Write off and Collection Procedure
Procedure # 3077.4
Effective Date: July 1, 2020
Related Policy: UW-3077 Non-Sponsored Centralized Accounts Receivable Policy
Functional Owner: Director of Financial Information Management
Contact: Supervisor Central AR for Non-Sponsored Billing, (608) 890-1328 or firstname.lastname@example.org
I. Procedure Statement
II. Who is Affected by this Procedure
V. Related References
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.
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
- 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
- UW-3077 Non-Sponsored Accounts Receivable & Billing Policy
- Write-off instructions
|Date Approved||July 1, 2020|
|Revision Dates||Jan. 19, 2021 – Procedure number updated from 100.4 to 3077.4 in new numbering system|