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School of Philosophical & Historical Inquiry

Effective 1 st May, 2004

Accounts Receivable (AR) Procedures

Contents

Overview

General Information

Establishing a New Customer (Debtor)

Amendments to Customer Details

GST

Raising an Invoice

Credit Notes/(Credit Invoice)

Receipts

Debt Management – Recovery

Internal Controls

Links to related information and forms

Appendix A – Reminder Notice : Overdue Invoice(s)

Appendix B – Final Notice : Overdue Invoice(s)

Appendix C – Request for Debt Recovery Action

Overview

To detail accounting procedures on the contractual arrangements, recording, collection and reporting of moneys owed to the University for Trade Debtors, excluding Student and Commonwealth Department of Education, Science and Training (DEST) regular grants.

This procedure applies to all SOPHI staff involved in University Trade Debtors activities.

General Information

SOPHI staff who have been trained as Billing Specialists have the responsibility for raising and posting their own invoices. Billing Specialists must ensure that invoices are raised only after the goods and services have been provided, or where the goods and services are provided under contractual arrangements, that invoicing is arranged on a progressive basis.

All transactions involving commercial arrangements with a third party must be referred to the Business Liaison Office (BLO) for assessment and approval. Trade Debtor invoices cannot be raised for commercial activities without attaching a copy of the relevant approval from the BLO.

Contracts for Outside Earnings must be submitted to the PVC via CHASS for approval.

The authority to enter contracts and agreements to sell goods and services is governed by the

An examination of the potential customer’s credit worthiness should be completed and considered thoroughly before credit terms are offered.

Where credit terms are offered, an approved University invoice must be raised. In the absence of specifically negotiated terms, the approved University terms are 30days from the date recorded on the invoice or 30 days from the liability to pay under a contract, which ever is the latter.

The supply of goods and services between University departments should be charged via internal transfer classifications, using a General Ledger journal.

Where services are supplied over a considerable period of time, invoicing should be undertaken on a progressive basis, i.e. at the end of each accounting month.

School of Philosophical & Historical Inquiry

Effective 1 st May, 2004

Accounts Receivable (AR) Procedures

Invoices can only be raised in Australian Dollars (AUD) for amounts greater than $25. Amounts less than $25 should be via cash or credit card facilities and a tax receipt should be given, containing details of the transaction.

Establishing a New Customer (Debtor)

Before invoicing, the Billing Specialist must search the AR system to see if a debtor exists.

If no customer detail exists for the debtor, the Billing Specialist should complete a Customer Create form and have it approved by the Finance Manager. It is important to record as much specific detail about the new debtor as possible. A post office box address is only acceptable for government departments or large recognized companies, and should not be accepted in the case of individuals.

The form then needs to be faxed to Revenue Services, FS who will then allocate the Customer Identification and establish the debtor. Revenue Services will advise SOPHI of the Customer ID by return fax.

Amendments to Customer Details

The Customer Amend form must be completed by the Billing Specialist for any changes to be made to the customer details. The form is to be authorised by the Finance Manager and faxed to Revenue Services, FS.

GST

Staff preparing the Invoice Request form must indicate the GST amount with account code. Staff should refer to section 4 in the Tax-GST Guide to determine if the supply is GST taxable.

The Billing Specialist enters the GST amount based on the information provided in the Invoice Request form.

Raising an Invoice

All official University invoices must be issued through Peoplesoft.

Invoices can only be raised in Australian Dollars (AUD) for amounts greater than $25.

An official University invoice is to be issued immediately but no later than 30 days following the supply of services or goods.

The details entered for an invoice must be meaningful. As a minimum, details of the goods or services provided and the period covered must be included in the notes or description entered in PeopleSoft.

Academic staff requesting an invoice to be raised are to complete and submit an Invoice Request electronically and supply supporting documentation by fax or email to sophi.finance@arts.usyd.edu.au on the day that the request is submitted.

An Invoice Request (AR) must be completed before an invoice is raised. The following is considered essential when raising an invoice:

o The Head of Department/Unit or a delegated officer must authorise the creation of an invoice and approve the Invoice Request once it has been fully completed. The person completing the form and the person approving the form cannot be the same person. Also,

School of Philosophical & Historical Inquiry

Effective 1 st May, 2004

Accounts Receivable (AR) Procedures

the Billing Specialist cannot approve the form.

o

Any existing supporting documentation e.g. purchase orders, memos should be attached to the Invoice Request form.

o

A copy of the contract, including the payment schedule should be attached.

o

For research and consultancy contracts, a copy of the BLO Head of Department Research Checklist form or BLO Head of Department Consultancy Checklist form must be attached to the Invoice Request form.

o

Invoices raised for commercial activities must include infrastructure charges. Details are available on the BLO website under the BLO Manual section 3.2.6.

o

Work papers detailing the basis of any calculation and the preparing officer’s name and signature.

Once the invoice has been raised, the invoice number generated by PeopleSoft must be recorded on the Invoice Request form.

Invoice Request forms are to be filed in invoice number and Billing Source order by the Billing Specialist.

If an invoice is requested in a foreign currency, the equivalent amount in AUD must be used. The ‘buyers’ exchange rate must be used and is obtained from the National Australia Bank (Phone: 132265) on the day the invoice is raised on PeopleSoft. This date and the rate of exchange must be recorded on the Invoice Request form as well as in the description field on the invoice. The Billing Specialist must monitor the payment of the invoice and make adjustments on foreign currency variances.

If an invoice is requested in a foreign currency and the funds will be deposited directly to the University of Sydney Bank Account, the invoice must be raised in foreign currency outside Peoplesoft. The Billing Specialist must complete the Electronics Funds Transfer form and fax it to the Cashier who will arrange for the funds to be receipted to the nominated account.

There is no need to keep a copy of the invoice once it has been sent to the customer. However, an Invoice Request form with the invoice number recorded on it must be on file.

Credit Notes/(Credit Invoice)

When an invoice has been processed, adjustments can only be made by way of a Credit Note.

A credit note may be raised to:

o

Record the return of goods or services

o

Record a reduction in the amount of the invoice

o

Record difference on exchange for foreign currency transactions

o

To cancel an invoice raised for an incorrect amount or other data entry error

o

To write off bad debt

Hand written adjustments on debtor invoices are not allowed.

A Credit Note Request form must be completed before a credit note is raised. The following is

considered essential when raising a credit note:

o The Credit Note Request form is authorised by a delegated officer; the authorising officer MUST never be the Billing Specialist. Under no circumstances must a credit note be raised or processed that has not been duly authorised.

School of Philosophical & Historical Inquiry

Effective 1 st May, 2004

Accounts Receivable (AR) Procedures

o

The Credit Note Request form must include the original Invoice number being adjusted and the reason. These details must be entered in PeopleSoft.

o

In all circumstances it is the responsibility of the Billing Specialist to ensure that the supporting documentation MUST be retained and filed in a secure local area and retained for audit purposes.

o

Once a Credit Note has been raised it MUST be offset against the invoice it is to credit, on the next working day. This is done by creating a worksheet and following the steps in section 11 of the Accounts Receivable - Billing Training Manual. Under no circumstance must a credit note be raised and not offset against the relevant invoice.

Receipts

Any payments received either wholly or partly attributable to a debtor must be delivered by hand to the University Cashier, FS as soon as possible with the remittance advice and a note of the ledger account number for any non-debtor part of the remittance.

Debt Management – Recovery

Effective debt recovery must be proactive with the objective of reducing outstanding accounts, while keeping sight of the need to maintain a professional relationship with the client.

A recommended best practice to assist the University cash management would be to target debt collection at a level of 80% within 30 days from the date of the invoice.

If a debt is not recoverable then the department will be contacted to authorise the debt to be

“written off” resulting in loss of the income.

SOPHI is responsible for reviewing and collecting debts for all Invoice Request forms issued by the School.

At the end of each accounting month, an Aged Analysis Report should be run from PeopleSoft Financials which will show all OPEN items. The following action is required:

o

Invoices listed in 31 – 60 days column Customer Contact – Billing Specialist should telephone all customers listed on the report to ask if the invoice has been received and are there any problems regarding payment. They should advise the client of the amounts outstanding, which are now two weeks past their Due Date, and request immediate payment. Record Conversation - A record of the telephone conversation should be made including time/date of call, contact officer, phone number called and the response from the client for each individual invoice. These conversations should be recorded in the Conversation Notes field and the invoice ID in the Topic field. See section 14 in the Account Receivable Billing Training Manual.

o

Invoices listed in 61 - 90 days column Customer Contact - A reminder letter signed by the Finance Manager is sent to the client asking for full payment of the amount outstanding and indicating that failure to pay will lead to further recovery action to be taken through the University’s assigned debt collection agency. (Refer Appendix A for pro forma). Record Action/Conversation - A record of the reminder letter should be made in the

School of Philosophical & Historical Inquiry

Effective 1 st May, 2004

Accounts Receivable (AR) Procedures

Conversation Notes field under the Customer within PeopleSoft. Include date when letter was sent, along with any further conversations had with the Customer, i.e. contact officer, contact phone number and the response from the client for each individual invoice. The invoice ID should be included in the Topic field.

o

Invoices listed in 91 - 120 days column Customer Contact - Once an invoice remains overdue for more than ten weeks, a final letter of demand sign by the Finance Manager is sent asking for full payment of the amount outstanding. This letter must be more direct, stating that the customer has only seven days (state date of payment) to make full payment or contact the University, otherwise the account will be transferred to Revenue Services, FS for recovery via the commercial debt collection agency. (Refer Appendix B for pro forma). Record Action/Conversation

o

Invoices listed in >120 days column Where the follow up has been unsuccessful in collecting payment the following options are to be considered by the Finance Manager:

Send detail of the debt to the College Finance Team for referral to Revenue Services, FS for Recovery action. Retain within SOPHI for further action. These would be for debts considered “sensitive’, advice should also be sent to the College Finance Team regarding planned action. Request that the debt be written off immediately. (Refer Appendix C for pro forma).

Internal Controls

Accounts Receivable Staff (Billing Specialists)

o

Create and amend customers as required

o

Process invoices, credit notes and worksheets

o

Generate Aged Debtors Report, SUARQ075 and SUARQ077 to identify outstanding debtors and assist in outstanding debts follow up.

o

Undertake follow up of outstanding debts.

Finance Manager

o

Checking and approving invoices and credit notes for goods and services provided.

o

Follow up of outstanding debts, including authorising reminder letters.

School of Philosophical & Historical Inquiry

Effective 1 st May, 2004

Accounts Receivable (AR) Procedures

Links

Accounts Receivable Billing Training Manual http://www.finance.usyd.edu.au/people_soft/manuals/arbill.pdf

Accounts Receivable PeopleSoft Training and Support http://www.finance.usyd.edu.au/people_soft/acc_rec/index.htm

Trade Debtors Procedures – Accounts Receivable http://www.finance.usyd.edu.au/account/income/ardebtors.pdf

Prepared by:

Angela Collins

Date:

11 May 2004

Approved by:

Cam Pham

Date:

12 May 2004

Version:

1/2004

School of Philosophical & Historical Inquiry

Effective 1 st May, 2004

Accounts Receivable (AR) Procedures

Appendix A Reminder Notice: Overdue Invoice(s)

TO:

REMINDER NOTICE – OVERDUE INVOICE(S)

Our Reference:

Dear Sir/Madam

I refer to the above outstanding invoice (copy attached) for the amount of $X,XXX.YY that still remains unpaid.

The University requires payment by (DATE i.e. 14 days from today’s date) as it is well over our terms of trade.

If payment has already been made please provide details, otherwise we will have no alternative but to take legal action to recover the full amount due plus any associated legal costs.

Please do not hesitate to contact me if I can be of any further assistance.

School of Philosophical & Historical Inquiry

Effective 1 st May, 2004

Accounts Receivable (AR) Procedures

Appendix B Final Notice: Overdue Invoice(s)

TO:

FINAL NOTICE – OVERDUE INVOICE(S)

Our Reference:

Dear Sir/Madam

I refer to the above outstanding invoice (copy attached), the University is concerned that the invoice has been overdue now for XX days past the due date of XX/XX/YY.

As indicated in the Reminder Letter sent to you dated XX/XX/YY, the University would begin legal action.

Therefore if payment is not received within seven (7) days from the date of this correspondence, the University will forward the matter to our commercial debt collection agency for recovery of the total amount plus any additional legal costs incurred.

We are disappointed that it is necessary to write to you in these terms, the University would appreciate that the invoice be settled promptly.

If you have forwarded payment prior to this reminder please disregard this notice.

Finance Manager

School of Philosophical & Historical Inquiry

Effective 1 st May, 2004

Accounts Receivable (AR) Procedures

Appendix C Request for Debt Recovery Action

TO: College Accountant – CHASS

REQUEST FOR DEBT RECOVERY ACTION

Our Reference:

Dear College Accountant

As required by the procedure on Trade Debtors-Accounts Receivable, Debt Management Recovery follow-up action has been undertaken by the Department of SOPHI.

I now authorise that the outstanding debt be, either:

Referred to Revenue Service, FS for recovery action, via the commercial debt collection agency.

Retain the debt within the Department for further action.

Request the debt be written-off immediately

Note: Please circle authorised action.

I have attached copies of all correspondence relating to this outstanding debt for review.

Finance Manager

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