit note can be issued. If the original amount charged was made by journal a credit will be made by the same method. For amounts less than £20 the original invoice must be paid, the parties then agreeing an alternative method of recompense, for example provision of further services free of charge.

Direct recharges

Where charges have been:

agreed at the outset
arise from the recharge of central costs (such as postage, photocopying, telephones etc)

the customer should provide the cost centre to be charged and the transaction can be entered by a direct journal recharge.

Interaction with other systems

Internal transactions may be uploaded into the financial system via other feeder systems (e.g. EDS Services job costing system, Concept, Event Exeter conference and booking system, Kinetic).

Internal transactions entered via other systems will follow the same principles as other transactions entered directly into the main financial system i.e. either an internal sales invoice will be raised via the feeder system and imported to the internal customer account or the charge will be imported directly to a cost code.

Further information

For further information on Internal Trading please contact Anna Gillbard on ext. 5786.