100.6 Refunding a payment Procedure

This procedure for refunding a payment is specifically for transactions that have been processed through centralized Accounts Receivable.

Refunding a Payment Procedure

Procedure # 100.6
Rev.: 7.1.20
Effective Date: July 1, 2020

Related Policy:Non-Sponsored Centralized Accounts Receivable Policy
Functional Owner: Director of Financial Information Management
Contact: Supervisor Central AR for Non-Sponsored Billing, 608-890-1328, Email: uwmsnar@bussvc.wisc.edu


Contents

I. Procedure Statement
II. Who is Affected by this Procedure
III. Procedure
IV. Definitions
V. Related References
VI. Revisions


I. Procedure Statement

This procedure for refunding a payment is specifically for transactions that have been processed through centralized Accounts Receivable. Refunds may become necessary as a result of duplicate or over payments made by customers or adjustments and cancelations of invoices that result in overpayments.


II. Who is affected by this Procedure

Any department that sells goods or services for non-sponsored activities should use this procedure.

The SFS Accounts Receivable and Billing System is currently being rolled out to UW-Madison departments for all non-sponsored accounts receivable, including internal and external customers. The use of SFS for non-sponsored billing and receivables was launched in November of 2018 and will be introduced campus-wide in the coming months/years – unless otherwise agreed upon with the Division of Business Services (DoBS).


III. Procedure

The following steps represent the overall process for requesting a refund:

  • If the refund is a result of an adjustment or cancelation of a bill, clearly indicate on the Cancel_Adjust Form that a refund needs to be processed.
  • Any duplicate payments received by customers will be placed on account for the customer in SFS. DoBS will work collaboratively with departments to determine if the payment needs to be refunded or can be applied to other open invoices.
  • Weekly, DoBS will request refunds to be processed through Accounts payable.

The following journal entry is a sample of what will post when a payment is refunded:

Debit: Selling Department Accounts Receivable (#6200) XXXX

Credit: Central funding string for payments                                      XXXX


IV. Definitions

  • Cancellation – Canceling an invoice should only be used when an error has been made on the bill. An error can include the incorrect customer, contact or location identified on the bill. A duplicate bill for services already invoiced would be a good reason to cancel the bill.
  • Adjustment – Adjusting the bill should be reserved for errors in amounts invoiced. Such as charging the wrong rate for a service or the wrong quantity ordered.
  • Refund – The process of returning money to a customer as a result of overpayment for goods or services.

V. Related Resources


VI. Revisions

Procedure Number

 

Date Approved

 

Revision Dates

100.5 Declined Payment Procedure

This procedure is for handling customer payments that have been declined for any reason including insufficient funds, closed bank accounts, etc.

Declined Payment Procedure

Procedure # 100.5
Rev.: 7.1.20
Effective Date: July 1, 2020

Related Policy:Non-Sponsored Centralized Accounts Receivable Policy
Functional Owner: Director of Financial Information Management
Contact: Supervisor Central AR for Non-Sponsored Billing, 608-890-1328, Email: uwmsnar@bussvc.wisc.edu


Contents

I. Procedure Statement
II. Who is Affected by this Procedure
III. Procedure
IV. Definitions
V. Related References
VI. Revisions


I. Procedure Statement

This procedure is for handling customer payments that have been declined for any reason including insufficient funds, closed bank accounts, etc.


II. Who is affected by this Procedure

Any department that sells goods or services for non-sponsored activities should use this procedure.

The SFS Accounts Receivable and Billing System is currently being rolled out to UW-Madison departments for all non-sponsored accounts receivable, including internal and external customers. The use of SFS for non-sponsored billing and receivables was launched in November of 2018 and will be introduced campus-wide in the coming months/years – unless otherwise agreed upon with the Division of Business Services (DoBS).


III. Procedure

The following steps represent the overall process for a declined payment:

  • Notification received that a credit card or check payment has been declined.
  • Business Services will reverse the payment in SFS and will reinstate the debt outstanding.
  • Business Services will apply an NSF fee of $25 to the customer account for the declined payment.
  • The customer will receive an updated invoice reflecting the additional fee.
  • The NSF fee will be used to offset the bank fees UWMSN incurs. The NSF fee will not be distributed to the department.

The following journal entries are samples of what will post when a declined payment is posted:

Reverse the payment:

Debit: Selling Departments Accounts Receivable $500.00

Credit: Central funding string for bank transactions          $500.00

Add the NSF fee:

Debit: Selling Departments Accounts Receivable $25.00

Credit: Central funding string for bank fee transactions   $25.00


IV. Definitions

  • Cancellation – Canceling an invoice should only be used when an error has been made on the bill. An error can include the incorrect customer, contact or location identified on the bill. A duplicate bill for services already invoiced would be a good reason to cancel the bill.
  • Adjustment – Adjusting the bill should be reserved for errors in amounts invoiced. Such as charging the wrong rate for a service or the wrong quantity ordered.
  • Refund – The process of returning money to a customer as a result of overpayment for goods or services.
  • NSF – Non-sufficient funds. This term is commonly used for when a credit card or check payment is declined. This could be the result of many different reasons such as insufficient funds or closed bank account.

V. Related Resources


VI. Revisions

Procedure Number

 

Date Approved

 

Revision Dates

100.4 Write off and Collection Procedure

Non-Sponsored receivable balances will be managed centrally by the Division of Business Services

Write off and Collection Procedure

Procedure # 100.4
Rev.: 7.1.20
Effective Date: July 1, 2020

Related Policy:Non-Sponsored Centralized Accounts Receivable Policy
Functional Owner: Director of Financial Information Management
Contact: Supervisor Central AR for Non-Sponsored Billing, 608-890-1328, Email: uwmsnar@bussvc.wisc.edu


Contents

I. Procedure Statement
II. Who is Affected by this Procedure
III. Procedure
IV. Definitions
V. Related References
VI. Revisions


I. Procedure Statement (Non-Sponsored receivable balances will be managed centrally by the Division of Business Services.)

Once an invoice is generated the customer will receive a monthly statement. If payment is not received, the customer will receive dunning letters each month after the due date. Once the invoice reaches 90 days past due, write offs and collection activities will be managed centrally by the Division of Business Services (DoBS) in collaboration with UW-Madison divisions and departments. Write off and collection activities need to be processed timely to ensure responsible stewardship of UW-Madison resources.

Write offs and collection activities are only for External customers. All intra-unit invoices are paid immediately so no collection activities are needed.


II. Who is affected by this Procedure

Any department that has an invoice outstanding in the SFS AR module and has become a doubtful account.

The SFS Accounts Receivable and Billing System is currently being rolled out to UW-Madison departments for all non-sponsored accounts receivable, including internal and external customers. The use of SFS for non-sponsored billing and receivables was launched in November of 2018 and will be introduced campus-wide in the coming months/years – unless otherwise agreed upon with the Division of Business Services.


III. Procedure

The following steps represent the overall process for collection efforts:

  • Statements will be sent for all outstanding invoices regardless of due date on or around the 15th of the month.
  • Dunning letters (reminder notices) will be issued by DoBS monthly on or around the 15th. Dunning letters will begin after 30 days past due and will continue to be sent until the debt is cleared.
  • At 90 days, DoBS will reach out to the billing department to discuss collections. Decision needs to be made at that time if the invoice should be sent to a collection agency, the state of Wisconsin Department of Revenue or written off. If the department is working with the customer on payment, a note can be placed on the account providing detail on the expected date of resolution.

The following steps represent the overall process for requesting a write off:

  • Write -off transactions are initiated through workflow in SFS. Follow instructions on how to initiate a write-off.
  • Write-offs over $1,000 require Dean or Director and DoBS approval.
  • Write offs must include explanation.

The following journal entry is a sample of what will post after a write off has been processed:

Debit: Selling Department contra-revenue account (#9312) XXXX

Credit: Selling Department accounts receivable account (#6200) XXXX


IV. Definitions

  • Doubtful account – a doubtful account refers to outstanding balances that we do not expect to be paid. Typically, a doubtful account takes many things into consideration such as age of the invoice, ability to make contact with the customer or bankruptcy notification.
  • Dunning letter – The word dunning stems from a 17th century word dun which means to demand payment of a debt. Dunning letters are reminder notices that are sent periodically when an accounts receivable balance is past due.
  • Write-off – Write off relevant to this policy means that we cannot collect on the outstanding balance for an invoice. Examples of reasons for a write off would include a customer in bankruptcy or deceased, or the debt has reached the age where we can legally no longer attempt to collect payment (statute of limitations).

 


V. Related Resources


VI. Revisions

Procedure Number

 

Date Approved

 

Revision Dates

100.3 Cancelation or Adjustment of an invoice Procedure

Cancelations and adjustments of open invoices are processed centrally in the Division of Business Services (DoBS). Adjustments and cancelations need to include explanation for the adjustment.

Cancelation or Adjustment of an invoice Procedure

Procedure # 100.3
Rev.: 7.1.20
Effective Date: July 1, 2020

Related Policy:Non-Sponsored Centralized Accounts Receivable Policy
Functional Owner: Director of Financial Information Management
Contact: Supervisor Central AR for Non-Sponsored Billing, 608-890-1328, Email: uwmsnar@bussvc.wisc.edu


Contents

I. Procedure Statement
II. Who is Affected by this Procedure
III. Procedure
IV. Definitions
V. Related References
VI. Revisions


I. Procedure Statement

Cancelations and adjustments of open invoices are processed centrally in the Division of Business Services (DoBS). Adjustments and cancelations need to include explanation for the adjustment. This procedure should not be used to write off a debt. For instructions on how to write off a debt, please refer to “Write off and Collection Procedure”. Please review the definitions section of this procedure to help determine which process to use.


II. Who is affected by this Procedure

Any department that has an invoice outstanding in the SFS AR module and has found an error in the bill.

The SFS Accounts Receivable and Billing System is currently being rolled out to UW-Madison departments for all non-sponsored accounts receivable, including internal and external customers. The use of SFS for non-sponsored billing and receivables was launched in November of 2018 and will be introduced campus-wide in the coming months/years – unless otherwise agreed upon with the Division of Business Services.


III. Procedure

The following steps represent the overall process for requesting a cancelation or adjustment of an invoice:

  • Fill out the Invoice Cancel_Adjust Form including your signature and the signature of the reviewing party for your area.
  • Submit form to DoBS via email to: uwmsnar@bussvc.wisc.edu
  • Adjustments and cancelations over $1,000 need additional review from the Dean or Director and DoBS.
  • DoBS will create a credit memo in SFS. The credit memo will be matched up to the original invoice to correct the balance due. The customer will receive a copy of the credit memo.

The following journal entries are samples of what will post after a cancelation or adjustment is processed:

Internal customer:

Debit: Selling Department Revenue XXXX

Credit: Buying Department Expense        XXXX

External customer:

Debit: Selling Department Revenue XXXX

Credit: Selling Department Accounts Receivable (#6200) XXXX


IV. Definitions

  • Cancellation – Canceling an invoice should only be used when an error has been made on the bill. An error can include the incorrect customer, contact or location identified on the bill. A duplicate bill for services already invoiced would be a good reason to cancel the bill.
  • Adjustment – Adjusting the bill should be reserved for errors in amounts invoiced. Such as charging the wrong rate for a service or the wrong quantity ordered.
  • Write-off – Write off relevant to this policy means that we cannot collect on the outstanding balance for an invoice. Types of reasons for a write off would include a customer in bankruptcy or deceased, or the debt has reached the age where we can legally no longer attempt to collect payment (statute of limitations).

V. Related Resources


VI. Revisions

Procedure Number

 

Date Approved

 

Revision Dates

100.2 Creating a Bill Procedure

Departments are responsible for entering bills into SFS. The Division of Business Services (DoBS) will generate invoices from the bills entered. Bills can be entered as either one-time or installment. Payment terms generally will be Net30, unless an exception has been approved by DoBS.

Creating a Bill Procedure

Procedure # 100.2
Rev.: 7.1.20
Effective Date: July 1, 2020

Related Policy:Non-Sponsored Centralized Accounts Receivable Policy
Functional Owner: Director of Financial Information Management
Contact: Supervisor Central AR for Non-Sponsored Billing, 608-890-1328, Email: uwmsnar@bussvc.wisc.edu


Contents

I. Procedure Statement
II. Who is Affected by this Procedure
III. Procedure
IV. Definitions
V. Related References
VI. Revisions


I. Procedure Statement

Departments are responsible for entering bills into SFS. The Division of Business Services (DoBS) will generate invoices from the bills entered. Bills can be entered as either one-time or installment. Payment terms generally will be Net30, unless an exception has been approved by DoBS.


II. Who is affected by this Procedure

Any department that sells goods or services for non-sponsored activities should use this procedure.

The SFS Accounts Receivable and Billing System is currently being rolled out to UW-Madison departments for all non-sponsored accounts receivable, including internal and external customers. The use of SFS for non-sponsored billing and receivables was launched in November of 2018 and will be introduced campus-wide in the coming months/years – unless otherwise agreed upon with the Division of Business Services.


III. Procedure

The following steps represent the overall process for creating a bill:

  • Use the bill upload template to import bills
  • Follow the instructions to upload bills

The following journal entries are a sample of what will post when the bills are generated:

Internal customer:

Debit: Buying Department Expense         XXXX
Credit: Selling Department Revenue                      XXXX

External customer:

Debit: Selling Department Accounts Receivable (#6200) XXXX
Credit: Selling Department Revenue                                                   XXXX


IV. Definitions

  1. Bill – A bill is a document created when a sale is made. A bill becomes an invoice when a balance is due. For the purpose of this policy, intra-unit bills (Madison department to Madison department) never become invoices because the bill is paid at the same time the bill is created.
  2. Invoice – A bill becomes an invoice when the bill is delivered to the customer and creates a balance due.

V. Related Resources


VI. Revisions

Procedure Number

 

Date Approved

 

Revision Dates

100.1 Shared Customer Procedure

UW-Madison Non-Sponsored AR and Billing has a shared customer file that is managed centrally by the Division of Business Services (DoBS).

Shared Customer Procedure

Procedure # 100.1
Rev.: 7.1.20
Effective Date: July 1, 2020

Related Policy:Non-Sponsored Centralized Accounts Receivable Policy
Functional Owner: Director of Financial Information Management
Contact: Supervisor Central AR for Non-Sponsored Billing, 608-890-1328, Email: uwmsnar@bussvc.wisc.edu


Contents

I. Procedure Statement
II. Who is Affected by this Procedure
III. Procedure
IV. Related References
V. Revisions


I. Procedure Statement

UW-Madison Non-Sponsored AR and Billing has a shared customer file that is managed centrally by the Division of Business Services (DoBS). Departments can request new internal or external customers by submitting the Customer upload file. Customers can have multiple contacts and locations. Modifications to existing customer information including additional contacts or locations should be requested through the uwmsnar@bussvc.wisc.edu mailbox. DoBS will review each customer request to ensure compliance with export control lists such as OFAC.


II. Who is affected by this Procedure

Any department that is using Billing and Accounts Receivable modules in SFS for invoicing to non-sponsored customers either within the UW-Madison community or externally.

The SFS Accounts Receivable and Billing System is currently being rolled out to UW-Madison departments for all non-sponsored accounts receivable, including internal and external customers. The use of SFS for non-sponsored billing and receivables was launched in November of 2018 and will be introduced campus-wide in the coming months/years – unless otherwise agreed upon with the Division of Business Services.


III. Procedure

The following steps represent the overall process for requesting new customers:

  1. Fill out either the Internal or External customer upload file
  2. If the customer is already set up but a different contact or location is needed, fill out the Customer Update Form
  3. Email to DoBS at: uwmsnar@bussvc.wisc.edu
  4. DoBS will review the customer information and ensure the customer is not on any export control lists such as OFAC.
  5. DoBS will reply via email when customers have been set up.

IV. Related References


VI. Revisions

Procedure Number

 

Date Approved

 

Revision Dates

100 Non-Sponsored Centralized Accounts Receivable Policy

Non-sponsored accounts receivable for both internal and external sales is managed centrally in the Division of Business Services (DoBS).

UW-Madison Administrative Policy
Policy # 110
Capital Equipment Policy

Effective Date: June 1, 2020
Last Updated: June 1, 2020
Last Reviewed: June 1, 2020
Next Review: TBD

Functional Owner: Director of Financial Information Management
Executive Sponsor: Asst. Vice Chancellor for Business Services
Policy Contact: Supervisor Central AR for Non-Sponsored Billing, 608-890-1328, Email : uwmsnar@bussvc.wisc.edu


Policy Summary

Non-sponsored accounts receivable for both internal and external sales is managed centrally in the Division of Business Services (DoBS). Departments are responsible for creating accurate, timely billings in the PeopleSoft Shared Financial System (SFS) at the time the goods or services have been provided and not at the time the payment is received. Departments must have appropriate financial internal controls when working with accounts receivable. DoBS will manage invoice generation, adjustments, cancelations, write-offs, collection efforts and payment applications in collaboration with UW-Madison divisions and departments.

This policy is not guidance for grants, tuition or student housing revenues.


Policy Application

The SFS Accounts Receivable and Billing System is currently being rolled out to UW-Madison departments for all non-sponsored accounts receivable, including internal and external customers. The use of SFS for non-sponsored billing and receivables was launched in November of 2018 and will be introduced campus-wide in the coming months/years – unless otherwise agreed upon with the Division of Business Services.


Rationale

To comply with State of Wisconsin DOA accounting manual (07-01), through the centralized timely collection of non-sponsored receivables. To minimize the exposure of uncollectible receivables and to increase the integrity of the financial statements through consolidation of receivables and revenues.


Policy Detail

Departments will upload bills to SFS using a shared customer file. DoBS will generate invoices from the uploaded bills and process all transactions related to the invoices from that point.

The shared customer file will be managed centrally by DoBS. Payment terms will be established and managed centrally.

DoBS is responsible for the collection of non-sponsored receivables in collaboration with UW-Madison divisions and departments as outlined in procedure 100.4. This includes uploading invoices to third party accounts payable companies. Outstanding balances of any non-sponsored receivables may be referred to either a third-party collection agency or the State of Wisconsin’s Department of Revenue. Wisconsin’s Department of Revenue will be used for collection efforts if the DoBS has a Tax-ID for the customer that can be helpful to the DOR. Otherwise the third-party collection agency will be used.

Forms of payment include check, credit card, ACH and Wire transfers. Credit card fees that result from payments on invoices will be charged to the department for that invoice on a monthly basis.

Any adjustments, cancelations or write-offs will be processed centrally and must include valid explanation and documentation as outlined in procedures 100.3 and 100.4. Write-offs of $1,000 or more will require dean or director and DoBS approval and approval from UW System Administration.

It is the responsibility of the department to correctly charge sales tax on bills per the state of Wisconsin sales tax policy.


Supporting Procedures and Templates


Definitions

  1. Bill – A bill is a document created when a sale is made. A bill becomes an invoice when a balance is due. For the purpose of this policy, intra-unit bills (Madison department to Madison department) never become invoices because the bill is paid at the same time the bill is created.
  2. Invoice – A bill becomes an invoice when the bill is delivered to the customer and creates a balance due.
  3. Accounts Receivable – An asset that refers to the amount due from a customer for the sale of goods or services, when the goods or services have been delivered to the customer and payment is not received by the seller.
  4. Accrual Accounting – A basis of accounting that recognizes revenue when earned, and expenses when incurred, regardless of when cash changes hands.
  5. Write off – Write off relevant to this policy means that we cannot collect on the outstanding balance for an invoice. Types of reasons for a write off would include a customer in bankruptcy or deceased, or the debt has reached the age where we can legally no longer attempt to collect payment (statute of limitations).
  6. Cancellation – Canceling an invoice should only be used when an error has been made on the bill. An error can include the incorrect customer, contact or location identified on the bill. A duplicate bill for services already invoiced would be a good reason to cancel the bill.
  7. Adjustment – Adjusting the bill should be reserved for errors in amounts invoiced. Such as charging the wrong rate for a service or the wrong quantity ordered.
  8. Refund – The process of returning money to a customer as a result of overpayment for goods or services.

General Responsibilities

Division Chief Financial Officer (CFO) – Coordinates the designation of billing specialist(s) for their division and provides oversight and support to the billing specialist(s) in execution of their responsibilities.

Accounts Receivable and Billing Manager – Coordinates rollout of AR/BI modules to campus divisions and provides troubleshooting, reporting, analysis and guidance on invoicing and collection efforts.

Accounts Receivable and Billing Accountant – Responsible for the overall processing of Accounts Receivable & Billing assigned to the University of Wisconsin – Madison. Duties include establishing and maintaining a customer database, training, troubleshooting and to ensure accurate accounting and reporting.

Billing Specialist – Responsible for the departmental functions in the AR/BI module in SFS.  Duties include verifying and submitting customer requests as needed, bill generation, and collaborating with the AR/BI Manager and AR/BI Accountant on collection efforts and inquires.


Links to Related Policies

401 Accounts Receivables (A/R), Invoicing, Collections Policy

It is the responsibility of the University of Wisconsin to establish the terms and/or conditions for payment at the time an account is created and to follow up routinely and diligently on all accounts receivable.  UW Madison states that all invoices to external customers for the sale of goods or services must be collected within 30 days.

UW-Madison Administrative Policy
Policy # 401
Accounts Receivables (A/R), Invoicing, Collections Policy

Effective Date: May 5, 2003
Last Updated: May 5, 2003

Policy Contact: Janet Hamm


Statement of Policy

It is the responsibility of the University of Wisconsin to establish the terms and/or conditions for payment at the time an account is created and to follow up routinely and diligently on all accounts receivable.  UW Madison states that all invoices to external customers for the sale of goods or services must be collected within 30 days.  These invoices which have not been collected within 30 days are considered past due.  Once an invoice is past due follow accounts receivable collection procedures.

View UW System Adminstrative Policy 326 – Collections and Write-Offs


Who should know this policy?

Deans, Directors, and staff handling accounts receivable invoicing and collections.


Related Documents

Debtor Notice Warning Letter
Delegation of Collections Functions
UW-Madison Collections Request