Finally, a successful AR process will send follow-ups to encourage prompt payment of outstanding invoices. They will run ongoing invoice aging reports to determine late payments and take a proactive approach to the collections process. Indicators include a low amount of debt and a high rate of early payments. The AR staff supports the balance sheet by minimizing the number of late payments through systemic monitoring and consistent follow-up.
These are generally made up of parking fines, library fines, miscellaneous fees, etc. Make sure that all personnel involved are training to understand the performance metrics for their jobs. For example, a company will manage $500,000 in monthly A/R balances (that’s $6,000,000 per year!) using an A/R clerk who makes $40,000.
1.6 Other/Miscellaneous Receivables
When an AR staff is acquainted with a company’s AP team, the easier the collections process becomes. Your business processes should always focus on the client and maintaining an ongoing level of satisfaction. AR software should have the ability to scan orders, receipts, and requests right as they arrive. Any corresponding document needed for invoice processing should be uploaded in the system and paired with the appropriate documents.
- The BANNER accounts receivable subsystem should be reconciled on a daily basis, if practical.
- A high volume of clients with a variety of needs and payment methods can lead to confusion and mistakes.
- All customer and sales data can be loaded into the system, where digital invoices are instantly generated.
- However, the repayment of travel advances should be handled in a manner similar to employee receivables.
The TGRAGES, which is by person and detail code should support the TGRRCON which is a summary report in BANNER. ZGRAGES, which is a ITS modification from baseline BANNER, is also available for the reconciliation process because it provides detail by student and fund. ZGRAGES may be more useful than TGRAGES because it can be downloaded into excel. The final part of the reconciliation is to then verify that the TGRRCON reconciles to the People Soft trial balance.
Institutions may also collect food service/meal plan fees in advance of services provided. Students, who have not paid or whose approved/awarded financial aid, scholarships and/or loans are not sufficient to cover remaining balances due, must be purged from class rolls unless “gap” funding is available. Institutional operating funds may not be used as a source for “Gap” funding. If a student’s account is discharged through bankruptcy, the institution is required to remove charges and any related holds from the student’s account with limited exceptions. All students with outstanding account balances older than thirty (30) days must have services withheld until the balance is paid.
Accounts Receivable
The statement should indicate the total balance due and identify a payment due date. The payment due date is up to each department, but should allow sufficient time for the department to post the payment before the next billing cycle. If the department has approval to assess a finance charge, the amount and terms must also be disclosed on the statement. If full payment is not received the procedures outlined in .030 are to be followed.
Accounting software removes the possibility of human error by automatically generating invoices and keeping track of who has paid what in the system. Any material breakdown of the record-keeping capability will be reported to the institution’s chief business officer, who will advise the USG’s Chief Fiscal Officer if deemed appropriate. Uncollectible receivables, that are a result of revenue generating activities, should be recorded as a contra revenue so as to reduce the related revenue accounts. The cost of collections effort may be recorded as an expense of the same fund. Due to de-minimis nature of this activity and to expedite processing, institutions may choose to record all NSF fees in fund 10600. Final claims for reimbursable expenditures are normally required to be submitted to the proper agency within ninety (90) days of the completion of the term of the contract, grant, or other agreement under which the expenses have been incurred.
Setting up payment expectations in the business agreement is a proactive approach to avoiding bad debt. A company should also work with a collection agency in case they need to write off unpaid invoices. One of the toughest jobs in the accounts receivable process is getting payments in on time. Some customers simply need a little push and that incentive can come in the form of early payment discounts. Prompt billing for reimbursement of expenses or charges arising from services provided under various agreements is essential for effective management of accounts receivable. Information must be maintained on the status of all unbilled accounts to ensure that all actions necessary for the preparation of the bill have been taken as required, which will allow the bill to be issued as expeditiously as possible.
6.2 Sample Request for Write-Off
If you have $500,000 or more in accounts receivable, then by compressing the accounts receivable cycle you will generate cash. Monthly – All departments are to complete a monthly accounting and aging of any receivables outstanding at the end of the month. Departments may used the KSU Accounts Receivable Report form or some other reporting tool or software of their choice. The records to be maintained for each customer must include the complete name and address plus the social security number (when necessary), Federal Employer Identification Number (FEIN) or other taxpayer identification number.
Receivables due from another state agency, foundation or another unit of the university system should not be written off. The USG Office of Fiscal Affairs should be contacted for assistance if item is over 120 days old. In most cases, the Governmental Accounting Standards Board (GASB) provides that uncollectible receivables should be treated as a contra asset (Allowance for Doubtful Accounts) and contra-revenue. This Agreement is entered into between the Student and the Board of Regents of the University System of Georgia, by and on behalf of [ USG institution ]. The following are types of transactions that could generate other/miscellaneous receivable balances. Fines and Fees are primarily the result of punitive action for failure to comply with institution or departmental regulations.
# Incentivize Early Payment Discounts
The restriction of services will prevent the student from having access to transcripts, registering for additional classes/subsequent semester, or graduating until the receivable is paid. At many institutions, this restriction of services may be referenced as a “hold” on the student’s records. Once a hold has been placed on a student’s account, the student must not receive any services that would create additional charges. The BANNER accounts receivable subsystem should be reconciled on a daily basis, if practical.
Cash is everything to a business and you certainly would not want to burn up your cash. Learning How to Write Accounts Receivable Procedures helps you to control your cash flow; Let’s look at an example of accounts receivable procedures that is a part of the revenue cycle process. Annual – All departments are to report total outstanding accounts receivable equal to or greater than $50,000 due from external customers as of June 30th. A copy of the Accounts Receivable Report is to be submitted to the Division of Financial Services by July 15th. Statements are to be sent at least monthly to all customers who have an outstanding balance due.
In each case, these accounts are to be analyzed and managed according to the control procedures that are most applicable to the particular receivable. Per Office of Planning and Budget Policy (OPB) (Revision 7), travel advances are only available to an employee whose current salary is $ 50,000 or less when traveling within the United States. See Section 4.8 of this manual for additional requirements regarding travel advances. If you decrease your collection cycle time you will improve proper cash flow control.
1.4 Auxiliary and Service Enterprises
The majority of clients most likely operate on digital systems and thus, to stay in line with competition and customer needs, digitizing the process is a smart move. The larger the business, the more important it is to digitize processes. A high volume of clients with a variety of needs and payment methods can lead to confusion and mistakes. If a customer has always been on time, you can be lenient when an extension is needed. If it’s a business, the contact information of the accounts payable department must be given.
Accounts receivable in this category require particular attention in all phases of the management function because they normally represent a large number of transactions that arise from all types of activities throughout the USG. Also, the bulk of the transactions involve relatively small, amounts, many involving debtors that may not regularly do business with the USG, therefore, the potential for uncollectibles is elevated. Each institution has a variety of other receivables not specifically described above.
