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Business Procedures Manual

10.1 Types of Accounts Receivable

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Receivable accounts are established for students (tuition and fees), employees (travel), federal and state agencies (grants and contracts), sponsored students (scholarships), auxiliary service enterprises (residence halls and bookstores), and other miscellaneous receivables that may be specific to certain institutions. These receivables are explained below.

10.1.1 Student Receivables

Tuition

  1. Granting of Credit: Receivable accounts for tuition are established while waiting for financial aid funds or scholarship funds from third parties on behalf of the student. Students who have not paid or whose financial aid has not been affirmed by the “add/drop” date should be dropped from class rolls.

  2. Aging and Analysis: Although student account receivables for tuition should be kept current, they should be reported on the aging report that is submitted to the University System Office (USO), as noted in Section 10.5.

  3. Collections: Due process should be followed in the collection of student receivables. Students should be given written notice about the nature and the amount of the outstanding obligation. If financial aid funds, scholarship funds, or guaranteed third party payor funds are not authorized for the student and he/she cannot pay the tuition, the student should be dropped from class. See Section 10.7.4, Table 2

Fees

  1. Granting of Credit: Receivable accounts are established for additional student fees that may be determined after the student registers and for the administration of fines.

  2. Aging and Analysis: All receivables for fees should be reported on the aging report that is submitted to the University System Office, as noted in Section 10.5.

  3. Collections: Due process should be followed in the collection of student receivables. Students should be given written notice about the nature and the amount of the outstanding obligation. See Section 10.7.4, Table 2

In the case of uncollectible student receivables, after due process is followed and the account is turned over to a collection agency, the bad debt should be written off as detailed in section 10.4.1.

Restriction of Services to Students

All students having student accounts with a balance older than ninety (90) days must have services withheld until the balance is paid. The restriction of services will prevent the student from having access to transcripts, registering for additional classes, 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.

Note: Institutions may have more stringent restrictions than this section requires.


10.1.2 Employee Receivables

Travel

  1. Granting of Credit: Normally, an employee should not have more than one advance outstanding at a time. Each advance should be accounted for before another advance is granted.

  2. Aging and Analysis: Data similar to that needed for miscellaneous debtor bills is required in the case of travel advance claims. Aging will be based on the date travel is completed plus ten (10) days.

  3. Collection: USG travel regulations require that all outstanding advances be settled within ten (10) days after completion of the trip. The amount of an advance that exceeds the allowed travel expenditures shall immediately be refunded to the institution. Immediate refund of a travel advance is also required when an authorized trip is cancelled or indefinitely postponed.

    If an outstanding advance has not been recovered by the time the accounting for the trip is due, institutions should, in the absence of extenuating circumstances, initiate action for recovery. See Section 10.7.4, Table 1.


10.1.3 State, Federal, and Similar Receivables

Billing

Claims originating with federal contract and grant activity or with state or private research agreements must be submitted promptly and accurately, since these claims are usually for large sums. Each institution must maintain procedures to ensure that the following billing standards are observed to the fullest extent practicable.

  1. Periodic Interim Claims: All reimbursable expenditures, net of amounts that are required to be withheld until final claims, should be billed to the proper agency within thirty (30) days of the close of the period (monthly, bimonthly, quarterly, etc.) for which reimbursement can be claimed.

  2. Final Claims: Final claims for reimbursable expenditures should 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.

Collection and Analysis

In order to ensure the prompt collection of these claims, a definite sequence of reimbursement collection efforts must be established, although the procedures will vary by funding agency. Aging information required is similar to that needed for miscellaneous receivables. In those instances where claims must be rebilled, the original billing date will continue to be used for aging purposes. Institutional follow-up procedures should take advantage of existing direct contacts available to campus contract and grant officers. See Section 10.7.4, Table 1.


10.1.4 Sponsored Students Deferred Fees

Deferred registration fees for sponsored students should be billed to the proper sponsoring agency within thirty (30) days of the close of the registration period for the quarter for which the fees are due.


10.1.5 Auxiliary and Service Enterprises

Residence Halls

Residence hall receivables are managed at each institution in accordance with the terms of the contract between the students and the institution. Amounts due from students who no longer live in a residence hall are to be pursued in accordance with the procedures described in Section 10.7.4, Table 2, for student bills. In analyzing these receivables, accounting offices must separately identify amounts representing deferred income (paid in advance) and age them as amounts not yet due.

Bookstores

Bookstores should limit the extension of credit to faculty and staff members, and outside organizations that regularly deal with bookstores. Their receivables should be managed in accordance with procedures described in Section 10.7.4, Table 1, for employees and the general public.


10.1.6 Other Receivables

Accruals and Other Unbilled Receivables

This category includes the following kinds of accounts:

  • Fiscal year-end accruals for unbilled current expenditures against contracts and grants.
  • Deferred registration fees for sponsored students that have not yet been billed to the sponsoring agency.
  • Credits due from vendors for returned merchandise, to be applied to subsequent purchases.
  • Miscellaneous receivables representing miscellaneous accruals.
  • Cash received in excess of recorded receivables, applicable to unrecorded receivables. These excess funds should be recorded as Deferred Revenue at year end.

Each institution must establish procedures to ensure that accrued and unbilled receivables are continuously reviewed, and that billings are issued and recorded without undue delay.

Miscellaneous Receivables

Each institution has a variety of miscellaneous receivables not specifically described above. In each case, these accounts are to be analyzed and managed according to the control procedures described above that are most applicable to the particular receivable. Installment receivables, deposits, and other amounts not yet due should be so identified.

Miscellaneous receivable accounts require particular attention in all phases of the management function because they represent a large number of transactions that arise from all types of activities throughout the University System. The bulk of the transactions involve relatively small amounts that become significant when taken as a whole. The potential for bad debts is high due to the fact that most debtors do not do business with the University System regularly.

There are three basic types of miscellaneous receivable transactions that require the granting of credit: student fines, departmental services, and special agreements.

  1. Student Fines: Miscellaneous invoices to students are primarily the result of punitive action for failure to comply with institution or departmental regulations. In most cases, the student is not available at the time it is determined that a fine is in order. Consequently, a bill must be issued notifying the student of his/her fine, and the University System is obligated to grant temporary credit to the student. A restriction of services to the student must be implemented as described in section 10.1.1.

  2. Departmental Services: Many institution departments are authorized to provide services or products to students and the general public. In these cases, the solicitation of customers and generation of income are not primary aims of the activities. As most transactions are for small amounts, the preparation of a bill and the granting of credit are properly influenced more by the need for the service than by the ability to pay. The risk of a few bad debts is acceptable compared to the avoidable administrative cost of credit investigation.

  3. Special Agreements: To handle recurring transactions with outside organizations, an institution will often establish special arrangements. Establishment of credit and timeliness of billing these cases should conform to normal commercial practice. Regular billing cycles will minimize the credit risk involved in these transactions.


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