Deposit And Payment Terms Enforcement
Mandatory policy governing minimum deposit requirements, net payment terms, late payment penalties, and vendor liability clauses for all corporate procurement activities above $5,000 CAD.
This policy enforces a minimum 30% deposit on all custom-engineered equipment purchases and orders exceeding $25,000 CAD. Standard net-30 terms apply to approved vendors only after successful credit check and signed master agreement. Late payments incur a 1.5% monthly penalty (18% APR) and immediate suspension of further PO releases. Vendor liability for non-performance is capped at 150% of deposit value unless otherwise stated in the purchase order.
This policy applies to all purchase orders issued by the Procurement Department for direct materials, capital equipment, services, and MRO supplies with a total contract value exceeding $5,000 CAD. It does not apply to inter-company transfers, petty cash purchases under $500, or emergency procurement requiring immediate payment via corporate credit card (see Emergency Procurement SOP). All vendors must have a signed Vendor Master Agreement on file before any deposit is accepted or PO released.
- All purchase orders > $25,000 must include a non-refundable deposit clause of 30% unless explicitly waived by VP Finance. Deposit invoice must be issued within 3 business days of PO issue.
- Payment terms are Net 30 from date of delivery/installation. Early payment discount of 1.5% offered if paid within 10 days (1.5/10 Net 30).
- Vendor liability for delivery delays > 15 days: deposit must be refunded within 5 business days plus a penalty of 10% of deposit value. For non-conforming goods, vendor bears all rework costs up to 100% of order value.
- No single PO may exceed $500,000 without dual approval from Procurement Director and CFO. Any PO exceeding this threshold requires a board-level sign-off.
- Late payment penalties: 1.5% monthly on overdue balances. After 90 days delinquent, vendor account is placed on hold and matter escalated to Legal for collection.
- Procurement Officer — Ensures all POs include mandatory deposit and terms language; verifies vendor credit status; processes deposit invoices.
- Accounts Payable — Tracks payment due dates; applies early payment discounts; initiates penalty calculations on overdue accounts; manages escalation for 90+ day delinquencies.
- VP Finance — Authorizes exceptions to deposit minimums; approves POs > $250,000; reviews quarterly compliance reports.
- Legal Counsel — Reviews vendor liability caps, penalty clauses, and deposit refund terms in all Master Agreements exceeding $100,000.