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
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: 17300 Xx Cr Doubtful Debts A/C: 20250 (xx) To reverse a doubtful debt previously recognised the following journal is required: Dr Doubtful Debts A/C: 20250 Xx Cr Bad Debt Expense A/C: 17300 (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
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: 20250 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: 17300 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
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 3.2.1 UNSW GLOBAL Account Codes Direct Costs Account Description Account Description 12200 Teaching Staff Salaries 12201 Teaching Staff Part time 12202 Teaching Staff Casual 12210 Teaching Staff Oncosts 12220 Teaching Staff Superannuation 12250 Project Consultants 12275 Proj. Staff Casual Salaries 12300 Salary Benefits Direct 12550 UNSW Schools & Faculties 12551 English Tuition 12590 UNSW Admin Charge 12591 UNSW Rent 12592 Library Fees 12593 Union Fees 12594 Cleaning 12595 Gym Fees 12600 Subcontractors 12620 Agents Commission 12900 Consumables Admin 12902 Consumables External 12904 Consumables Maths 12905 Consumables Commerce 12906 Consumables Science 12907 Consumables Technology 12908 Consumables Int Student Adv UNSW Global Accounts Receivables Policy V3 Amended at 21 June 2012 Page 4
12909 Consumables Computer Labs 12950 Project Procurement 13000 Stationery 13001 Printing Admin 13002 Printing External 13003 Printing English 13004 Printing Maths 13005 Printing Commerce 13006 Printing Science 13007 Printing Tech 13008 Printing Int Student Advisor 13200 Hire of Facilities 13300 Repairs Direct 13400 Direct Travel 13401 Accommodation 13402 Air Travel Domestic 13403 Air Travel International 13404 Car Hire 13500 Catering 13800 Communication Direct 13900 Delivery Direct 14000 Student Rentals 14050 Student Allowances 14060 Student O'seas Health Cover 14100 Computer Op Direct 14200 Bank Charges Direct 14400 Legal fees Direct 14500 Advertising 14700 Miscellaneous Direct Indirect Costs Account Description Account Description 15100 Salaries 15101 Salary Benefits Staff 15250 Salaries Casuals 15253 Casual Staff English 15254 Casual Staff Maths 15255 Casual Staff Commerce 15256 Casual Staff Science 15257 Casual Staff Technology 15258 Casual Staff Student Advisory 15500 Superannuation 15550 Workers Compensation 15600 Payroll Tax 15650 Leave Provision 15660 Long Service Leave 15700 Consulting Services UNSW Global Accounts Receivables Policy V3 Amended at 21 June 2012 Page 5
15800 Staff Training 16000 Fringe Benefits Tax 16100 Entertainment 16101 Entertainment FBT 16200 Travel Airfares 16201 Travel Accomodation 16202 Travel Per diems 16300 Bank Charges Indirect 16400 Printing Indirect 16410 Printing Photocopies 16420 Printing Brochures 16430 Office supplies 16500 Communications Indirect 16600 Delivery Indirect 16700 Computer Op Indirect 16701 Computer Op Hardware 16702 Computer Op Software 16704 Computer Op Programming 16705 Computer Op Consulting 16707 Computer Lab Support 16708 IT External Charges 16800 Insurance 16900 Legal & Collections 16901 Subscriptions & Memberships 17000 General Maintenance 17100 Motor Vehicle Costs 17200 Auditors Remuneration 17300 Bad Debts 17400 Depreciation 17500 Property Maintenance 17501 Property Leasing 17502 Property Utilities 17503 Equipment Purchases 17600 Rent 17700 Promotion Exhibitions 17701 Promotion Advertising 17702 Promotion Materials 17800 Advertising 17900 Miscellaneous Indirect 18900 Divisional Overheads UNSW Global Accounts Receivables Policy V3 Amended at 21 June 2012 Page 6