Obtain Wire Transfers and Foreign Drafts

Purpose

This document describes alternate methods for making payments to vendors, tells when to use the alternate methods, and describes how to obtain alternate payment methods.

Available Methods

Alternate payment methods are used when the recipient will not accept a payment from the Research Foundation (RF) via check or direct deposit or when a payment needs to be made quickly. These payment methods have higher processing costs and should always be an alternative and not offered to recipients as standard payment methods.

Additionally, due to the high processing costs, the minimum amount for an alternate payment is $100 USD. Any payments for under this minimum must be discussed with the Finance Office before processing can occur. The alternate payment methods that are available include the following:

• international and domestic wire transfers
• foreign currency wire transfers
• foreign drafts (foreign currency)

Which Method to Use

The alternate payment method that should be used depends on the situation, the location, and how quickly the funds need to get to the recipient. Operating locations uncertain about whether a method is appropriate, or which is best, should contact the Finance Office. A description of each option is provided below:

Wire Transfers

A wire transfer is the electronic transfer of funds from one bank to another. There are two types:

• Domestic - the transfer of funds to a bank within the U.S.
• International - the transfer of funds to a bank outside the U.S.

  Depending on the country, international wire transfers may be sent in foreign currency.

  If funds are requested for deposit in a foreign or domestic bank account established for project use, the account must be pre-approved by the Finance Office. Refer to Establishing a Bank Account for specific requirements.

Foreign Drafts

A foreign draft is a bank check drawn on a bank outside the U.S. in a foreign currency. Foreign drafts are usually mailed to operating locations for forwarding to the payee unless special mailing instructions are received from the operating location. The draft must be presented to the foreign correspondent bank by the payee in order to cash the draft.

Note: If a foreign draft is used, operating locations should make certain that there is a corresponding bank or branch in the city where the payee is located.

Suitable Geographic Locations

Some alternate payment methods are not suitable for certain geographic locations. The Research Foundation is notified by its financial institution of these locations at the time of the wire transfer.

Length of Time to Reach Recipient

The following table shows the length of time each method of payment usually takes to reach the recipient:

Fees

Operating locations electing to obtain foreign drafts through the Finance Office will be charged a $15 foreign draft fee. International wires may have fees deducted by corresponding or foreign banks. These fees are not controlled by the RF, but should be considered when calculating the amount being wired if possible.

Additional fees may be charged by financial institutions for cancellation of wire transfers or foreign drafts. Refer to Description of Follow-Up and Cancellation/Recall Procedures for Wire Transfers and Foreign Drafts.

Review and Approval

Purchases made using one of the alternate payment methods listed in this document are subject to the same review and approval procedures required when using the standard vendor payment process. Refer to How to Review a Request for Goods, Services, or Payment for specific requirements.

International purchases should have special consideration taken by reviewing the Export Controls Information on the Research Foundation portal and should have a review performed using Visual Compliance software prior to input into the Oracle system. Proof of this review should accompany the wire transfer request when it is sent to the Finance Office for processing.

Payments in excess of $25,000 must be reviewed and approved by the operations manager or senior-level designee and the alternate payment must be obtained through the Finance Office.

Payments exceeding $100,000 require a second review and signature at central office. Refer to Payments in Excess of $25,000 Policy for more information.

Miscellaneous Income Payments

Miscellaneous income includes non-employee compensation, rent, and royalty payments. If an alternate payment method through a local bank is used for a miscellaneous income payment that requires IRS 1099 or 1042 reporting, then the payment must be manually tracked and reported to the Office of Administration and Human Resources at central office so that the appropriate form can be manually produced.

Refer to Overview of Miscellaneous Income Payments for more information on miscellaneous income.

Methods for Obtaining Wire Transfers and Foreign Drafts

Campuses can obtain wire transfers and foreign drafts two ways:

• Method 1: Campus obtains wire transfer or foreign draft through their local bank, provided that the campus has a bank account at the bank. If the request
  exceeds the dollar limit on the bank account or exceeds $25,000, the campus must obtain the alternate payment method through central office.
  
  Note: If the operating location uses a local bank account, it is responsible for all paperwork and record keeping, and for replenishing the petty cash or
  project bank accounts in a timely manner.
  
• Method 2: Campus obtains wire transfer or foreign draft through the RF Finance Office. Wire transfers or foreign drafts are processed as invoices/payments
  that do not produce checks and are recorded as expenditures in the Accounts Payable module. Refer to the next section for the detailed procedure.

Obtaining a Wire Transfer or Foreign Draft through the Finance Office

Requests must be made well enough in advance to ensure the funds will arrive on time (for example, for domestic wire transfers this would be a few days, for foreign drafts it would be a few weeks). The RF Finance Office will process the wire transfer within 2 business days after receiving the Alternate Payment Form.

The following table outlines the steps campuses must take to obtain a wire transfer or foreign draft through the Finance Office:

Processing the Request at Central Office

The Finance Office processes alternate payment method requests received by the 12:00 pm deadline through Key Banks KTT Web the next business day, and also performs the following steps in Oracle:

• For wire transfers in foreign currency or a foreign draft, the Finance Office uses the purchase order created by the campus to process an invoice to
  record the expenditure in the Accounts Payable module.
• For all alternate payment methods, the Finance Office processes an Oracle manual payment to clear the invoice.

Follow-Up Procedures

Each alternate payment method has optional follow-up and cancellation/recall procedures. Features of each procedure are outlined in Description of Follow-up and Cancellation/Recall Procedures for Wire Transfers and Foreign Drafts.

Change History

Effective Date:
responsible Party: Finance Office
Contact Information: 518-434-7050

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