Responsibilities and Set-up
It is important to note that center staff are responsible for maintenance of their local accounts and all related billing functions. This includes monitoring sales activity and requesting new accounts, as appropriate. Financial information from established accounts are crucial to the rate renewal process and balances will be recorded on the cost tool to determine break-even position.
In regards to related billing functions, center staff are responsible for establishing the correct accounts and billing profiles such as an Internal Service Provider (ISP) within the Workday Financial Management System (FMS).
Setting up a Program Account
To begin billing for services, the recharge center must first set up an account to track expenditures and collect revenue. This can be done through the DocuSign request located on the Financial Services forms website. The new program request will route through the necessary department approval and then to Financial Services for final review and approval.
During this process, a local program account will be set up for the recharge center.
Center staff should coordinate with Financial Services to set up the account under a base or premium hierarchy.
Base v. Premium Hierarchy
To request a local program account, review the instructions for ‘Requesting a New Program/Gift’ and submit application to Financial Services. The application should include the appropriate program hierarchy. The following describes when to choose the Base or Premium hierarchy.
A base hierarchy is needed for all recharge centers. Primarily, this will be used for recharge centers that charge to internal customers only or to both internal and external parties.
A premium hierarchy should be used for recharge centers that will charge to external customers. External sales negotiated with Financial Services will be set up with premium hierarchy and are not required to have a corresponding base hierarchy.
Recharge center accounts, regardless of base or premium, should be set up with the activity code ‘A1400 Academic Support’ and fund code ‘FD5001 Unrestricted’. A capital replacement account may be requested to collect capital equipment depreciation.
Billing Guidelines for Internal and External Customers
Recharge centers may charge for services to internal sponsored projects, programs, and gift accounts. Such charges must show traceable information that describes the service or product provided. The account manager, PI, and/or other persons given permission to charge the account should review charges to ensure compliance.
Recharge centers that charge external customers in addition to internal customers should review established university invoicing procedures. Recharge centers that intend to charge external customers exclusively should also review the External Sales site for information regarding contract set-up and review procedures.
Discounts and waivers
Internal discounts and incentives are permitted if offered consistently. If waivers or discounts are offered to specific customer groups, the unit must provide detailed justification in addition to the proposed rates. Additionally, the department-sponsored subsidy must be sufficient to offset imputed revenue and the unit must agree to provide detailed records of imputed revenue, as necessary.
It is important to note that when a customer is charged a rate lower than those approved and on file, the center is essentially committed to subsidizing the difference. This often occurs as a result of offering discounts and waivers to customers. Centers that anticipate using this methodology should coordinate with their associated department or college to ensure that the effect to center net income will not be an issue. Additionally, this subsidy must be documented as earned or imputed revenue.
The importance of tracking imputed revenue cannot be understated as it is critical to recording revenue accurately. If not tracked, not only will center revenue show as understated, but may have adverse consequences during the next center rate review. Under this circumstance, a reviewer may determine that the previously established rates have been underdeveloped. In turn, this may have significant impact to the center being able to break-even with continued operation.
Unit Assessed Charges
Due to the nature of recharge centers, the following internal charges are assessed on the recharge center account level but cannot be included in the internal rate development:
Administrative Service Charge (ASC)
Risk Management and Technology (Netcomm) Fees
For external sales activities, a premium or additional overhead cost may be charged that can include the cost of fees as listed above to compensate for their exclusion from the internal user rates. Centers and their responsible departments should determine who will be covering these charges and from which accounts. It is important to note that internal sales activity cannot be used to cover these charges but revenue may be transferred from non-tuition revenue sources.
Billing Method Options
It is required that recharge centers utilize the current suite of internal service delivery options to bill for services. While there is room for exceptions in rare circumstances, the listed options below are the recommended methods for billing.
Internal Service Provider (ISP)
An Internal Service Provider (ISP) is linked to the recharge center’s program and cost center that is required to charge for services provided to internal sponsored projects, other programs, and gift accounts. An ISP must be established prior to creating any Internal Service Delivery journals. To establish an ISP, submit an FMS Support ticket on the ServiceNow Portal, located under the Departmental Catalogs sections.
Internal Service Delivery (ISD)
The Workday Internal Service Delivery (ISD) is available for recharge center billing which can be used to systematically document information. Internal Service Delivery documents are the method of billing internal university departments for services provided by internal service centers, referred to in the FMS as Internal Service Providers (ISP). Instructions to build an Internal Service Delivery are available on Workday’s Work Instructions section under the ‘Application’ module.
An ISD should be leveraged for all recharge center charges to sponsored projects, programs, and gifts. In order to be processed appropriately, these must record the appropriate revenue and expenditure worktags.
If there is a mistake on the ISD after the journal has been processed, users are able to correct the entries by submitting a separate accounting journal titled ‘ASU ISD Correction’. This is a departmental initiated journal that effectively processes accounting adjustments related to ISD transactions posted in the system.
iLab is a service designed to help Core Facilities labs manage the process of requesting and billing for services rendered and the use of equipment. This software integrates billing information into Workday as an Internal Service Delivery.
Before adopting this software, it should be noted that this service is reserved for specific recharge centers that meet the following criteria:
Anticipated revenue of the recharge center must meet a threshold of $500K per year of operation.
A signed MOU with the KE Core Facilities Finance team outlining financial responsibility of the recharge center.
Ability to contribute to paying for the Core Facility subscription fee to iLab service provider.
In general, this service is used by centers that have already been reassigned to KE and are no longer financially managed by the originating unit. However, exceptions exist and will be reviewed on a case by case basis. Recharge centers that do not meet the aforementioned criteria should bill for services through the use of standard Internal Service Delivery journals.
Audits and Compliance
As a compliance provision, any internal entity operating as an unrecognized recharge center will have transactions posted to sponsored projects, rejected. Furthermore, the entity will be prompted to establish formally approved rates within 30 days of notice. If the unrecognized center does not comply, the charges will be considered unallowable costs on the sponsored project and must be absorbed by the responsible unit.
To prevent audit risk, high-level internal audits will be conducted from time to time and corrective action will take place in the event potential audit risks are found.