External Sales Policy, Procedure, Contract, Amendments Updates April 30th, 2014

1. External Sales Policy, Procedure, Contract, Amendments Updates April 30th, 2014 University of Minnesota

2. Policy & Procedure Update Risk Assessment Survey Contracts Library Terms & Condition on Invoice Approval Form Service Agreement Short Form Amendments Other process considerations Questions & Answers anytime during the presentation Agenda

3. Policy • University Administrative Policy: • “Selling Goods and Services to External Customers” http://policy.umn.edu/Policies/Finance/Accounting/EXTERNALSALES_PROC04.html

4. Procedures • University External Sales Procedures: • Conducting External Sales • Establishing an External Sales Accounting Structure • Establishing External Sales Rates • Establishing External Sales Agreement • Unrelated Business Income Tax Procedures, and Collecting and Remitting Minnesota Sales Tax on External Sales Transactions

5. Use the on-line risk assessment survey to determine whether a sales transaction is classified aslow, medium orhigh risk. Defines the accountability Operating procedures Oversight Monitoring procedures Handout provided: Risk Profile of sales Transactions (Roles and Responsibilities) Policy Update – Risk Based Approach

6. Self-monitor and provide local oversight regarding pricing decisions and financial implications. Discretion as to the method used to process sales activity. Units may choose to either use a University-approved contract Bill customers via the EFS billing system. Management of compliance activities (e.g. collecting and payment of sales tax) Controller's Office will review low-risk sales activities every 4-5 years for compliance with the policy Controller's Office will keep a repository of all external sales contracts LowRisk

7. Units will work with the Controller's Office: to complete a business plan for sales activity formal rate development contract Controller's Office will provide: pricing assistance for units requesting the service responsible for monitoring and providing oversight review medium risk sales activities every 2-3 years for compliance with the policy Medium Risk

8. Units will work with the Controller's Office: Business plan for sales activity Formal rate development Contract Market pricing Financial stability of customer Controller's Office will provide: Pricing assistance for units requesting the service Responsible for monitoring and providing oversight Review high risk sales activities every 1-2 years for compliance with the policy High Risk

9. Risk Assessment Survey This survey (on-line risk assessment survey or External Sales Risk Assessment) is designed to help units conducting external sales determine if their sales activity with a given customer islow, medium, orhighrisk.   FORM: OGC-SC102 Form Date: 01.29.02 Revision Date: 11.16.10

10. Risk Assessment Survey The survey is located at : • Selling Goods and Services to External Sales: Assessing the Risk Profile of Sales Transactions, Use of Contracts, Appendices • Conducting External Sales Activity: Applying risk based factors, Evaluate risk category, • Establishing External Sales Rates: Applying risk based factors • Establishing External Sales Agreements: Introduction • External Sales website: Risk Assessment FORM: OGC-SC102 Form Date: 01.29.02 Revision Date: 11.16.10

11. Risk Assessment Survey Example of using the Risk Assessment Survey online • Choose the answer to each characteristic that best describes your activity. FORM: OGC-SC102 Form Date: 01.29.02 Revision Date: 11.16.10 • To begin the survey, please fill out the following information fields

12. Risk Assessment Survey Questions that are asked on the survey: • What is the anticipated revenue on this transaction? • What is the customer type? • What is the payment history? • Does the customer contribute to the design or manufacturing? • Customer’s main line of business? • Service provided by the unit? • Taxes or fees as a result of transaction? • Shipped outside of United States? FORM: OGC-SC102 Form Date: 01.29.02 Revision Date: 11.16.10

13. Risk Assessment Survey Results that are provided: Your activity is considered to be “Low, Medium, or High Risk” based on the answers you have selected. Will provide a summary of what it means to be at “Low, Medium or High Risk” activity. Important: You must click submit to finish this survey. FORM: OGC-SC102 Form Date: 01.29.02 Revision Date: 11.16.10

14. Contract Library Utilize standard U of M agreements whenever possible, available at OGC website: www.ogc.umn.edu/ Standard Agreement • If standard agreement is used, OGC does not review Non-Standard Agreement • If non-standard agreement is used, OGC must review, and usually negotiate with customer’s counsel FORM: OGC-SC102 Form Date: 01.29.02 Revision Date: 11.16.10

15. Contract Library Go to “Contracts” http://www.ogc.umn.edu/contracts/index.htm Standard Contracts Library http://policy.umn.edu/contracts/ External Sales & Purchasing Agreements Used for external sales and purchasing. Go to FORM: OGC-SC102 Form Date: 01.29.02 Revision Date: 11.16.10

16. Terms & Condition on Invoice If customers are billed via the EFS billing system. • Provide customer with the terms and conditions provided on the back of the invoice in advance of starting work. FORM: OGC-SC102 Form Date: 01.29.02 Revision Date: 11.16.10 • Handout provided: Terms & Conditions

17. External Sales Activity Form Internal/External Sales Approval Form UM 1699 Updated: External Sales Activity Form UM 1799 FORM: OGC-SC102 Form Date: 01.29.02 Revision Date: 11.16.10 • Handout provided: External Sales Activity Form UM1799

18. Service Agreement Short Form UNIVERSITY SHORT FORM SERVICES AGREEMENT Current criteria: •  Use with low risk transactions  • Should not be used in lieu of an existing standard service agreement template, unless ALL of these criteria are met: • Value of services being provided must be $5,000 or less; • No additional terms, conditions, services, activities or modifications of the agreement Handout provided: Short form and Guidelines

19. Amending a Service Agreement Contract has been identified as an agreement that can be modified • An amendment can change the compensation or term sections of the services Agreement. • Increases the compensation, add services or extending the term of an agreement without having to start a new agreement. • Once an agreement has expired it can no longer be amended. • Extend the term for up to three years. • Consider collection issues, services provided and terms. • Original agreement will be included in the amendment. Handout proved: Amendment and Instructions

20. Other Considerations • Customer presents their company contract to University, these steps may help to speed up the contracting process: • Offer the University Standard Contract as a counter offer. If they accept it and sign it, then the negotiations are complete. • If they choose to "mark-up" or "take exception" to parts of our standard agreement, then it would need to go through OGC for review • If they reject our contract and insist on using their company contract, negotiations on terms & conditions will generally take longer than starting with the University agreement • me offering, these steps may help to speed up the contracting process:

21. Contracting Tips Tips Unit to help speed up a medium or high risk contract through OGC: • Use the latest revision of the standard contract. • Supply any background information and/or related contracts with customer. • Provide standard rate sheet or rate development. • Provide the contact information for the customer's legal representative.

22. Contracting Tips - Cont. Additional tips: • Provide a date when you need the contract to be ready for customer signature. • Provide any changes to the insurance clauses. • Provide information is work for a foreign entity, services will be provided in or is coming from a foreign entity. • Supply DeptID # and approved ESAF #.

23. Contract Review Questions and Answers Contact Information: Keith Jansen 4-5540 kkjansen@umn.edu Russ Bakke 4-8835 extsales@umn.edu Steve Brandeen 4-9014 extsales@umn.edu