1. External Sales Approval

2. Introduction to Staff o Keith Jansen - Manager o Steve Brandeen - Finance Professional o Russ Bakke - Finance Professional Email address - extsales@umn.edu

3. Agenda Objectives Approval Form (UM 1608) Business Proposal Outline (UM 1741) Subject Matter Experts (SMEs) Rate Development Contracts Classification Q & A anytime during the presentation

4. Objectives  Approve new internal/external sales activity  Review internal/external sales rates  Review external sale contracts  Validate compliance to policy and procedures

5. Objectives  Apply best business practices  Risk assessment  Analyze tax implications  Assist with rate development and cost allocation

6. External Sales Policy and Procedure  University Administrative Procedure: “Conducting External Sales Activity”  University Policy: “Selling Goods and Services to External Customers”

7. Internal/External Sales Approval Check with Internal/External Sales to validate what has been approved for the department Send a brief description of services that will be offered Define a complete list of services to be provided

8. Internal/External Sales Approval Form IESAF - (Form UM1608) Combined form for approval of Internal/External Sales Standardized responses to Yes/No questions New streamlined review process (2 pages)

9. Internal/External Sales Approval Form IESAF - (Form UM1608) Purpose Identify dept., key personnel, chartfieldstring Approvals section Sales activity type Description of activity Type of customer Activity Risk characteristics

10. Business Proposal Outline (Form UM1741) A key part of your application to conduct internal or external sales General business considerations: –Describe the department and its activities –Describe the proposed external sales activity –How does the activity relate to the department and the University mission? –Who will be responsible for the activity?

11. Business Proposal Outline Sales and Marketing Considerations:Sales and Marketing Considerations: –Consider the potential customers –Consider how to reach those customers –Are there other entities at the University that provide the same or similar services? Production considerationsProduction considerations –How will the product or service be produced? –How will you determine production costs?

12. Business Proposal Outline Budgeting and forecastingBudgeting and forecasting –Prepare a financial forecast for the current year Detail estimated revenue, expenses, and sales volume –Prepare a projection of expenses New streamlined review process (2 pages)

13. Subject Matter Experts Risk ManagementRisk Management: Ann Martin Tax Management OfficeTax Management Office: Heather Broneak Office of the General CounselOffice of the General Counsel (OGC): Elizabeth Anderson Sponsored Projects AdministrationSponsored Projects Administration (SPA): Amy Rollinger Office for Technology and CommercializationOffice for Technology and Commercialization (OTC): Andrew Morrow Environmental Health and SafetyEnvironmental Health and Safety (EHS): Joe Klancher) Institutional Review BoardInstitutional Review Board (IRB): Andrew Allen Controller’s Office (IES):Controller’s Office (IES): Keith Jansen

14. Internal Sales Rate Development Steps to setting an Internal Sales rate: Determine the measurable unit for goods and services (e.g. hours, units, tests) Determine all direct and indirect costs Determine the breakeven volume Determine annual output Exclude unallowable costs Determine the activity per-unit rate Rates should be reviewed and updated each year

15. External Sales Rate Development Steps to setting an External Sales price: If you have a Recharge Center, start with an Internal Sales rate –Add unallowable costs for internal sales If no Recharge Center activity, determine actual cost of external sales activity Goal is to match market rate for similar activity Add additional revenue to match market rate, if market allows Submit rate with initial approval form and with contract Create standard unit rate sheet, if applicable

16. External Sales Rate Development What can surplus revenue be used for? Fund 1026 Unrestricted Funds can be used to subsidize recharge centers, training of staff, FTEs, equipment, etc. Set up the account structure with internal revenue and expenses separated from external revenue and expenses through the use of Fund 1026 for external activity and funds 1150/1151 for internal sales activity

17. Market Driven Pricing The following method should be used to price based on market: Compare price to a similar good or service from an outside vendor used by your department or another department at the University Call and request a quote from outside vendor If activity is not available outside of the University, determine a similar effort with similar skill levels and request quote from an outside vendor Request information about pricing from the University of Minnesota Purchasing Department

18. Approval Process Send to extsales@umn.edu: 1.Internal/External Sales Approval Form 2.Business Proposal Form 3.Rate Development 4.Any other supportive documents Int/Ext Sales will review and return Sign Internal/External Sales Approval Form Int/Ext Sales will sin on behalf of the Controller Will send notification of approval in e-mail

19. Contract Review Process Utilize standard U of M agreements whenever possible, available at OGC website: www.ogc.umn.edu/contracts.htmlwww.ogc.umn.edu/contracts.html Always get a copy from the OGC library to ensure the latest revision is used –If non-standard agreement is used, OGC must review, which will lengthen approval time OES reviews contracts for: –Appropriate type of service (matches initial approval) –Appropriate rate structure –Related concerns, such as export controls issues, product liability concerns, currency validation, etc.

20. Classifications When determining if a transaction should be a Gift, Sponsored Project, or External Sale: Review “Fund Bucket Definitions” Guide (see handout) If still unsure: classification@umn.eduSend information regarding transaction to the classification group at: classification@umn.edu

21. Classifications Approval of an External Sale does not mean that a follow- on contract will not be a Sponsored project. Factors that could create a Sponsored project: Type of customer (federal or state agency, etc.) Change in activity (creating new intellectual property, prototype, research, clinical trial) Sub-contractor status pushed down from prime contractor Consulting (who has the decision-making power?)

22. Summary for External Sales Use market rate in costing model based on internal costs Use market driven pricing model to determine actual price Use standard contract and the latest revision whenever possible All contracts are reviewed by External Sales office Cost must be segregated for internal and external sales extsales@umn.eduUse our email address: extsales@umn.edu

23. Summary Go to website for forms, job aids, policies and training Fill out forms with as much detail as possible Use classification email, identification tool Send draft to us for review before securing signatures Call or e-mail us early in the process We are here to help you in any way that we can extsales@umn.eduextsales@umn.edu