EFT Deposits Denominated in a Foreign Currency

Overview

Payment for goods or services provided by the University may be received electronically through an Electronic Funds Transfer (EFT). These funds are transferred bank-to-bank. University policy requires all payments made to the University be denominated in US dollars. However, some pre-existing contracts may require the University to accept payments in a foreign-denominated currency.

EFT Deposits denominated in Foreign Currencies

The process differs slightly if receiving one of five foreign "Multi-Currency Account (MCA)" currencies:

• British Pounds (GBB)
• Euros (EUR)
• Japanese Yen (JPY)
• Canadian Dollars (CAN)
• Australian Dollars (AUD)

MCA Currency

1. Departments expecting a non-sponsored receipt of revenue funds denominated in one of the five MCA currencies must contact the Office of Investments and Banking (OIB).
2. The OIB will provide a bank, bank account number and banking instructions to the requesting department.
3. The OIB will also coordinate with Non-sponsored AR Services to notify them of the expected EFT.
4. If expecting a sponsored receipt of funds, departments should contact Sponsored Financial Reporting (SFR).
5. The billing specialist in the cluster must create a bill in the financial system for the goods or services. The billing specialist should key in notes indicating that the payment is expected via EFT through an MCA account. This notifies Non-sponsored AR Services to look for the payment in the daily bank statements.
6. The departmental revenue will be booked to the general ledger when the bill is created and the department will have an open accounts receivable item until the funds are received.
7. The Office of Investments and Banking monitors the MCA bank account for the deposit.
8. When the deposit is received, the OIB converts the foreign-denominated deposit to US dollars at the prevailing spot exchange rate. The deposit (now in US dollars) is transferred to one of the University's banks.
9. The OIB also notifies Non-sponsored AR Services so that they may look for the deposit in the daily bank statements and credit the appropriate AR account for the deposit.
10. The converted dollar amount, most likely different than the billed dollar amount, will require a manual reconciliation by Non-sponsored AR Services. Differences between the billed amount and received amount will result in either a credit (for an overpayment) or a remaining open AR item (for an underpayment.) Alternatively, an adjustment to the bill may be necessary.

Non-MCA Currency

1. Departments expecting a non-sponsored receipt of revenue funds denominated in a foreign currency, but not one of the five MCA currencies, must contact the Office of Investments and Banking (OIB).
2. The OIB will provide a bank, bank account number and banking instructions to the requesting department. OIB will also coordinate with Non-sponsored AR Services to notify them of the expected EFT.
3. Departments expecting a sponsored receipt of funds must contact Sponsored Financial Reporting (SFR).
4. The Billing Specialist in the cluster must create a bill in the financial system for the goods or services. The Billing Specialist should key in notes indicating that the foreign-currency denominated payment is expected via EFT through a non- MCA account. This notifies Non-sponsored AR Services to look for the payment in the daily bank statements.
5. The departmental revenue will be booked to the general ledger when the bill is created and the department will have an open accounts receivable item until the funds are received.
6. When the deposit is received, the University's bank converts the foreign-denominated deposit to US dollars at the prevailing spot exchange rate.
7. The converted dollar amount, most likely different than the billed dollar amount, will require a manual reconciliation by Non-sponsored AR Services. Differences between the billed amount and received amount will result in either a credit (for an overpayment) or a remaining open AR item (for an underpayment.) Alternatively, an adjustment to the bill may be necessary.

Monitoring Outstanding Accounts Receivable Items

Departments are responsible for monitoring their Accounts Receivable balances for outstanding items to ensure the University has received cash for the revenue. If payment is not received, the department may have a bad debt expense charged against the revenue, effectively reversing the revenue.