Preferred Payment Method
The preferred method of remitting payments to vendors in foreign countries or
in currencies other than US dollars is via wire transfer. There are two considerations
that lead to this preference. The first is security. Wire transfers are more
secure than foreign drafts reducing the opportunity for fraud. It is important
to note that all payment forms – domestic or international carry with
them risks for fraud. International payment forms carry a slightly higher risk
than domestic forms. The IU Treasury Department has advised us that foreign
drafts carry more opportunities for interception than wires.
The second consideration is cost. While the bank costs of foreign drafts and
wires are approximately the same, drafts involve an additional costs associated
with postage.
Because of the university’s preference for wires, DV’s that come
in to the Accounts Payable department with a payment form of foreign draft,
and with supporting documentation which contains wire transfer information or
where wire transfer information is easily obtainable, the AP processor will
cancel the foreign draft DV and create one to make the foreign payment via a
wire transfer. Often times international invoices contain wire transfer information
on the first page of the invoice. Invoices that originate from European countries
fall into the category of those where wire transfer information is easily obtainable.
The following document outlines the steps for paying invoices with a wire transfer
or foreign draft under various invoicing conditions.
Invoice Payments Remitted via Wire Transfer with a PO
The following steps should be followed when paying invoices where the PO has
been set up in TOPS and the vendor has provided information for payment via
wire transfer.
- If the department receives the invoice directly, the department should initiate
a DV, using the payment reason that reflects the nature of the expenditure,
and document location of the appropriate Accounting Office for your campus.
The PO number should be referenced in the check stub field. The payment method
should be marked "Wire Tr." and the requested wire information should
be complete. The object code used should be the expense object code set up on
the PO.
When the payment method "Wire Tr." Is marked, the DV asks the initiator
for the following information related to the currency.
- U.S. Dollars
- DV amount is stated in US Dollars: Convert to Foreign Currency
- DV amount is stated in Foreign Currency
Currency Type __________________
The DV should be completed in the amount and currency stated on the invoice
or supporting documentation with the appropriate option selected to reflect
this. DV initiators should not attempt to convert currencies.
As an example, if the department knows the amount in British Pounds that needs
to be paid, then the third option from above should be selected. The Treasury
office will correctly modify the DV to state the US dollar equivalent once the
bank has made the conversion.
If the department knows the US dollar amount but also knows that the money needs
to arrive in Pounds then the second option above should be selected, the US
dollar amount should be entered, and Pounds Listed in the Currency Type field.
- The department should then attach the invoice to the DV cover sheet and forward
them to the documentation location selected above.
- If the invoice arrives at the campus payables location, the AP department
should initiate a DV following the same instructions provided in number 1 above.
The individual in the AP department initiating the DV should not be a part of
the wire transfer approval workgroup or the campus DV approval workgroup.
- The local campus AP department should enter the invoice in TOPS, cross reference
the DV document number and then cancel the invoice. This leaves an audit trail
linking the PO with the invoice and payment.
- The local campus AP department should scan the supporting documentation (if
the campus supports scanning) and then approve the DV after ensuring the requested
information for a wire is complete.
- The Treasurer's department initiates the wire once the approved DV appears
in their inbox.
- Once the Treasurer's department has the US dollar value of the wire, they
will change the amount of the DV to that amount if necessary. The GL entries
will reflect the US Dollar transactions.
Payments Remitted via Wire Transfer where no PO was created
The following steps should be followed when paying invoices where no PO has
been set up in TOPS and the vendor has provided information for payment via
wire transfer.
- If the department receives the invoice directly, the department should initiate
a DV, using the payment reason that reflects the nature of the expenditure,
and document location of the appropriate Accounting Office for your campus.
The payment method should be marked "Wire Tr." and the requested wire
information should be complete. The object code used should be the expense object
code appropriate for the expenditure.
- When the payment method "Wire Tr." is marked, the DV asks the initiator
for the following information related to the currency.
- U.S. Dollars
- DV amount is stated in US Dollars:
- Convert to Foreign Currency
- DV amount is stated in Foreign Currency
Currency Type __________________
The DV should be completed in the amount and currency stated on the invoice
or supporting documentation with the appropriate option selected to reflect
this. DV initiators should not attempt to convert currencies. As an example,
if the department knows the amount in British Pounds that needs to be paid,
then the third option from above should be selected. The Treasury office will
correctly modify the DV to state the US dollar equivalent once the bank has
made the conversion. If the department knows the US dollar amount but also knows
that the money needs to arrive in Pounds then the second option above should
be selected, the US dollar amount should be entered, and Pounds Listed in the
Currency Type field.
- The department should then attach the invoice to the DV cover sheet and forward
them to the documentation location selected above.
- The local campus AP department should scan the supporting documentation (if
the campus supports scanning) and then approve the DV after ensuring the requested
information for a wire is complete.
- The Treasurer's department initiates the wire once the approved DV appears
in their inbox.
- Once the Treasurer's department has the US dollar value of the wire, they
will change the amount of the DV to that amount and the GL entries will reflect
the US Dollar transactions.
Invoice Payments Remitted via Foreign Draft with a PO
The following steps should be followed when paying invoices where the PO has
been set up in TOPS and the vendor is requesting payment via foreign draft.
- If the department receives the invoice directly, the department should initiate
a DV, using the payment reason that reflects the nature of the expenditure,
and document location of the appropriate Accounting Office for your campus.
The PO number should be referenced in the check stub field. The payment method
should be marked "Frgn Dr." and the requested wire information should
be complete. The object code used should be the expense object code set up on
the PO.
- When the payment method "Frgn Dr." Is marked, the DV asks the initiator
for the following information related to the currency.
- DV amount is stated in US Dollars: Convert to Foreign Currency
- DV amount is stated in Foreign Currency
Currency Type __________________
The DV should be completed in the amount and currency stated on the invoice
or supporting documentation with the appropriate option selected to reflect
this. DV initiators should not attempt to convert currencies.
As an example, if the department knows the amount in British Pounds that needs
to be paid, then the third option from above should be selected. FMS will correctly
modify the DV to state the US dollar equivalent once the bank has made the conversion.
If the department knows the US dollar amount but also knows that the money needs
to arrive in Pounds then the second option above should be selected, the US
dollar amount should be entered, and Pounds Listed in the Currency Type field.
- The department should then attach the invoice to the DV cover sheet and forward
them to the documentation location selected above.
- If the invoice arrives at the campus payables location, the AP department
should initiate a DV following the same instructions provided in number 1 above.
The individual in the AP department initiating the DV should not be a part of
the foreign draft approval workgroup or the campus DV approval workgroup.
- The local campus AP department should enter the invoice in TOPS, cross reference
the DV document number, then cancel the invoice. This leaves an audit trail
linking the PO with the invoice and payment.
- The local campus AP department should scan the supporting documentation (if
the campus supports scanning) and then approve the DV after ensuring the requested
information for a foreign draft is complete.
- The local campus AP department should e-mail Barbara Wells at bwells@indiana.edu
to alert her that there is a foreign draft in process. If there is supporting
documentation that needs to accompany the foreign draft, the attachment box
should be checked on the DV. If the local campus AP department has scanned this
supporting documentation, it can be printed by FMS Bloomington and mailed with
the foreign draft. If the local campus has not scanned supporting documentation
that needs to be remitted with the foreign draft, they will need to mail or
fax it to FMS Bloomington (fax 812/856-4452).
- The DV routes to FMS Bloomington. FMS calls the bank to arrange to have the
foreign draft printed.
- Once the foreign draft has been returned from the bank, FMS enters the US
dollar amount in the DV, scans the conversion form as supporting documentation
to the DV and approves it.
- FMS then mails the foreign draft with attachments to the vendor.
Payments Remitted via Foreign Draft where no PO was created
The following steps should be followed when paying invoices where no PO has been
set up in TOPS and the vendor is requesting payment via foreign draft.
- If the department receives the invoice directly, the department should initiate
a DV, using the payment reason that reflects the nature of the expenditure,
and document location of the appropriate Accounting Office for your campus.
The payment method should be marked "Frgn Dr." and the requested
wire information should be complete. The object code used should be the appropriate
expense object code.
When the payment method "Frgn Dr." Is marked, the DV asks the
initiator for the following information related to the currency.
- DV amount is stated in US Dollars: Convert to Foreign Currency
- DV amount is stated in Foreign Currency
Currency Type __________________
The DV should be completed in the amount and currency stated on the invoice
or supporting documentation with the appropriate option selected to reflect
this. DV initiators should not attempt to convert currencies.
As an example, if the department knows the amount in British Pounds that
needs to be paid, then the third option from above should be selected. FMS
will correctly modify the DV to state the US dollar equivalent once the
bank has made the conversion.
If the department knows the US dollar amount but also knows that the money
needs to arrive in Pounds then the second option above should be selected,
the US dollar amount should be entered, and Pounds Listed in the Currency
Type field.
- The department should then attach the invoice to the DV cover sheet and
forward them to the documentation location selected above.
- The local campus AP department should scan the supporting documentation
(if the campus supports scanning) and then approve the DV after ensuring the
requested information for a foreign draft is complete.
- The local campus AP department should e-mail Barbara Wells at bwells@indiana.edu
to alert her that there is a foreign draft in process. If there is supporting
documentation that needs to accompany the foreign draft, the attachment box
should be checked on the DV. If the local campus AP department has scanned
this supporting documentation, it can be printed by FMS Bloomington and mailed
with the foreign draft. If the local campus has not scanned supporting documentation
that needs to be remitted with the foreign draft, they will need to mail or
fax it to FMS Bloomington (fax 812/856-4452).
- The DV routes to FMS Bloomington. FMS calls the bank to arrange to have
the foreign draft printed.
- Once the foreign draft has been returned from the bank, FMS enters the US
dollar amount in the DV, scans the conversion form as supporting documentation
to the DV and approves it.
- FMS then mails the foreign draft with attachments to the vendor.
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