Obtaining Approval to Conduct External Sales

Introduction

University organizations planning to sell goods or services to external customers must verify that the activity is an external sale and complete the following steps prior to conducting sales transactions.

An external sale is an exchange of tangible or intangible property or services by the University with external customers for monetary consideration which meets all three of these 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, sponsorship, 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.

See the definition for a covered external sale transaction for a more comprehensive list of external sales transactions covered and not covered under this policy.

For additional information review the Appendix Gifts, Sponsored Projects, & External Sales, if additional clarification is needed regarding the classification of the activity, contact [email protected]

A transaction classification group with representatives from Sponsored Projects Administration (SPA), External Sales, and University of Minnesota Foundation provide rapid input to faculty and administrators who are uncertain how to classify a given transaction. This group consults with University General Counsel when necessary. 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 protected]. A classification decision or a request to obtain clarifying information is provided to the requestor within three working days.

Examples of unacceptable external sales activities.

  • Activities that are illegal or that violate University policy
  • Activities that are not consistent with the University's mission.
  • Activities that do not provide competitive rates and service.
  • Activities that do not identify a reasonable method for distributing costs to users based on actual usage.

Evaluate the risk category classification for the activity

Prepare the Internal/External Sales Approval Form UM 1608

  • For activities identified as low risk, the college and administrative units are responsible for the approval to conduct the external sales activity.
  • For activities identified as managed risk, units must complete the remaining steps in this procedure.

Budgeting and Forecasting

Include a proposed budget for the current and subsequent fiscal year. See Administrative Procedure: Establishing External Sales Rates. Include:

  • the financial forecast for the current and next fiscal year, detailing estimated annual revenues, expenses, capital needs, and sales volumes; and any sales tax and unrelated business income tax considerations.

For low risk external sales, send the completed form to the college Chief Financial Manager or designee for approval. For managed risk external sales, send the completed Internal/External Sales Approval Form UM 1608 (Excel spreadsheet), rate development and related documents to the Internal/External Sales Office  at [email protected] for review before engaging in managed  risk external sales.

Once an activity is approved, units can proceed with obtaining a legal contract if required. Refer to procedure;: Establishing External Sales Agreements (Contracts).

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