Business Procedures Manual

Essential business procedural components for University System of Georgia institutions.

10.1 Types of Accounts Receivable

(Last Modified on April 3, 2019)

Student receivables make up a significant portion of outstanding accounts receivable, however procedures outlined in this BPM section would also apply to amounts due from federal, state or local government agencies, vendors and other non-student accounts as a result of normal business operations.

10.1.1 Student Receivables

(Last Modified on April 19, 2019)

Student receivables generally consist of a combination of tuition, mandatory fees, housing fees, food service fees, other elective fees and special charges.

Per Section 7.3.3 of the BOR Policy Manual, “all tuition and fees are due and payable on or before the last day of the drop/add period for the specific academic term.” However, collection of tuition and fees may be deferred for a specific academic term in the following circumstances for amounts:

  1. Guaranteed by an outside agency/third party,
  2. Covered by loans or scholarships,
  3. Stated in certificate or documents guaranteeing payment for international students.

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. “Gap” funding is funding provided from designated resources, such as emergency type loans or foundation funds to bridge the difference (gap) between what has been applied to a student’s account (cash, aid, scholarships) to cover semester charges vs what remains due from student. This could be temporary or permanent funding, depending on source. Institutional operating funds may not be used as a source for “Gap” funding.

The purge date should normally be the final add/drop date and the purge process should start on that date. However, to accommodate financial aid processing at institutions with a large number of late/walk up registrations, the purge date for the late/walk up registrations may be extended with permission from the USG Chief Financial Officer. At no time should the purge date be extended beyond fourteen (14) working days from the add/drop date. This should provide institutions with ample time to process and finalize financial aid awards.

Scholarship funds or financial commitment letter must be on hand at financial aid office by ‘add/drop” date to be considered approved resources.

Balances due for sponsored students should be billed to the proper sponsoring agency no later than mid-term for the semester for which the balances are due.

If financial aid is withdrawn at or near the end of the semester, and the student has already registered for the following semester, the student must be withdrawn from the following semester if prior semester’s balance is not paid by the “add/drop” date.

  1. Note: Beginning in Fall Semester 2019, institutions are required to send preliminary billing notices to students 45 to 60 days after tuition and fee rates are approved by the Board of Regents (BOR) for the upcoming semester.

In certain circumstances, institutions may be allowed to collect tuition and fees on an installment basis. Collections must always be made in advance of services rendered to remain in compliance with the State’s “gratuities clause”.

  1. For institutions, which desire to manage the collection of tuition and fees on an installment basis, a proposed installment payment plan must be submitted to the USG Chief Fiscal Officer for approval. The following items are required:
    1. The request must be made in writing and must be signed by the President and the Chief Business Officer.
    2. The institution must show that it has sufficient staff to administer a payment plan.
    3. The institution must demonstrate that it has sufficient available operating cash reserves to manage cash flows needs during each semester the payment plan is in effect.

      “Available operating cash” is defined as cash available for normal operating expenses, therefore, the following items must be removed when calculating “available operating cash”:

      • Non-current restricted cash
      • Cash reserved for capital renewals and replacements (including R&R reserves)
      • Endowment fund cash

    4. The installment plan must be structured so that tuition and fees are collected in advance of services provided.
  2. Once approved for an installment program, the institution must:
    1. Stay current on all collection efforts,
    2. Submit a listing of aged accounts receivable to the USG Chief Fiscal Officer on a quarterly basis,
    3. Maintain data on participants in the installment program:
      • Number of participants and dollar amounts,
      • Participants who paid late, including amounts,
      • Participants that did not pay and amounts due,
      This data must be available to the USG Chief Fiscal Officer upon request. Proper management of the program will have a significant bearing on an institution’s ability to continue the installment program.

    An institution’s authority to offer the tuition and fee installment plan, may be removed at any time, if the USG Chief Financial Officer deems that the plan is not being effectively managed or the financial position of the institution is adversely affected.

Institutions manage housing fees in accordance with terms of the housing contract with students. Per some contracts, housing fees are collected on an installment basis, with the fees collected in advance of services rendered.

Institutions may also collect food service/meal plan fees in advance of services provided. However, if the institution has been approved by USG Chief Fiscal Officer to use the tuition and fee installment payment plan option, housing fees and food service fees must be collected using the same installment terms as used for tuition and fees.

If any institutions collect housing or meal plan fees on an installment basis, they must structure the payments to limit the possibility of creating an accounts receivable resulting from a student withdrawal and return of Title IV funds.

10.1.1.1 Financial Responsibility Agreement

Beginning Spring Semester 2020, institutions must maintain a signed Financial Responsibility Agreement on file for each student. Early implementation is encouraged. These agreements must be signed, at a minimum, annually. See BPM Section 10.6.3 for a sample form. This agreement acknowledges the student’s responsibility and agreement to pay all tuition, fees and all related costs for the services received.

In situations where a student has incurred debt, this agreement acknowledges a student’s financial obligation to repay the institution and provides the institution the mechanism to charge collection fees to the student (15%) as suggested by the Attorney General’s Office in accordance with OCGA 13-1-1.

10.1.1.2 Restriction of Services to Students

All students with outstanding account balances older than thirty (30) 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/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.

In certain circumstances a limited amount of financial aid may be retroactively applied to a previous semester. In this scenario, the hold may only be removed in a controlled environment and only by the Registrar or designee. With the exception of retroactive application of financial aid, holds may not be removed under any other circumstances until student has paid account in full.


10.1.2 Employee Receivables

(Last Modified on April 3, 2019)

Units of the University System normally should not have employee receivables, however, there may be instances where errors occur in payroll and/or travel reimbursements which could create balances due from employees. These receivables may be collected in two ways: either through payroll deductions or direct repayment from employee. If payroll deduction is used, the university must get authorization from the employee. Signed authorization would be best practice, but e-mail authorization would be acceptable if employee expressly states in an e-mail the nature of the deduction and amount being approved.

If employee ceases to make payments, the institution’s chief business officer in consultation with the human resources director should determine proper course of action. Employees, who do not demonstrate good faith effort to repay, may be placed with collections.

Travel advances, which are provided on occasion to employees on travel status, are treated as prepaid items, not employee receivables. However, the repayment of travel advances should be handled in a manner similar to employee receivables. Each travel advance should be repaid before any future travel advances are allowed (generally within 10 days after completion of trip). If a trip is cancelled, funds should be remitted to the institution as soon as trip is cancelled.

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.

  1. Note: Per SAO regulations, an employee should have only one travel advance outstanding at a time. Each advance should be cleared before another advance is granted. See OPB (Revision No. 7) Section 12 for more information.

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.


10.1.3 State, Federal, and Similar Receivables

(Last Modified on April 3, 2019)

Accounts receivable discussed in this section relate primarily to externally sponsored grants and contracts. Ensuring timely submission of invoices is important in ensuring that all available contract/grant funds are received on projects. Invoices related to federal contract and grant activity or with state or private research agreements must be submitted promptly and accurately in accordance with award provisions.

Generally, 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.

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.

Fixed-price contracts are often used by governments because of the benefits for more precise budgeting where the buyer and seller know what to expect to pay or receive based on product or service provided. If an institution has amounts due from fixed priced contracts, these amounts should be billed within 30 days of the completion of terms of the agreement. If the agreement is structured such that payments are to be received upon completion of certain contract parameters, billing should occur within 30 days of completion of prescribed contract provisions.

Georgia State Financing and Investment Commission (GSFIC) reimbursements are to be submitted, at a minimum, on a quarterly basis; however, it is recommended that reimbursement requests be submitted on a monthly basis. GSFIC reimbursement policy states as follows:

  1. “Requests for reimbursement that are not received on a timely basis, or contain invoices that are over one hundred twenty (120) days old, are subject to denial by GSFIC”.

Accounts receivable may also result from business arrangements with other governmental units and foundations resulting in claims for payment. Diligence must be exercised to ensure timely billing and collection to minimize the receivables arising from these claims.


10.1.4 Auxiliary and Service Enterprises

(Last Modified on April 3, 2019)

Residence Halls

As stated in Section 10.1.1, Board policy allows for the collection of housing rents on an installment basis. Housing rents must be collected in accordance with the terms of the residence hall contracts.

Rents collected on behalf of vendors participating in the Public Private Partnership (PPP) initiative are not revenues of the institution and will be treated as a custodial relationship. Therefore, any receivables created from this revenue collection process are not considered accounts receivable of the institution. Any collection efforts related to these receivables would be responsibility of participating vendor.

Bookstores

Bookstores should limit the extension of credit to faculty and staff members, and outside organizations that regularly deal with bookstores.

Some institutions, with institutionally managed bookstores, may allow students to charge books and other academic supplies from the bookstore, subject to any institutional limit and aid available on the student’s account. Any amounts charged in excess of aid available must be paid within 15 days after add/drop date.

Health Services

Health Services are generally funded by student fees, however there are some health service charges that are not covered by fees and are the responsibility of the student or the student’s health insurance provider. Any amounts not covered by the health insurance provider should be added to the student’s account. Federal financial aid cannot be applied against health insurance charges due from student, therefore, institutions must modify coding to accommodate for that restriction. When billing students for these outstanding balances, the student must be provided written notice of the nature and amount of the obligations due. Health Information Portability and Accountability Act (HIPAA) regulations must be observed, and if turned over for collections, institutions may only provide minimum information necessary for collection agency to perform the collection effort.

For student privacy purposes, some institutions maintain health service charges in a separate subsystem. This is acceptable as long as detail is maintained by student in the subsidiary ledger and the charges and any resulting accounts receivable are recorded in the general ledger.


10.1.5 Fines and Fees

(Last Modified on April 3, 2019)

Fines and Fees are primarily the result of punitive action for failure to comply with institution or departmental regulations. These are generally made up of parking fines, library fines, miscellaneous fees, etc.

At times, these charges may be of such minimal values that it would not be practical or cost effective to continually create or modify accounts receivable balances by feeding these charges from the subsystem (normally Banner) to the general ledger as transactions occur.

In such situations, institutions may determine that it would be more efficient to manage the activity on a cash basis throughout the year, whereby charges are transferred to the general ledger as payments are received. Institutions using this approach would still be responsible for maintaining the charges by student/vendor and collecting the charges. Procedures must be in place to ensure that:

  • Reasonable collection efforts are made. Collection notices must be sent even though these amounts are managed on the cash basis.
  • Proper/independent supervisory personnel must approve any non-collection.
  • Non-collection approval must be documented.
  1. Note: Nominal amounts of $25 or less per individual may be adjusted.

At year end, any charges remaining in these subsytems should be recorded as accounts receivable on the general ledger through a year-end GAAP ledger entry. Sample entries will be provided.


10.1.6 Other/Miscellaneous Receivables

(Last Modified on April 3, 2019)

Each institution has a variety of other receivables not specifically described above. In each case, these accounts are to be analyzed and managed according to the control procedures that are most applicable to the particular receivable.

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.

The following are types of transactions that could generate other/miscellaneous receivable balances.

  1. Departmental Services: At many institutions, activities such as Departmental Sales and Services, extension services, etc., are authorized to provide services or products to students and the general public, even though the solicitation of customers and generation of income are not primary aims of the activities. Most of these transactions are for small amounts and payment should be received when the goods or services are provided, however, when the risk of loss is considered relatively low, the establishment of an accounts receivable creating a temporary payment term is acceptable because of the need for the service.
  2. Credit Memos: Generally occur in institutionally managed auxiliary operations when vendors owe institutions returns of merchandise, make pricing adjustments or provide marketing allowances. Credit memos are normally cleared by applying reductions against future invoices from the vendor. At minimum, institutions should work open credit memos on a monthly basis. Credit memos should be credited or cashed out within 30 to 90 days. If the institution has an outstanding credit memo with a vendor which it no longer does business, the institution should request immediate payment from the vendor.
  3. COBRA and Retiree Receivables: It is permissible to establish accounts receivable for retirees and other persons receiving benefits under COBRA. All credit granted under this provision should be kept current; i.e., collected within thirty (30) days. If continued collection efforts are not successful, then benefits must be terminated in accordance with deadlines established in BPM Section 5.1.5.

↑ Top