UNSW Global Accounts Receivables Policy V3 Amended at 21 June 2012 Page 1

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Sheryl Byrd
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1 3.2 Accounts Receivable Accounts Receivable refers to the billing and collection of monies owed to the company for services rendered. Accounts Receivable systems All Accounts Receivables transactions must pass through either UNSW Global Financials, the Foundation SAS database, the Study Abroad database, The UNSWIL student database or the ETC schools competition database. Unless approved by the CFO, all invoices will be raised in one of the systems referred to at 2.1 and no shadow accounts receivable systems are to be used whatsoever. Access to the UNSW Global Financials Accounts Receivable (Billing) system is not permitted without prior attendance at an Accounts Receivable training session provided by the accounts department. Please also note that generally staff will not be provided concurrent update access to both the Accounts Receivable (Billing) module and On line Journal Entry in UNSW Global Financials General Ledger. Procedures Staff should observe the following procedures, Invoice preparation is the responsibility of individual Divisions. A request for an ad hoc invoice should be put in writing and approved by a delegated officer or accompanied by supporting documentation. A file of written requests should be maintained by each Division. The member of staff making the request is responsible for ensuring that invoices accurately reflect the goods or services provided. Terms of Trade Terms of trade are 30 days. Goods and Services rendered by one Division to another Goods and services rendered by one Division to another are not to be processed via the Accounts Receivable system i.e. only debts due from outside of the company are to be processed via the Accounts Receivable system. Cost recoveries for goods and services rendered by one Division to another are to be recovered by journal transactions. Sale of Goods and Services Sales of goods and services on credit should not be processed where an existing debtor owes monies to the Company for periods in excess of 60 days. Further sales should be referred to the CFO. Credit is not to be extended beyond $5,000 to new debtors without reference to the Company Accountant for a credit reference check. All monies due to the Company from the sale of goods and services are to be recorded in the Accounts Receivable (Billing); system with the exception of monies due in foreign currency. All foreign currency billing must be referred to the accounts department for processing. All conferences, seminars etc. and sales of publications etc. should be paid up front in an effort to avoid collection costs. Invoices are to be raised only on the provision of goods and services, i.e. where a debt exists. UNSW Global Accounts Receivables Policy V3 Amended at 21 June 2012 Page 1

2 Where a milestone must be reached before debt becomes due, invoices may be raised as a held item in the Accounts Receivables (Billing) system with a release date based upon the milestone date. GST on Billing and Revenue Collections (cash sales) The Company s liability for GST arises at the earlier of the issue of a tax invoice, or the receipt of cash in respect of a transaction. On the occasions where a tax invoice is not raised via the UNSW Global Financials Accounts Receivable (Billing) system the proceeds of these sales must be receipted using an approved pro forma tax invoice. Such invoices must be approved in writing by the CFO. Any consideration (cash/cheque/credit card transactions) for a supply is to be banked to the company's account using an approved form. Forms must show the amount of GST separately. Banking forms must be approved by the company accountant. Tax invoices must be provided to customers on request within 28 days. Allocation of Payments Payments accompanied with a remittance advice are to be allocated in accordance with that advice. Payments not accompanied with a remittance advice are to be applied to the oldest invoice first. Credit Notes With the written approval of a delegated officer, credit notes (adjustment notes) may be issued via the billing system to correct any incorrect billings. Income Recognition Divisions are credited with the income as soon as the invoice is raised. Provision for Doubtful Debt In general, a provision for doubtful debts will be established after an invoice is unpaid for more than 90 days. The provision for Doubtful Debts will be reviewed quarterly. To raise a doubtful debt the following journal is required: Dr Bad Debt Expense A/C: Xx Cr Doubtful Debts A/C: (xx) To reverse a doubtful debt previously recognised the following journal is required: Dr Doubtful Debts A/C: Xx Cr Bad Debt Expense A/C: (xx) Debt recovery The CFO is to ensure that all practical means are taken to recover amounts due to the company and shall issue instructions on all aspects of debt recovery, including the arrangements and procedures for: UNSW Global Accounts Receivables Policy V3 Amended at 21 June 2012 Page 2

3 The issue of a letter of demand seeking payment; The issue of reminder notices if the first letter of demand is unsuccessful; Referrals to a debt collection agency; and Applying a block to prevent extending further credit. Issue of Statements to Debtors The Company Accountant will arrange to prepare monthly statements for debtors and will liaise with the Divisions to arrange their distribution. Debtor responses are to be forwarded to the Chief Accountant. Conditions for Writing off Bad Debts One of the following conditions must be satisfied before a debt can be regarded as irrecoverable: The debtor cannot be located; It is uneconomic to finalise recovery action due to the relatively small value of the debt and/or the potential costs of recovery; The medical, financial or domestic circumstances of a particular debtor at that time does not warrant the taking of recovery action or further recovery action; and Legal proceedings through the courts have proved, or on legal advice would prove, unsuccessful. To write off a bad debt that has been provided for the following process steps are required: 1. Raise a credit note against the invoice/s that the bad debt relates, this with automatically post against the income account that the invoice was originally posted to. 2. Post the following journal for the credit note amount, this will correct the doubtful debt and income account position: Dr Doubtful Debts A/C: Xx Cr Applicable Income Account (xx) To write off a bad debt that has not been previously provided for the following process steps are required: 1. Raise a credit note against the invoice/s that the bad debt relates, this with automatically post against the income account that the invoice was originally posted to. 2. Post the following journal to correct the income statement position: Dr Bad Debt Expense A/C: Xx Cr Applicable Income Account (xx) Approval and Write off of Bad Debts UNSW Global Accounts Receivables Policy V3 Amended at 21 June 2012 Page 3

4 The writing off of a bad debt can only be approved by the Board of Directors. At year end, approved bad debts are to be charged against the provision for doubtful debts. Responsibility of company officers No officer of the company is permitted to inform a debtor that action has been taken to write off a debt. Register of debts written off The CFO will maintain the Register of Debts Written off to record the details of the debt, the authority for write off, and any subsequent action to reinstate the debt. Reconciliation and reporting Monthly, within twenty working days of the end of the reporting period the assistant accountant will reconcile the Accounts Receivable ledger with the General Ledger and produce an Aged Debtor listing to be submitted to the CFO for review. Debt Recovery While the CFO has overall responsibility to ensure that all practical measures are taken to recover amounts due to the company, it is in the interests of the each Division to recover all amounts within 90 days or face having their income reduced by the amounts that are overdue UNSW GLOBAL Account Codes Direct Costs Account Description Account Description Teaching Staff Salaries Teaching Staff Part time Teaching Staff Casual Teaching Staff Oncosts Teaching Staff Superannuation Project Consultants Proj. Staff Casual Salaries Salary Benefits Direct UNSW Schools & Faculties English Tuition UNSW Admin Charge UNSW Rent Library Fees Union Fees Cleaning Gym Fees Subcontractors Agents Commission Consumables Admin Consumables External Consumables Maths Consumables Commerce Consumables Science Consumables Technology Consumables Int Student Adv UNSW Global Accounts Receivables Policy V3 Amended at 21 June 2012 Page 4

5 12909 Consumables Computer Labs Project Procurement Stationery Printing Admin Printing External Printing English Printing Maths Printing Commerce Printing Science Printing Tech Printing Int Student Advisor Hire of Facilities Repairs Direct Direct Travel Accommodation Air Travel Domestic Air Travel International Car Hire Catering Communication Direct Delivery Direct Student Rentals Student Allowances Student O'seas Health Cover Computer Op Direct Bank Charges Direct Legal fees Direct Advertising Miscellaneous Direct Indirect Costs Account Description Account Description Salaries Salary Benefits Staff Salaries Casuals Casual Staff English Casual Staff Maths Casual Staff Commerce Casual Staff Science Casual Staff Technology Casual Staff Student Advisory Superannuation Workers Compensation Payroll Tax Leave Provision Long Service Leave Consulting Services UNSW Global Accounts Receivables Policy V3 Amended at 21 June 2012 Page 5

6 15800 Staff Training Fringe Benefits Tax Entertainment Entertainment FBT Travel Airfares Travel Accomodation Travel Per diems Bank Charges Indirect Printing Indirect Printing Photocopies Printing Brochures Office supplies Communications Indirect Delivery Indirect Computer Op Indirect Computer Op Hardware Computer Op Software Computer Op Programming Computer Op Consulting Computer Lab Support IT External Charges Insurance Legal & Collections Subscriptions & Memberships General Maintenance Motor Vehicle Costs Auditors Remuneration Bad Debts Depreciation Property Maintenance Property Leasing Property Utilities Equipment Purchases Rent Promotion Exhibitions Promotion Advertising Promotion Materials Advertising Miscellaneous Indirect Divisional Overheads UNSW Global Accounts Receivables Policy V3 Amended at 21 June 2012 Page 6

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