POLICY:

All lease/purchase financing must be conducted with Capital Finance or Banc One Leasing Corporation on the established bulletins for financing. The only exception would be financing required by a mandatory state bulletin.

PROCEDURES:

An agent receives a requisition for "lease" of equipment.

1. The agent must determine whether it is a lease-to-purchase or a simple rental transaction. If a rental, bid accordingly. A rental is where there is no purchase anticipated at the end of the rental period. If a lease-to-purchase, go to next step.

1.2. To acquire financing for a lease/purchase transaction, use one of the existing bulletins. If the dollar amount is $5000-$20,000, use bulletin 15-93500-209, currently with Banc One. If the total dollar amount is over $20,000, the transaction must be submitted to Capital Finance. Capital Finance will review purchases as low as $20,000 for inclusion in an agreement. If Capital Finance accepts the financing, use bulletin #15-93500-209. See Section 2. If Capital Finance denies the financing, see Section 3.

2. Use bulletin 15-93500-209, Master Lease Agreement to finance capital assets, software, and certain other intangible program costs. Questions about this process should be directed to Capital Finance at 267-0374 or DOA purchasing manager at 266-2450.

2.2. The agent will Fax the completed original form Request for Use and Approval and a copy of the requisition to Capital Finance, at 266-7645. The original should be forwarded via interdepartmental mail to Capital Finance, 101 E. Wilson St. FLR 10, Madison, WI 53702.

2.3 If denied by Capital Finance, the agent may use Bulletin #15-93500-209.

2.4 Capital Finance will prepare a draft Master Lease schedule based upon the information provided and the program's current interest rate. The schedule will determine if the Master Lease Program is the most economical means of financing. (Total time: approximately 10 days).

2.5. If approved, the agent will receive a "Notice of Confirmation of Approval to Utilize the Master Lease Program". The agent will issue two POs against the existing requisition.

2.5.2 The next work day, the agent will issue a "no print" cancellation PO to the equipment vendor (see 2.5.4).

2.5.3 NOTE: If an advance or a down payment is to be made, it must be done through Capital Finance. It must not be made to the vendor directly.

If a department. is making a down payment at the time of the initial order, the down payment should be included in the initial requisition. The agent must notify Capital Finance that a down payment is being requested. If the department is making an additional advance payment, an add-on requisition should be done requesting the additional payment. The agent must contact Capital Finance to notify them that an advance payment is being requested. A copy of the change order must be sent to Capital Finance.

This procedure allows for the UW to make a "down payment" on the equipment without violating the requirement of the state having no prior interest in the equipment.

If the UW intends to pre-pay any portion of the equipment, that portion will be withdrawn from the identified appropriation and transferred to Capital Finance immediately after Capital Finance has paid the vendor.

2.5.4 The second PO is issued to Capital Finance in care of UW-Accounting Services (Vendor #22222). This PO should be set up with order type LC or LT. The beginning and ending dates must be completed to ensure that a continuing order requisition (COR) will be generated. Each COR must reference the previous COR number. The PO dollar amount is the amount to be paid during the term of the PO. Use order text message CP2 on the item. Complete text message and also include equipment bid/contract number, Master Lease purchase number and lease payment schedule number. Master Lease purchase numbers can be obtained from the notice or can be obtained by contacting DOA Procurement at 262-2313. The reference number is the Master Lease bulletin # 15-93500-209. The commodity code must be the ten-digit code from the bulletin. When a down payment is requested for any portion of the equipment, that portion must be identified in the text section of the PO and Capital Finance must have been notified. The agent must send a copy of the PO to Risk Management.

2.6 The agent will send two copies of the Memo to Department, Master Lease Finance Equipment Receipt and Acceptance to the department asking for return of one signed copy certifying satisfactory receipt of equipment. Upon receipt of signed copy, agent should notify Capital Finance so final payment schedule can be generated.

2.7 The agent will receive an initial Equipment Payment Schedule for signature. The original must be signed, dated and returned to Capital Finance. Copies are not acceptable. Revised schedules may be periodically sent. Each subsequent schedule replaces the one before it. A change order needs to be done, updating schedule number and payment information, every time a revised schedule is received. A copy of the change order must be sent to Accounting Services Operations Manager.

2.8 Upon receipt of invoice, Capital Finance will Fax to the agent a "Master Lease Program Notice of Equipment Acceptance" which authorizes Capital Finance to pay the vendor. If the agent has not received a signed copy of the Memo to Department, Master Lease Finance Equipment Receipt and Acceptance, the agent will contact the department immediately to determine whether the equipment has been received and is satisfactory. This form should NOT be signed until it is known that UW is completely satisfied. The agent will Fax the acceptance form back to Capital Finance at 266-7645. The original must be returned to Capital Finance.

If UW receives the invoice, immediately forward to Capital Finance.

2.9. Lease payments, as identified on the most current schedule, will automatically be deducted by Capital Finance in February and August, for the duration of the lease period. . If the UW intends to pay for any portion of the equipment "up front," that portion will be withdrawn from the identified appropriation and transferred to Capital Finance immediately after Capital Finance has paid the vendor.

2.10 Title of leased equipment is with Firstat Bank and will transfer to UW upon completion of lease payment obligations.

3. Use Bulletin #15-93500-209 (currently with Banc One Leasing Corporation) to finance transactions between $5,000-20,000. UW-Madison Accounts Payable policy is to prepay lease/purchase contracts annually when the annual payments total less than $5,000. If monthly payments for the year total more than $5,000, they may be paid monthly, quarterly, semi-annually, or annually at the discretion of the department. Annual payments allow cost savings over quarterly/monthly payments. The sequence of events, starting with 2.1, may vary depending upon acceptable delivery/installation by equipment supplier. WARNING - THESE PROCEDURES ARE NOT CURRENT. SEE YOUR SUPERVISOR.

Buyout There is a buyout option, as shown on the payment schedule, available each fiscal year which must be total pay off of loan. Buyout may be arranged at other times via a phone call to Banc One to determine buyout amount.

3.1. The agent will contact Banc One Leasing Corporation at (800) 888-9199 X7, or FAX (414) 765-3386 to request the current interest rate based on the desired financing. Give the equipment name, total dollar value desired method of repayment (monthly, annually, etc) and desired length of financing.

3.2. The agent will prepare initial purchase order (PO) to Banc One Leasing Corporation, #17805 using the provided rate of interest with the understanding that a change order may be necessary once the equipment is installed to set up the final financial terms. Order text message "1ST" provides exact wording of initial order. Any subsequent change order, if necessary, will show the final interest rate and complete payment schedule (typed on the purchase order--not an attachment). The agent will:

• Reference the bulletin number on the PO in the bulletin number field and the original UW bid or contract number for the equipment within the PO text.
• Order type must be "LC" or "LT"; and the beginning and end dates must be entered on the purchasing system base to ensure a COR is produced.
• A copy of the PO to Banc One should be sent to Risk Management. The agent will put a "pull form" in the vendor attachment box on the date of release asking to have the PO photocopied and mailed.

3.3 Banc One will issue their own PO (after receiving UW PO) to the equipment vendor and send a copy to Purchasing.

• Banc One will send a Lease Purchase packet containing two sets of the following documents to the agent (who signs all but one form):
• Delivery Order with a number issued by Banc One
• Exhibit A, Equipment Description that lists the equipment ordered (Agent should verify for accuracy)
• Exhibit B, Payment Schedule that confirms the payment cycle (this document subject to modification and should be verified and corrected if necessary as to payment dates)
• Exhibit C, Receipt Certificate that verifies the University received the equipment and establishes the "bill to" address for invoices (must be signed by agent) NOTE THAT THE RECEIPT CERTIFICATE SHOULD NOT BE SIGNED UNTIL THE DEPARTMENT HAS VERIFIED THE PRODUCT/SERVICE IS SATISFACTORILY RECEIVED/INSTALLED.
• The Form UCC-1 is a statement filed under the Uniform Commercial Code to record the lease/purchase transaction.
• The 8038-GC or 8038-G form (NOT signed by the agent). The agent must verify figures on form and give it to the department secretary, and the department secretary will obtain the signature of the Director and give the agent a copy to mail to Banc One with the other documents.

3.4. The agent will send form memo with a photocopy of the questionnaire (Exhibit D), and receipt certificate (Exhibit C) to the department for completion and return to agent as notification of satisfactory receipt/installation of equipment.

3.5. The packet should be filed in the Bid Processing Finance pending file with green BID PROCESSING FINANCE ACTION SLIP. Indicate appropriate tickle message, date of tickle, PO #, date and reason for follow up written on top.

3.6. Upon receipt of the questionnaire (Exhibit D) from the department and if equipment is received and accepted via the signed receipt certificate (Exhibit C), the agent completes and signs both original sets of the lease/purchase packet. If the equipment is not yet received (no receipt certificate received from the department), do not sign the receipt certificate form. Also, if the receipt certificate is not received, have the transaction filed and tickled using method in 2.5. Agent may send the packet to Banc One without the signed receipt certificate-- to keep the transaction in process (after step 2.8).

3.7. The agent photocopies one complete/signed packet for review and preparation of an Opinion of Counsel Letter by Legal Services. The photocopy and a filled in cover memo requesting the legal review are given to the agent supervisor for approval. The approved packet is then given to the department secretary for logging and forwarding to Legal Services. (NOTE: Purchasing Director signs the 8038GC or 8038G form).

3.8. Legal Services will prepare and send the Opinion of Counsel letter directly to Banc One. A copy of this letter is sent to the agent as notification to send the original packet to Banc One.

3.9. When the equipment is shipped, the equipment vendor will invoice Banc One. IF Banc One receives the equipment vendor's invoice but they have not received the complete signed packet, they will contact purchasing (via a copy of the invoice) to obtain authorization for payment. Banc One will not pay the invoice until the University authorizes the payment. This is done via the receipt certificate form (Exhibit C) which is to be completed after notification of delivery by the department.

3.10. Both original copies of the lease/purchase packets with a copy of the Opinion of Counsel letter must be sent to Banc One for approval/signature (generally within three days of acceptance of the equipment). Make a photocopy of signed documents for the Bid Processing Finance pending file (see #2.5 above).

3.11. Packet to Banc One should be mailed via U.S. mail.

3.12. Banc One will return one fully executed lease/purchase packet to the University "bill to" address. THIS IS TO BE GIVEN TO THE AGENT SO A CHANGE ORDER CAN BE PROCESSED, IF NECESSARY. THE FINAL CHANGE ORDER SHOULD INCLUDE THE COMPLETE PAYMENT SCHEDULE (TO BE TYPED INTO ORDER).

3.13. The agent should request the lease/purchase documents be filed in the ALL FILE.

3.14. Banc One will invoice the University for lease/purchase payments according to the purchase order.

3.15. Title of leased equipment is with the lessor and will transfer to UW upon completion of lease payment obligations.

REFERENCES:

State Purchasing Operating Bulletin 15-93500-209
Master Lease Factor Grid (for reference)