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What is A/R? . Debts owed to universityFor goods or services University has sold or provided to customersShort termExpected to be paid in 30 daysNo interest charge.
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1. Fiscal Policy TrainingAccounts Receivable, FI0305 Laura Foltz
Business Affairs
2. What is A/R? Debts owed to university
For goods or services
University has sold or provided to customers
Short term
Expected to be paid in 30 days
No interest charge #1
3. Reconciling Balances Individual account balances
Control balance
Perform aging periodically
Review past due accounts
Reconcile individual accounts to control balance periodically
#1,2
4. Invoicing Pre-numbered invoices
Invoice number accounted for periodically
#2 4
5. Cashiers should NOT Handle disputed items
Approve refund of credit balances and credit adjustments
Where possible, the duties of the accounts receivable bookkeeper and the cashier should be separated.
A/R write-offs should be approved by an employee who does not handle cash receipts.
5 #2
6. Billing and Collections Regular billings - all customers on account.
Statements or invoices mailed monthly
Students at end of term, monthly if necessary
Written routine collection procedures
Special reminders/collection letters mailed for all past due accounts
2,3
7. Delinquent Accounts Customers – Services discontinued
Students – Holds placed on account
Release of grades and records
Registration
Certain debts can be cancelled if student dies during enrolled term
Delinquent amounts over $2,000
submit a list of accounts to General Counsel's Office for consideration.
#3, 17, 18 7
8. External Collection Agencies Six Months & $50 or more
Referred to Business Affairs
If not used, justification on write-off request
8 #3
9. Allowance for Doubtful Accounts Aging of Accounts Receivable.
Individual customer account balances categorized by length of time outstanding
Business Affairs estimates the relative uncollectibility for each category based on past experience.
The estimated uncollectible amounts in each category are totaled to determine the total allowance.
#4
10. Year End Aging Categories 0-30 days
31-90 days
91-180 days
181+
Semester - unpaid extensions of student fees 10 #5
11. Year End Reporting Allowance recorded (Business Affairs)
Departmental account is charged
List of A/R as of June 30 to Business Affairs
Aging of A/R must accompany list
#4,5
12. Returned Checks Automatically debited to University bank account.
The checks are returned to Business Affairs
Appropriate accounts receivable returned checks fund is charged #6
13. Returned Checks Detailed record maintained
If transferred for collection, the responsible office must obtain and keep a transfer receipt
#7
14. Returned Checks - Collected Official receipt written
Separate receipt book for high volume areas
Deposited to the university's bank account
Credited to A/R initially charged
$30.00 minimum service charge
Service charges credited to an income fund
#8,9,10,11
15. Returned Checks Reconcile checks on hand to amount on university official records
Appendix A - sample reconciliation sheet
Write off uncollectible returned checks
Keep returned checks even if person presents other payment
#12.13, 20
16. Uncollectible Accounts After above collections efforts
Department head ensures due diligence is collecting A/R
Department head requests write off
#14, 15
17. Documentation Initiating Write Off Documentation of collection activity
Copies of invoices
Special collection letters
Notes from telephone contacts
Returned Mail
#15, 20
18. Submit to Business Affairs T-35 Form completed by Department head
Request form includes justification
Itemized list of uncollectible accounts
Original returned check, if applicable
19. Writing Off A/R Chief business officer (or designee) signs FORM T-35 and forwards to Controller's Office
Copy is returned to department for files
The Controller's Office records journal entry
20. Writing Off A/R The Controller's Office prepares annual summary of write-offs for treasurer, Audit and Consulting Services, chief financial officer, and the TN Dept. of Finance and Administration.
Audit and Consulting Services will use this summary to perform periodic audit of accounts receivable write-offs.
21. Justification for Write-off NOT accounts of students currently enrolled
Collection agency returns as uncollectible.
Bankruptcy of debtor legally declared
Credit balances under $50 & inactive for year
Over 3 years old & billed regularly
Owed by companies no longer in business
Judgments over six months old.
16
22. Justification for Write-off Under $50 and over 6 mos. old and either
Returned for incorrect address (or)
Billed at least 3 times. (Generally, the third billing should include a special collection notice. )
Amounts under $2 (DR or CR) of any age
regardless of whether from a student who is currently enrolled.
Other reasons considered - case-by-case basis
#16
23. Bankruptcy of Debtors Notification from bankruptcy court that debtor filed for bankruptcy- immediately cease all collection efforts
Send all bankruptcy forms to Business Affairs
24. Bankruptcy of Debtors Student loans or other debts representing an obligation to repay amounts received or credited for educational purposes are not dischargeable in bankruptcy unless the court finds that exception from discharge will impose an undue hardship on the debtor.
#19
25. Bankruptcy of Debtors Parking and library fines are not dischargeable by the court under either Chapter 7 or Chapter 13.
If a discharge notice is received from the bankruptcy court, the debtor is no longer liable and the debt should be cleared from the debtor's record. However, for nondischargeable debts as described, collection efforts may resume after the debtor's discharge in bankruptcy.
Collection efforts may also resume if the case is dismissed.
#19
26. Bankruptcy of Debtors Business Affairs handles all bankruptcies.