Importance of Distinguishing Your Customers
It is very important for a service center to distinguish between internal and external customers. There are different rates that can be charged to each category of customer, so it is important to make sure that customers are classified appropriately. This differentiation ensures efficient processing and appropriate handling of payments within the service center's operations, as well as correct rate charging.
What Should You Be Charging?
The main rate that is produced through the rate calculation process is what we charge internal customers. This rate uses variables including the following:
- Non-personnel expenditures paid for using the 3E fund
- Salary and wage expenditures paid for using the 3E fund
- Capitalized equipment depreciation with an entity code and a remaining useful life, paid off an allowable fund for the internal rate
- The surplus/deficit to carry forward from the previous year, also known as the over/under recovery
External customers, on the other hand, are charged the internal rate with additional expenditures included as well. These expenses could include the following:
- Unallowable costs excluded for internal customers
- All non-personnel expenditures, related to providing the service, paid from unrestricted funds
- All salary and wage expenditures, related to providing the service, paid from unrestricted funds
- Capitalized equipment depreciation that is either fully depreciated or was paid for out of an allowable fund for the external rate
- The applicable F&A rate for your university and activity
Note: Since C-FOPs are not used for external customers, the applicable F&A rate cannot be automatically assessed!
For More Information:
We encourage you to take our Service Activity Basics and Service Activity Advanced courses to expand your knowledge on these topics. Whether it be learning the lingo or understanding which funds are allowable for which types of customers, we’ve got you covered in our training!
Contact us if you have any questions. System Government Costing is always here to help with your rate calculation needs!
Contact
Additional information related to managing self-supporting funds can be found on the System Government Costing’s Rates page and the Who to Ask page to request further assistance.
