University of Minnesota  Procedure

Approval for Internal Sales Activity


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Please use the contact section in the governing policy.


Any University organization planning or expecting to sell goods or services to University colleges and departments in excess $25,000 in revenue or charge a sponsored project of any dollar amount must verify that it can perform internal sales activity. The following steps must be completed in order to begin internal sales activity: 1) verify that the unit can conduct internal sales activity; 2) determine the appropriate classification of the activity; 3) complete the Internal/External Sales Approval Form; 4) obtain administrative approval; and 5) take training.

  1. Verify that the unit can conduct internal sales activity.
    • Provide a specific ongoing good or service to other campus units or projects charged on a rate basis.
    • Develop rates to recover the actual direct costs of the good or service.
    • Set rates to breakeven.

    The following units cannot conduct internal sales activity.

    • Units, such as parking or housing services, that primarily serve individuals and whose revenues are recorded as income to the University (these are auxiliary services).
    • Units that provide a one-time distribution of an expense rather than an on-going activity.
    • Units with expected annual internal sales less than $25,000 in revenue that do not charge sponsored projects . (These units should use a NonISO revenue account such as 500103.)

    Example: Copy charges

    Internal sales activity: a unit provides full service document printing. Units using the printing service are charged a rate per sheet and the rate includes salaries and benefits of printing staff, equipment depreciation, and supplies.

    Not internal sales activity: two units share a copy machine. They divide the costs of the equipment, service agreement, and supplies. These are direct costs that are allocated to each unit, and it is acceptable for one unit to incur the expenses and transfer the appropriate portion to the other unit's budget or to allocate the appropriate portion to the other unit's budget at the time that the invoice is paid.

    Note: The following sales activities are examples of un-acceptable internal sales.


    • 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 an acceptable method for distributing costs to users based on actual usage (no flat fees).


  2. Determine the appropriate classification of the activity.

    Units that conduct internal sales activity must identify the activity as either a recharge service or a specialized service.

    Recharge Service: A Recharge Service is a good or service that provides support to the University community on a rate basis. A unit engaged in providing one or more recharge services is known as a Recharge Center.

    • Specialized Service: A Specialized Service is a recharge service that:
      • Requires the use of highly complex or specialized facilities or equipment.
      • Annual internal sales budget exceeding $1 million
      • Generates significant charges to sponsored projects is considered a Specialized Service Center.

    Examples of specialized service centers:


    • Research Animal Resources
    • Genomics Center
    • Magnetic Resonance Research Center


  3. . Complete and submit the University of Minnesota Internal/External Sales Approval Form (UM 1608).

    The UM 1608: Internal/External Sales Approval Form (XLSX) must be signed by the appropriate Chief Financial Manager and Chancellor, Vice President, or Dean. If the internal sales activity is categorized as a Specialized Service, the relevant Senior Vice President must also sign the Internal/External Sales Approval Questionnaire.

    Send a copy of the completed Internal/External Sales Approval form to [email protected] for administrative approvals. This process will ensure that the internal sales rate conforms to federal regulations and help the University determine which sales activities are best provided internally and which would better be done by external organizations. Units will be notified whether authorization has been granted or denied. If authorization is denied, a memo will be sent to the unit with an explanation.

  4. Complete training.

    Training is required for all new recharge center business managers. Internal Sales training is available on-line via the Training Hub. The Internal/External Sales department will provide direct training to an individual or department if requested