The majority of billings and receivables will be handled through the enterprise financial system. However, there are a few areas in which there is a high volume of non-sponsored billings and where there exists a strong departmental tool to manage the activity. Departments must receive approval from the Non-Sponsored Accounts Receivable department before using their departmental systems. Departments are also responsible for ensuring appropriate internal controls and data integrity over their systems.
Departments are responsible for generating accurate, timely billings to non-University customers. These billings must be recorded in the approved departmental system. The standard payment term to be applied to these external billings is Net 30.
Departments will track all invoices sent and follow a regular collection schedule with appropriate escalation actions for those not paid in full within the 30 days.
Receivables may be established in the approved departmental system once the goods or services have been provided.
Collection of outstanding non-sponsored receivables are handled by departments. If not resolved in a specified time period, the collection may be referred to either the Office of the General Council (OGC) or collection agencies. Fees paid to collection agencies will be deducted from any monies collected from the customer. Amounts deemed uncollectible after all reasonable collection efforts have been taken will be written-off to a non-sponsored departmental account number.
If a customer has a pattern of non-payment, they may be deemed not credit-worthy. Departments may decide to discontinue providing goods or services until such a time as the internal credit rating has improved and the risk of non-payment has decreased.
Departments shall provide detailed records of sales activity and outstanding receivables quarterly to the Non-Sponsored Accounts Receivable department, to be used in preparing the annual consolidated financial statements. These records may be requested, when needed, to respond to audits.
Exclusions
Student accounts receivables are handled separately. Sponsored accounts receivables are managed by the office of Sponsored Financial Reporting.
To maximize the University’s cash flow through the timely collection of receivables; minimize exposure from uncollectible receivables; and to increase the integrity of the financial statements through accurate and timely recording of receivable transactions.
The folowing procedures will be added as they become available. For more information contact David Laden at 612-624-0929 or laden003@umn.edu.
- Obtaining Approval for Departmental Accounts Receivable Systems
- Receiving Payments
- Collection of Outstanding Receivables
- Approval for Departmental Accounts Receivable System
- Non-Sponsored Accounts Receivable Reporting Form
- Accounts Receivable
- Amounts due the University of Minnesota for credit sales of goods or services to non-University customers, including sponsors of University research. An account receivable is created upon the shipment of a product, rendering of a service, or satisfaction of a performance step as outlined in an agreement. An account receivable maybe due or not yet due; a receivable that is due is a claim against a customer that the University has the right to collect at the present time.
- Accounts Receivable Aging
- The aging is the starting point for the evaluation of the collectability of accounts receivable and often triggers appropriate actions to mitigate the potential for bad debt.
- Allowance for Uncollectible Accounts
- An estimate of amounts that will likely not be collectible, intended to accomplish these two results: a) to charge the loss for accounts that provide to be uncollectible against the period that caused the loss; and b) to show the estimated realizable value of the customers’ accounts.
- Credit Balance
- A balance due to a customer as a result of returned goods previously paid for by the customer, or the granting of later credits and allowance for various reasons such as unsatisfactory performance. These balances represent obligations of the University that will have to be satisfied either by cash payments or providing a replacement good/service.
- Invoice/bill
- The document that notifies the customer what is owed for a particular transaction or time period.
- Revenue Recapture Program
- A program authorizing the Minnesota Department of Revenue to recapture taxpayer refunds and apply them to debts the taxpayers owe to other state agencies, the University of Minnesota and to certain local governmental units. A debtor under this program is an individual person who is obligated to pay a debt to a claimant agency.
- Uncollectible Amount
- An amount for which payment from a customer is not expected, for reasons such as disputes over pricing; contractual terms; performance or receipt of product; bankruptcy or other legal proceeding.
- Write-off
- The actual removal of an amount from the accounts receivable subledger once it has been determined that the customer will not pay an amount owed.
- Non-Sponsored Accounts Receivable
- Grants approval for departmental accounts receivable system. Receives periodic reports of sales activity and outstanding receivables from departments with approved departmental AR systems. Grants approval for write-offs over $25.
- University Clusters and Departments
- Responsible for generating billings to non-University customers using the approved departmental system, maintaining customer information and billing adjustments, Billing adjustments must have appropriate justification. Responsible for managing departmental accounts receivable, payment processing, billing correspondence, and collections. Grants approval for write-offs $25 and under.
There are no Appendices for this policy.
There are no Frequently Asked Questions for this policy.
- Effective:
- July 2008
Supercedes: Accounts Receivable.
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To obtain a copy of a historical policy,
e-mail the U Policy Librarian at policy@umn.edu or call 612-624-4372.
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