Payments & Banking
Managing an international program involves making payments abroad, often by different means than those used domestically. Along with the Office of Treasury Management (OTM), Accounts Payable (AP), and your School's Finance Office, we can help strategize about how to transmit or transport funds. We can also advise on a foreign country’s currency control and banking regulations for field operations.
You can start by:
- Reviewing payment and banking options and identifying those that will work for your project.
- Developing realistic financial controls and reconciliation processes that meet Harvard's requirements and those of your funding organization.
- Consulting with your School’s Finance Office about your plans, especially if you expect to need a local bank account or operating advance.
And then contact us or one of the other relevant offices identified below.
7 Payment Options Abroad
This is often the most convenient method of payment for travel abroad. Ensure that your chip and PIN card is activated and that you've set your PIN before you travel. Visit the corporate card page for more information.
Harvard processes international wires in U.S. dollars for amounts of $1,000 or more. In most cases, U.S. dollar wires are discouraged, but wires can be sent in most other currencies for any amount. Include a cushion of 10 percent to cover the currency exchange fee for the wire; any unused amount is reimbursed.
Foreign companies and individuals accepting a wire transfer can be set up as vendors and paid normally via HCOM Payment Request. Foreign nationals can be paid for work completed overseas without U.S. tax withholding via GLACIER. In order to process wire transfers, the vendor must be set up in the Oracle AP system. Visit the Office of the Controller's new vendor setup page for instructions, and then download the wire transfer form.
Harvard discourages cash payments because transporting cash puts your personal safety at risk. Where cash is the only option, you should minimize the amount you carry by using local banks, ATMs, or Western Union. Another option is to enable cash advances on your corporate card. If cash advances will be drawn down, your School's or Unit's Financial Dean or equivalent counterpart must be informed and approve of them prior to travel. School policies pertaining to cash advances and cash reimbursements vary, but you must have receipts for any expenses paid in cash.
Short-Term Operating Advances
A Short-Term Operating Advance (STOA) may be useful if your program is shorter than six months and your expenses cannot feasibly be paid using HCOM Payment Request or credit card payments. A STOA is an advance of funds to an individual employee who then becomes responsible for those funds. All expenses must be documented and submitted for reimbursement. See the STOA policy and procedure.
You can use your personal credit card or cash and file for reimbursement. Be mindful of exchange rates, foreign transaction fees, Harvard's documentation requirements for payments processed as reimbursements, and any additional documentation requirements set by your project's funding source. The Harvard travel policy and the business expense reimbursement policy are good places to start.
If you have significant or cyclical spending in a foreign country, it may be impractical to make all of your payments from the U.S. or through a local partner. Setting up a foreign bank account may be a solution, but it has become increasingly difficult to hold a foreign account without being a registered entity or business in the foreign location. All Harvard bank accounts (including those held by affiliated entities) must be opened and managed by the OTM. Harvard is not responsible for supporting or monitoring personal bank accounts opened in the name of a faculty or staff member.
Along with OTM's Cash Management Office, we can advise on the implications and challenges of opening an account and the possible solutions. For example, we can help you decide whether the account should be in U.S. dollars or the local currency, depending on currency volatility and sponsored requirements (for grants). See the bank account policy and OTM's bank account "how to" page for more information.
Payments Made by Local Partners
If you work with a local partner, the partner could be responsible for dispersing local payments. This can be a helpful solution if payments must be made locally but opening a bank account isn’t an option. You need to account for currency exchange fluctuations and ensure all parties have a clear understanding of documentation requirements. If your project is grant funded, establish financial controls with your partner organization to review local expenses and ensure expenses are allowable and documented.
Establishing Financial Controls
In order to track and evaluate your program’s finances, you need to establish appropriate controls for the following:
- Storage of financial records: Determine an appropriate system of record keeping, including where and for how long records are stored (e.g. up to seven years for federal grants).
- Cash flow: Review how often and how much money is wired to the project location, especially if you utilize a local bank account. Determine whether or not cash can be remitted back to the U.S. once it’s transferred; this is very difficult in certain countries.
- Petty cash: Develop a process to manage petty cash in the foreign location, including security measures for any cash stored locally.
- Sub-recipient monitoring: Establish a process for monitoring a local organization or field office to ensure they meet OMB-audit (or similar) standards. See the Office of Sponsored Programs sub-recipient monitoring policy.