Accounts Receivable, Credit and
Collections Policy
Credit and Collection Function
The
primary function of the UIS credit and collections department is to collect
over-due receivable accounts from UIS customers that are not on the University
general ledger system and who have purchased UIS products and services on
credit. These customers include Harvard affiliates, institutes, student
organizations, etc. The Credit and Collections department performs all
associated duties necessary in accomplishing this objective in accordance with
the principles, practices and procedures described below.
Collection Principles
The following principles shall be followed by
all UIS employees involved in the collection of overdue accounts and all UIS
managers who oversee businesses that provide product and services to customers
on a credit basis:
- Staff shall maintain
a positive and constructive attitude toward all customers
- Discrimination in
customer relations is to be avoided
- Customer contacts
are to be kept on a dignified and professional basis
- Every attempt should
be made to find a suitable credit basis with which to deal with customers
that are deemed eligible to purchase
- All credit and
collection decisions shall be independently made and shall conform to
requirements of the law.
Collection
Practices
The following practices have been established to
assist in the collections efforts for all UIS employees who are involved in the
collection of overdue accounts and all UIS managers who oversee businesses that
provide product and services to customers on a credit basis:
- Management will be kept apprised as to the status of all credit and collection activity, and notified about changes to policies and procedures.
- Collection policies and procedures have been established that:
o minimize the level and age of receivables to achieve the lowest possible days sales outstanding and bad debt loss
o promote maximum internal control over cash and receivable transactions and insure the integrity of the financial data
o maximize customer contact while providing the flexibility to accommodate for individual account variations.
Collection
Procedures
The following procedures shall be followed by
all UIS employees involved in the collection of overdue accounts and all UIS
managers who oversee businesses that provide product and services to customers
on a credit basis:
Contact Lists
Contact lists have been established by the
Collections Department to facilitate the communications process. The contact
list contains the names and numbers of the individuals at each of the approved
affiliated institutions who typically transact for UIS products and services.
Monitoring and Reporting
On a monthly basis, the UIS Collections
department creates and distributes the following reports to the business and
financial management of the organization:
- Accounts Receivable/Collections
Summary Report
– Outlines the outstanding balances in the aged receivables, the total
write-offs year-to-date, and the amounts collected year-to-date.
- Potential Write-off Report – Outlines all
outstanding invoices by customer over 90 days, and the status of the
collection process.
- Year-to-date Write-off Report – Outlines all
written-off customer invoices that have not yet been collected for
the current year, all written-off customer invoices that have been
collected for the current year, and all amounts received this year for
prior year write-offs.
These reports should be reviewed carefully by
management. Regular meetings with the collections staff to review all
outstanding receivables can also be arranged.
Collecting
on Accounts
When an account becomes
past-due, service to that customer or future purchases on account may be
terminated to reduce the exposure to excessive losses due to bad debt. Additional
collection activities may include the following:
Direct
Calling
At 90-days past due, the
collections staff will contact the customers accounts payable department to
inquire about the payment status. The collections staff will email or fax
duplicate invoices to the customer if requested. If the customer does not
dispute the invoice, a payment commitment date will be confirmed. If the
commitment date is not met, the collections staff will follow-up with
additional phone calls to the customer as necessary.
Collection
Letters
A series of collection
letters can also be used as a tool in collecting overdue amounts. Collection
letters are typically sent out at the following times:
- When the account becomes 90-days past-due
- When payment has not been received at 120-days past-due
Resolving Customer Disputes
It is not uncommon for
customers to dispute certain outstanding charges. Below is a list of common
customer payment issues:
- The invoice does not match their original purchase order (P.O.) amount
- The P.O. provided at the time of purchase was incorrect
- The customer disputes some or all of the costs on the invoice
- The product was not received
- The product was returned
The collections staff
will work with the customer and UIS business management to resolve all customer
disputes and arrive at a satisfactory agreement on outstanding monies owed.
Writing-off
Uncollectible Accounts
After a customer
receivable account has remained open for 6 months, the University will
automatically write the account off to the Allowance for Bad Debt Account (object
code 5773) in the general ledger. However, if the original charge was posted
to Accounts Receivable (object code 0200), the write-off will be posted
directly to that account and then later moved to account 5773. Internal
collections activities may continue, and if collections are successful, the
write-off will be reversed and the payment applied to the account.
When all internal
collection efforts have been exhausted and an account is deemed permanently uncollectible
(i.e. it is no longer worthwhile to pursue the claim when the expense to
recover is greater than the amount to be recovered), internal collections efforts
will cease. The accounts with material balances will be turned over to the
University’s outside collection agency. The outside collection agency will
proceed with additional collection alternatives, including written/verbal
correspondence, and legal action. If moneys are later collected on the written
off account, the write off is reversed to allow for proper payment posting to
the account.
For More Information
For additional information on the
department-wide Accounts Receivable, Credit and Collection Policy and
Practices, please contact Dave Murphy at 5-1836.
