Declined Payment Procedure
Procedure # 3077.5
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 email@example.com
I. Procedure Statement
II. Who is Affected by this Procedure
V. Related References
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).
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
- 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
|Date Approved||July 1, 2020|
|Revision Dates||Jan. 19, 2021 – Procedure number updated from 100.5 to 3077.5 in new numbering system|