An external customer is defined as a non-university entity. Many external customers can be identified because they pay by cash, check, or credit card. This includes students, faculty and staff, and fund 80 (agency fund) speedtypes. This category specifically excludes other CU campuses, which are considered internal customers.
- The price charged to all external customers may not be less than the product's cost or less than what an internal customer would be charged for the same good/service.
- The price charged to external federal customers should be no more than the cost of the product plus a 60-day reserve allowance.
- The price charged to external nonprofit and external corporate customers may not be less than the cost to external federal customers and may include a profit component.
Campus units may earn revenues by selling goods and services to entities outside of the University (also known as External Sales Activities or ESAs). These revenues will typically be recorded as Auxiliary Operating Revenues, Sales and Services of Educational Activities (SSEA) revenues, Rental Income, or Miscellaneous Revenues. The appropriate recording of these revenues in the finance system will, in part, depend on the nature of the unit raising the revenues. For example, officially designated Auxiliary Enterprises will typically use the Auxiliary Operating Revenue account codes, regardless of the customer, while Internal Service Centers (ISCs) can only use the Miscellaneous Revenue account codes for external sales.
When operating your business be aware of the fund type in use, especially if your business charges both internal and external customers. If your business does both types of business, please refer to this fund decision tree (PDF) for best fund placement.
For more information on charging external customers, see the Office of Contracts and Grants' (OCG) website.
Charging Both External and Internal Customers
Some campus units may generate revenues by selling to both internal and external customers. The external customers must be charged a rate equal to or higher than the cost of the product and equal to or higher than the rate charged to the internal customers. This is because federal costing standards require that federal contracts and grants be charged the best price and because CU-Boulder policy is for internal charge rates to be non-discriminatory (i.e., all internal users should be charged the same rate).
Internal service centers are generally expected to operate on a break-even basis and therefore should maintain fund balances equal to no more than 60 days of working capital, per federal regulations for higher education costing practices and principles (in particular, OMB Circular A-87). Profits from external customers do not factor into this calculation and should be separated from internally-generated balances to promote compliance. External profits may be used to buy down rates for internal customers or for other approved activities.
When recording revenues from both internal and external customers, service centers should use the Miscellaneous Revenue account codes for the external revenue and the Internal Service Center or ID revenue account codes for the internal revenue.