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Handbook of Business Procedures

Date published: 
Last revised: 
Issued by: 

June 20, 2010
June 20, 2010
Financial Accounting Services

 

Part 5. Sales of Goods and Services - Table of Contents


5.3. ACCOUNTS RECEIVABLE

A. Introduction

Accounts receivable at The University of Texas at Austin are generated from several programs and activities, including student tuition and fees, housing and food service fees, parking fees, library fees, student loan programs, returned check fees, contracts, services, and property rentals.

Departments that provide services manage their receivables through the Centralized Receivables system or through a separate departmental system.

  1. Centralized Receivables System
    The Centralized Receivables system (RMM *DEFINE commands) allows the creation of bills, posting of income at the time bills are created, and the acceptance of payments. The system generates entries that allow billing and payment activity to post automatically to the appropriate accounts in *DEFINE. Outstanding bills owed may be viewed and paid on the What I Owe website under UT Direct. Centralized Receivables is used by central processing offices and university departments to bill for the following types of receivables:
    • student tuition, fees, loans, housing, and penalties
    • retiree health insurance
    • departmental bills
    • TXShop
    • other sales and services


  2. Sponsored Projects Award Administration (SPAA) Billing System
    SPAA, in the Office of Sponsored Projects (OSP), creates invoices for research projects based on the funding methodology specified in the award documentation. The SPAA billing system is used to monitor project billing. Dunning letters are generated by the billing system when the receivable is identified as 90 days old. If a sponsor is delinquent on payments for three months, Sponsored Receivables, in the Office of Accounting, contacts the sponsor to arrange payment. If payment is still not received, then within the six-month aging period, Sponsored Receivables notifies the appropriate specialist in SPAA to help resolve the payment issue. The SPAA specialist works to arrange payment and elevates the issue as needed.

    In addition, SPAA provides weekly receivable reports to OSP management in order to monitor the status of receivables and financial position related to Sponsored Projects. This report includes weekly status updates on items over 12 months of age and lists invoices that reach 10 months of age. If the payment issue cannot be resolved, SPAA notifies The University of Texas System Office of General Counsel, and legal action is considered. For more information, see the Handbook of Business Procedures, Part 17. Office of Sponsored Projects/Sponsored Projects Award Administration.


  3. Other Receivable Systems
    Other Receivable Systems are used by departments that do not use the Centralized Receivables system. The departments bill their internal and external customers and monitor collections. Revenue is posted as it is collected, but receivables are not posted to *DEFINE until fiscal year-end.

B. Collections

Accounts receivable that are not recovered with initial billing are subject to more extensive collection efforts, which may include letters or e-mails, restrictions on student services by implementing financial bars, reporting to a credit bureau, and/or referrals to a collection agency.

  1. Collection Agency
    • Student loans are referred to a collection agency at a certain point past the payment due date, depending on the type of loan—three months past due for institutional loans and six months past due for federal loans.
    • Past due bills from the Division of Housing and Food Service (DHFS) are referred to a collection agency 90 days after the date of check out.
    • Past due citations from Parking and Transportation Services (PTS) that are a minimum of 42 days old are sent to the first collection agency for 91 days. If payment is not collected after 91 days, the citations are returned to PTS and are then sent to a second collection agency for up to 24 months.


  2. Credit Bureaus
    • Loans
      Long-term institutional loans, tuition loans, and all federal loans are reported to national credit bureaus from the date the loans are made. Short-term institutional loans are reported to credit bureaus if they are sent to a collection agency.
    • Tuition
      Past due tuition installments are reported to credit bureaus three months after the end of the semester in which the past due balance was incurred.

C. Bad Debt Write-Offs

  1. Write-Offs of Student Receivables
    1. Institutional loans are written off to the loan fund when they become 10 years past due. A miscellaneous receivable bill is put in the system for the balance owed on the loan at the time it is written off, so that the amount remains a financial bar.
    2. Federal Perkins loans cannot be written off by the university. After litigation and upon recommendation of The University of Texas System’s Office of General Counsel, these loans may be assigned back to the U.S. Department of Education (DOE). No bar remains on the university’s accounting system; however, the individual whose federal loan is returned to DOE is then ineligible for future federal financial aid.
    3. Centralized Receivable bills that are posted to income are written off for accounting purposes when they are two years past due, and the student’s account remains barred.


  2. Write-Offs of Sponsored Projects Award Administration (SPAA) Receivables
    A determination is made by SPAA management as to whether or not a sponsored project should be written-off. If SPAA management deems that a sponsored project should be written-off, an analysis and supporting documentation will be kept on file to substantiate the write-off.
    1. Documentation used to assist in making a write-off decision consists of e-mail, letters, and accounting system documents.
    2. An Excel spreadsheet is maintained throughout the fiscal year summarizing the amount of the write-off, the budget group, the sponsor name, and the reason for the write-off.
    3. At the end of the fiscal year, the Excel spreadsheet is sent for final approval of the amount to be written-off.
    4. Once approval is received, an accounting entry is created to transfer the amount to the allowance for doubtful accounts.

 

 

Part 5. Sales of Goods and Services - Table of Contents