The External Sales compliance office reviews and approves the External Sales Approval Form, the Business Proposal and initial rates for all new external sales activity. The Office works with units to identify and mitigate legal, insurance, and tax financial risks, to streamline the process for establishing external sales activity, to accurately accumulate all costs within identified segregated set of accounts, to establish rates based on total costs and to ensure that an external sale unit is self-supporting. University colleges and departments are encouraged to utilize academic expertise and institutional resources to generate additional sources of revenue from non-University (external) customers in a commercial and competitive manner.
Steps to obtain approval to conduct external sales activity
Does it meet the following criteria?
- The funds are in exchange for services performed by the University and any tangible goods produced as a result of such services, use of laboratory equipment, or a license to use information on University maintained databases;
- The transaction is not a Sponsored Project, Gift, or an excluded transaction; and
- The transaction is consistent with the scope, guiding principles, and criteria set forth in Board of Regents Policy: Direct Sales of Goods and Services. (pdf)
For definitions regarding Gifts, Sponsored Projects, & External Sales, see Appendix A (pdf) of the policy Selling Goods and Services to External Customers.
- If additional clarification is needed regarding the classification of the activity, contact firstname.lastname@example.org.
- A transaction classification group with representatives from SPA, External Sales, and both University Foundations has been established to provide rapid input to faculty and administrators who are uncertain how to classify a given transaction. This group also has ready access to University counsel when needed.
- To obtain input from this group, send a copy of the proposed statement of work, budget and performance dates, contact information for the person most knowledgeable about the proposed transaction, and any other background information the requestor feels is pertinent to: email@example.com. A classification decision or a request to obtain clarifying information will be provided to the requestor within three working days.
- Obtaining Approval to Conduct External Sales Activity (step 2, 3)
- Establishing a Sales Accounting Structure (step 6)
- Establishing External Sales Rates (step 4)
- Establishing External Sales Agreements (Contracts) (step 7)
- Unrelated Business Income Tax Procedures, and Collecting and Remitting Minnesota Sales Tax on External Sales Transactions
Take this risk assessment to assist in detemining where your risk level is.
- Agreements (contracts) (ppt)
- Rate development process (ppt)
- Internal/External Sales overall presentation (ppt)
- UM Reports presentation handouts Fall 2011
- Internal/external sales business proposal outline (doc, enable macros please) (step 2)
- External Sales Activity Form (xlsx) (step 3)
- Internal/external sales approval form (xlsx) (step 3)
- Contracts Library, general external sales contracts (step 7)
- Establishing Market Driven External Sales Rates (pdf) (step 4)
- Frequently asked Questions (doc)
- Risks to Consider/Identify (pdf)
- Calculation for Billable Hours (xls) (step 4)
- Sample Rate Sheet Consulting (xls) (step 4)
- Sample Rate Sheet Lab Tests (xls) (step 4)
- External Sales process flow (pdf) (all steps)
- Contract Review process flow (pdf) (step 4)
- External sales, questions to answer (doc)
- External sales internal process review flow (pdf)
- Direct versus Indirect costs (pdf)
Most Common Audit Findings and Recommendations - External Sales
- Ensuring contracts are in place where appropriate to support external sales.
- Verifying sales tax collected and remitted are appropriate and accurate.
- Establishing policy and methodology for pricing of goods and services sold.
- Reporting external sales to External Sales Office.
The External Sales training modules are highly recommended for RRC managers, business managers, and anyone in the department involved with the external sales activity. Each module takes about 30 minutes. After completion of each module, the "personal training records" of the individual will be updated to show that the course has been completed. These courses are in the U Learn system.
- Course1 Overview of Policy Governing External Sales
- Course2 Transacting External Sales and Rate Development Basics
- Course 3 External Sales Rate Development Example
Step 1 - Verify that the activity is an external sale. See "Is your activity an external sale?" information above.
Step 2 - Complete the Internal/External Sale Approval form and send to firstname.lastname@example.org for review. See Administrative Procedure: Obtaining Approval to Conduct External Sales Activity.
Step 3 - Complete the Internal/External Business Proposal Outline and sent to email@example.com for review. See Administrative Procedure: Obtaining Approval to Conduct External Sales Activity.
Step 5 - After the External Sales Compliance Office has completed review, obtain administrative approvals.
Step 6 - Establish an accounting structure. See Administrative Procedure: Establishing an External Sales Accounting Structure.
Step 7 - Complete activity and invoice.
Want a printable version of the checklist? Click here.