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File code: ADM.PREPAYOR.POL
Approval Date: 08/20/98
Approved By: President's Staff

Procedures for Prepayment of Orders for Goods and Services

Occasionally, companies with whom you attempt to place orders for goods or services will require prepayment. This occurs often with memberships, subscriptions, and preventative maintenance. In most of those situations, payment in advance is generally required by companies as a customary business practice of their firm. Often the companies order form will be printed with the statement that prepayment is required.

In some cases, equipment, supplies and services may have to be prepaid. Care should be taken in these situations. It is best if you are familiar with the company with whom you are doing business. Under no circumstances, should a fiscal agent prepay orders just to encumber the funds close to the end of the fiscal year.

As a general rule there is nothing illegal about prepaying orders. However, the State of Illinois does address the issue in the State Statutes which describes how such orders should be worded. Prepayment must be specifically agreed to in the contract, so stated in the company's order form or other memorandum of agreement when you order on behalf of the University. As a matter of prudent business practice, advance payment should be avoided whenever possible.

Prepayment requests must be approved by the Purchasing Office prior to ordering.