Best Practice for Prepayments

Best Practice for Prepayments

The University’s standard payment terms are Net 30 days upon receipt of the final invoice, after goods are received or services are rendered.  Prepayments to vendors for goods or services must be avoided, as it is very risky to the University.

Here are a few helpful guidelines to follow when working with vendors to set up payment terms:

• The University of Illinois System is subject to and complies with the State Prompt Payment Act 30 ILCS 540, which mandates that invoices charged against state appropriated funds must be paid within 90 days of receiving a complete invoice. However, the University’s standard payment terms are Net 30 days. Please work with the vendor to establish Net 30 payment terms before submitting a quote and requisition to Purchasing. 
• In some instances, a vendor may request a credit reference package. Please contact Purchasing to obtain the credit reference package.  
• If the vendor will not grant Net 30 payment terms:
  • Consider the use of another vendor that can supply the same goods or services and offer Net 30 day terms.
  • Consider the use of a P-Card for payment, assuming the transaction falls within the parameters of allowable P-Card purchases.
• If all of the above options have been exhausted and prepayment terms are still required, please provide a detailed explanation in the internal notes section of iBuy with the following details.  Also, be sure to select non-standard pre-payment terms in iBuy. A Purchasing Supervisor will review the prepayment request before granting final approval.
  • What steps were taken to request Net 30 terms from the vendor?
  • Why does the vendor require prepayment? 
  • Is this vendor a sole source for the product/service being purchased?