Procedure: 401-A/R, Invoicing, Collections
Collections on Unpaid Accounts
The amount of effort expended on collection attempts should depend on the dollar size of the account. The expenditure of time, effort, and money to collect large amounts is appropriate; however, the same efforts expended on very small accounts may prove unfruitful. Each department must assess its individual level of the cost associated with the effort and the benefit that the effort will bring. Regardless of the amount of the account, if an account is not paid within a set number of days from the billing date, some of the following collection efforts should be made.
"Skip" Accounts
The procedure for skip accounts is that normal channels of information be used to attempt to locate the customer. These would include checking:
original source documents for accuracy of name and address,
correspondence or previous invoice files for prior activity (contact) with customer,
and telephone books. The Internet provides several electronic telephone books. teldir.com, BigFoot, and WhoWhere? are a few examples.
If this proves unsuccessful, the account should be referred immediately to a collection agency or written off as uncollectible.
NSF Checks
Non-sufficient funds (NSF) checks require immediate action. The initial step to be taken is to attempt to make telephone contact with the maker of the check. Telephone contacts are very effective and at least two or three attempts should be made to establish telephone contact within 48 hours after receiving the bad check. If unable to make telephone contact, an evaluation of the debt, in terms of dollars, should be made to determine what procedural steps are appropriate. As soon as it is determined that collection efforts are not working, the invoice should be submitted.
Section 20.905(2) of state statutes requires the addition of a NSF check charge when checks are returned by the bank. The charge is set by the Depository Selection Board. Effective July 1, 1998 the charge increased to $20. According to the statutes, a similar charge should be added for credit card transactions rejected by the bank. The purpose of this charge is to allow the University to recover its administrative cost of processing the returned check and collecting the money. This fee should be recorded as a miscellaneous receipt on the receipt deposit form, coded to 9900, and routed to Cash Management for processing.
General Follow-up
Follow-up should use calendar periods, with a thirty (30) day interval between notices. The actual timing for beginning a sequence of this nature would depend on the customer served; however, it should be started within a reasonable period after initial billing. The following is a general list of follow-up procedures.
- The full sequence (3) of collection letters has been sent. The letters should be sent in 30-day intervals.
- A records hold has been placed if appropriate.
Procedure: 401-A/R, Invoicing, Collections