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Departmental Buyers Guide

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Receiving & Payment Process

Inspection & Acceptance

Departments are responsible for inspecting and accepting goods or services purchased. It is the department's responsibility to inspect all items immediately upon receipt. Inspection is the close and critical examination of goods received or services provided to determine conformance with applicable requirements or specifications.

Inspection of goods should confirm the following:

  1. The products conform to the purchase order requirements and other relevant documents (correct model number, description, size, type, color, ratings)
  2. The quantity ordered against the quantity shipped or delivered
  3. No damage or breakage
  4. The unit of measurement count is correct
  5. Delivery documentation (packing list, certifications) is acceptable
  6. Perishable items are in good condition and expiration dates have not been exceeded
  7. Products are operable and functional
  8. The process for accepting services is in principle the same as the process for tangible products

Financial Procedures Manual, Section 4205.420 - Expenditures; Inspection, Acceptance & Rejection of Goods or Services

Testing

Testing may be performed by the department to ensure that the products substantially conform to the specifications documented in the purchase order, contract, or supplier's proposal. Acceptance testing is highly recommended for complex, expensive capital equipment prior to approving final payments to the supplier.

An acceptance testing period may occur as a single instance or over a period of time, but should be performed as quickly as possible following the receipt of the product.

For major capital equipment purchases, specific acceptance testing criteria should be developed and incorporated into the contract (work with your Procurement Services Buyer to do this). Departments should perform the testing according to the criteria established in the agreement for the results to be considered valid and legally enforceable in the event the product is rejected and payments are to be refunded.

When Acceptance Testing is incorporated into the contract, the department should acknowledge acceptance of a product by issuing a written notice of successful acceptance to the supplier and providing copies to the Procurement Services Buyer. Email is an acceptable to communicate this information.

Receiving Report

Before a vendor is paid for materials delivered, it is important to verify that the item delivered meets the standards and quantities specified in the order.

The Receiving Report Form must be completed for all items purchased costing $5,000 and greater and must be signed by a different individual than the person originating the purchase. The Receiving Report should be accompanied by a Purchase Order or Accounting Voucher and should be sent to Accounts Payable for payment processing. The employee who receives the goods and verifies the quantity and condition must enter the date received and his/her full signature. A copy of the bill of lading or packing slip is required for any purchase $5,000 or greater.

Financial Procedures Manual, Section 4205.400 - Expenditures; Receiving Reports

Product Returns for Credit/Refund

When a supplier has shipped items as specified on a purchase order, they have legally complied with their part of the contract and are under no obligation to accept returned items for credit or refund. If the supplier agrees to accept the returned item, a restocking fee of 5 percent - 25 percent of the original item cost may be charged by the supplier. Restocking fees are paid by the requisitioning department.

When a product is damaged, is rejected for failing acceptance testing or is not as specified on the purchase order, the department should immediately contact the supplier and notify them of the issue and that a return will be made for exchange or refund. The department should request return instructions from the supplier. Identifying information should be placed on the outside of the returned package for easy identification when received by the supplier. For purchases over $5,000 or those made from contract vendors, the Procurement Services Buyer can assist in securing the return authorization, credits or refunds from the supplier, if the requisitioning department has difficulty.

Financial Procedures Manual, Section 4205.440 - Expenditures; Rejection of Goods