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So these tips and procedures do not apply to sales where you are paid immediately, in other words, cash sales. You’ve given the customer their sales invoice. Now what? Well, you need to keep a note of when that invoice is going to be due for payment. When the due date arrives you need to check if it has been paid. If it hasn’t you need to start your accounts receivable collection steps. Here, we will focus on accounts receivable procedures such as:- What’s involved in extending credit to a customer A method to help you maintain the sales invoices waiting for payment Issuing month end statements Issue them with:-A copy of your Terms and Conditions relating to your goods, their sale and related payments. Once you have approved their application you can allocate the customer Account numbers are helpful to businessesContact details of their accounts person. The names and telephone numbers of three trading referees so you can check their payment history. The full names of the business directors. A paragraph to indicate they should read the attached terms and conditions of sale with a place for them to sign their acknowledgement of such. Contact your lawyer for a suitable template. You can also purchase and download templates off the internet; just be sure you are using a reputable provider and one that is specific to the laws of your region. Below are the basic steps to follow from the time you give the customer their invoice: Make a cover page on which to list the unpaid invoices. Draw up Keep this cover page in the frontReceivables cover page. You can also make a note (hand-written or You can change it to suit your You can simply place all invoices directly into the Sales Invoices folder because you will use the bookkeeping program for the accounts receivable procedures. A statement of account is handy for two reasons:-The customer can then match the As a reminder to customers that their account is due for payment (or overdue as the case may be).
Statements are usually only issued once a month to include all invoices from the 1st to the 31st (or 30th) - so wait until the first day of the next month before preparing statements. Also, go here for more information on this document. Leave me a comment in the box below. Aug 04, 20 11:46 PM A Chart of Accounts helps a business classify income and expense transactions into specific categories and is like a map to the general ledger accounts. Each account has a ledger showing details of money received or spent. Amounts covered by Interdepartmental Vouchers (IFVs) need not be included as receivables, even though the IFV credit has not yet appeared on the monthly departmental FIS statement. The records to be maintained for each customer must include the complete name and address plus the social security number (when necessary), Federal Employer Identification Number (FEIN) or other taxpayer identification number. The sale is to be entered into an accounts receivable ledger for the customer and the total sales for the day are entered into a control ledger. The accounts receivable ledger is to be maintained for each account showing all charges and payments. The control ledger is to equal the receivable ledgers for all customers. A monthly reconciliation is to be completed between the receivable records for the customers and the control ledger to ensure accuracy. The statement should indicate the total balance due and identify a payment due date. The payment due date is up to each department, but should allow sufficient time for the department to post the payment before the next billing cycle. If the department has approval to assess a finance charge, the amount and terms must also be disclosed on the statement. If full payment is not received the procedures outlined in.030 are to be followed.
The following procedures should be used at a minimum for collecting amounts due: At the same time, the Division of Financial Services will forward the original Delinquent Account Data Form to the collection agency and file the duplicate. However, they are to be included in the write-off request if not collected. When any account becomes 60 days past due, additional credit should not be given until the account is returned to current status. Departments may used the KSU Accounts Receivable Report form or some other reporting tool or software of their choice. This monthly report is to be maintained in the department. A copy of the Accounts Receivable Report is to be submitted to the Division of Financial Services by July 15th. Do not include receivables due from other university departments. Thus, departments should not include these receivables in their reports. Departments or colleges that place holds on a student's academic records should note the following. Any hold or removal of a hold is to be posted to KSIS by the originating department or college. Departments are responsible for timely removal of any hold, which they have placed on a student's academic record. The Registrar's Office will train departments in placing holds on student's academic record. These lists do not include delinquent dollar amount. The Registrar's Office distributes to each department a list of students whose hold is in override status immediately following early enrollment. If a department does not want a student's academic record cleared, the department is responsible for reactivating the hold. Another Interfund will be used to pay the State Division of Accounts and Reports their 17% collection assistance fee.
The Division of Financial Services will contact the department to determine which account is to receive the payment and from which account the collection assistance fee is to be paid, and will then send a record of each of these transactions to the department for recording and filing. When the accounts have been approved for write off by the State Division of Accounts and Reports, the department will be notified by the Division of Financial Services and instructed to delete the accounts from the department's accounts receivable. These accounts are not to be included on the monthly accounts receivable reports after receiving the notification. Any amounts received on these accounts are to be remitted to the Department of Administration, Division of Accounts and Reports, State Office Building 110N, Topeka, Kansas 66612 by an Interfund Voucher.Pursuant to the Federal Trade Commission's Red Flags Rule the following guidelines are offered to assist in the identification of risks associated with extending credit or establishing account receivables for customers. Please consider the following as potential Red Flags in each of the listed categories: Questions regarding the annual reporting of accounts receivable are to be referred to Financial Reporting and Asset Management section of the Division of Financial Services at 785-532-1853. Questions regarding the encumbering of students' records are to be referred to the Office of the Registrar at 785-532-6254. We have found it. Reducing Average Days Collection Why. With these new accounts receivable processes and reports, the company now tracks Average Days Collection and past due rather than just Days Sales Outstanding (DSO) as the measure of their collection effectiveness. Again, it’s obvious what a crucial role time plays and how an increase in velocity and discipline directly lead to increases in efficiency and cash savings. So, how can you use time to your advantage.
Accounts Receivable Procedures and Collection Methods Accounts Receivable is a part of the revenue process. The sale is not complete until you get paid for the sale and until you get paid you have loaned your money to your customers, interest free. The longer they have your money, the less chance there is for you to get your money back. The money sitting in receivables is money that is not sitting in your bank account. Therefor, here are a few things to keep in mind when Writing Accounts Receivable Procedures. DECREASE YOUR COLLECTION CYCLE TIME Examine customer accounts that go beyond your terms. Do not wait until twice the net terms to take action. Time is your enemy, the likelihood of collecting your receivables decrease with time. You have to catch collection problems early in the collection cycle. TIGHTEN YOUR CREDIT POLICY Examine credit process for slippage. Do you have a credit approval process. Do you perform credit checks. What standards are used to extend credit and how often do you review your credit policies to make sure they work as intended. These are a few of the Accounts Receivable question you should be asking. REDUCE YOUR CREDIT TERMS Change the credit terms you offer your customers. If you offer terms of net 45, reduce it to net 30. You might offer a discount of 1% if paid within 10 days else net due in 30 days. This is equivalent to 18 % annual interest and most businesses will take those terms. SHORTEN YOUR INVOICE PROCESS Bill your customers immediately. This is a big one. Many service organizations wait until the end of the month to tally billable hours and determine customer charges. Do not wait until the end of the month. This could reduce your day’s receivable by as much as 15 days right there. Email or fax your invoices to save another day or two (e.g. QuickBooks accounting software contains this feature). REDUCE YOUR BILLING ERRORS Most customers delay payments because of invoice errors.
Customers won’t recognize the invoice until it is corrected and may not even notify you, the vendor, of the error until you call for collection. Again, avoiding this delay in error and time will amount to cash savings. TRAIN YOUR ACCOUNTS RECEIVABLE PERSONNEL Make sure that all personnel involved are training to understand the performance metrics for their jobs. But then the supervisor uses nothing more than On-The-Job (OJT) training for the clerk. Does your CFO think that he or she (the CFO) is really managing the cash. But, in reality, that’s not the case; the clerk is managing the money day-to-day. And with time-saving procedures set in place, you will let your efficiency work for you Grabbing Your Policy Goal With accounts receivable procedures in place, you will increase your efficiency by reducing your Average Days Collection. More Articles from Bizmanualz. How to Write an Accounts Payable Procedures Manual What Is a Policies and Procedures Manual. What are SOX Accounting Policies and Procedures. Policies and Procedures Questions Answered Why Use Policies and Procedures Manuals. What Is the Purpose of a Procedure Manual. What Are the 10 Best Reasons for Writing Procedures. How Much Detail Goes into A Procedure. How to Write Procedures for Results Do You Need a Policies and Procedures Style Guide. Share Leave a Reply Cancel reply Your email address will not be published. The Importance of an Updated Fire Safety Manual In Any Workplace How To Run a Successful Business with Remote Employees What Is a Policies and Procedures Manual. What are SOX Accounting Policies and Procedures. What Systems Does a Business Need. Cash must be immediately obtained in all cases for transactions which are minor in amount to reduce the additional record keeping which is inherent with an accounts receivable system. For the purposes of this policy, billing is defined as an invoice in any format, a letter billing, verbal billing, or any other format which might be conceived.
Normal terms of payment are: This will insure basic control over amounts due the University. It may be more effective, on occasion, to have a representative of the department which originally requested a billing to assist with collection efforts. Such aid should be provided, if possible, when requested by Accounting Services. There may have been an error made when a billing was originally requested or an invoice should never have been requested in the first place. While this may happen on occasion, departments should be very certain that an account receivable does, in fact, exist before requesting a billing. Also a billing may have to be replaced by another when some of the billing data is found to be incorrect. Finance check to see if customer is already in place and Email new Customer Number when set up. Credit Application Form The following Details are required to Set up a Customer; Customer Name, Purchase Order number Customer Address, VAT Number, Phone Number, Invoice Email Address, Accounts Email Address, Local Contact Sub cost code Sales Order-Invoice All invoices issued by DCU to third parties must be processed through the Finance Office. Invoice requests are made on Agresso using the Sales Order Process to ensure invoice and payments are processed correctly. Requests cannot be catered for by Email. The sales order (invoice) must include a description of the activity and an amount in accordance with the schedule of charges.In order to facilitate the collection of invoices we need an Official Purchase Order from the customer or a letter on headed paper instructing DCU to carry out this work. Both should include a description of the activity and an agreed amount and can be scanned to the sales order. Please ensure the correct VAT has been applied to the sales order as the sales order cannot be amended once converted to invoice. Sal es Order Procedure Invoices are issued by Finance Office on a weekly basis.
Requests received by Wednesday lunch time will be issued on Thursday of each week. The following fields are mandatory to complete the form: (1) Customer Name, Address (2) Description, (3) Amount (4) VAT is Applicable. (5) Sub cost Code; (6) Phone Number (7) Purchase order number (8) Email address (9) Company Number Subcost A sub cost centre equals COST centre, i.e. where income and expenditure are charged. Sub cost centres are broken down into three types. If the activity takes place outside Ireland VAT is accounted for in the relevant country the activity takes place then. Inside Ireland Vat charged at appropriate rate (Check Vat Appendix) Inside EU (excl. Ireland ) If they have a Vat No quote it on the invoice and state 'Vat Reverse Charge Applies' and no vat needs to be charged by us. If not vat must be charged at the appropriate rate. Exempt (3) Charities; Invoices to charities would be liable to VAT (4)VAT 13B Exemption; Exempts certain exporting companies from charging or being charged vat provided they have a valid Vat 13B authorisation certificate. It is each department’s responsibility to request and file copies of their customer’s Tax Exemption certificates (VAT13B). The authorisation number quoted on the Vat Exemption certificate must be quoted on each of the invoices. Prior to the exemption Certificate running out the department should request from their customer a copy of their new certificate and if they do not have a new certificate vat will then have to be charged as appropriate. Payments can be made by Bank Transfer or by Credit Card and is co-ordinated by the service provider. Credit Control: A Statement of Account is emailed to all DCU debtors on the 1 st working day of each month detailing all outstanding invoices. Reminders are emailed mid-month to debtors to prompt payment for over-due invoices, on the basis of more than 30 days overdue, more than 60 days overdue and more than 90 days overdue.
The Accounts Receivable staff is responsible for calling university clients to collect outstanding monies. The DCU companies carry out their own client calling. Invoice queries are initially addressed by the staff. Request to issue a credit note is raised by the invoicing unit, to Accounts Receivable, and must be approved by the relevant Finance Staff in writing (Credit Note Approval Form). Credit Notes are generally issued on Friday Dublin City University Credit Note Approval Form EI Vouchers; If you have an Enterprise Ireland Innovation Voucher to redeem and have already signed a contract with the industrial sponsor, Further details on Standard Procedures for Enterprise Ireland Innovation Vouchers Agreement Review are available at: Enterprise Ireland Innovation Vouchers All innovation vouchers are VAT able at the standard rate (currently 23%). Enterprise Ireland does not pay VAT on innovation vouchers. This should be invoiced to the industrial sponsor (SME) as the value of the contract plus VAT and less the value of the innovation voucher to be paid by Enterprise Ireland. Please see the template for invoicing EI and the SME at the following web link: Innovation voucher invoice templates In order to invoice the Industrial sponsor (SME), they should be set up as a Debtor on the Accounts Receivable system. Once the contract is complete, please fill out the innovation voucher claim form and send with copies of the invoice to Enterprise Ireland (see Enterprise Ireland web link below for further help). The Advantages of Maintaining Accounts Receivable One of the most basic business functions is managing money coming into the company as a result of sales activity. The company must set up accounts for customers to structure payments and address the question of whether to issue credit and to whom. It has to collect the money from customers who have made purchases, and it must reconcile invoicing and funds received.
All these activities require policies to give them direction and procedures to specify how employees carry them out. Background Companies must balance speeding up the collection of accounts receivable with the possibility of gaining customers by issuing credit and implementing easy payment terms. Small businesses often have restricted access to credit themselves and may have to depend on rapid payment of outstanding amounts. Company policies define the goals and the framework of the accounts receivable functions from the point of view of such limitations. Quality issues often lead to late payments, and the company must consider customer satisfaction in collection procedures. Managing Invoicing The first step in implementing an accounts receivable system is developing policies and procedures for invoicing. A business can speed up collection by issuing invoices as soon as the sale is complete. Internal policies must detail when the sales department should report sales and when the accounting department should issue the invoice. Procedures detail what the sales report must include, how to prepare it and where to send it. Accounting procedures give the details of invoice preparation, verification, data entry into the accounting software and invoice mailing. Managing Credit Unless customers always pay in advance, they typically receive credit, at least until they pay their bills. Customers that receive credit must have accounts for which the company has performed a credit check and which it monitors for prompt payment. Company policies specify which customers can open accounts, what kind of credit approval process to apply and the required credit standards. Procedures detail the account information required from customers, who carries out the credit check and how. Account maintenance procedures give details on tracking payment performance and how to suspend credit when required.
Collecting Receivables The final step in the operation of an accounts receivable system is collecting the amounts due as rapidly as possible. If a company operates in an industry where payment in 30 days is the standard, it can offer discounts or incentives for earlier payment. Regular reminders to customers with overdue accounts are an effective tool. Policies specify the standard payment terms, any discounts and a schedule for reminders as well as consequences for late payment. Collection procedures detail tracking payments, entering receipts into the accounting system, sending reminders for late payments and initiating additional collection actions. He started writing technical papers while working as an engineer in the 1980s. More recently, after starting his own business in IT, he helped organize an online community for which he wrote and edited articles as managing editor, business and economics. He holds a Bachelor of Science degree from McGill University. What Is a Work-Order Receivable. Municipality staff assigned to the administration and collection of accounts receivable accounts shall adhere to the policy and procedures detailed below. Departments are responsible for the effective communication with debtors, third parties and the Treasury Department, ensuring that accounts receivable are adequately reported, collected, extinguished or written off as appropriate. POLICY, PROCEDURE AND IMPLEMENTATION 1.0 General 1.01 The Treasury Department is authorized to collect delinquent non-tax debts on behalf of the Departments within the Municipality that do not specialize in the collection function. 1.02 on The Treasurer has the authority to assign accounts to a third party for collection, behalf of the municipality, and, where authorized by legislation, to add the delinquent accounts to property tax accounts. 2.0 Recording of Accounts Receivable 2.
01 All amounts determined to be due to the municipality must be promptly recorded as an accounts receivable by the Municipality. Each account receivable must be recorded and maintained until payment is received or the recorded amount is written off or extinguished. 2.02 An adequate provision for doubtful accounts must be established. Explanations of significant variances from the report for the previous quarter must be included with each quarterly report. 7.0 Interest on Accounts Receivable 7.01 Interest must be charged on amounts owing to the Municipality of Dutton Dunwich in accordance with the Fees By-law for Financial Services, or as stated in the Agreement signed by both the debtor and the municipality. 7.02 Interest shall be calculated on overdue accounts receivable commencing on the first day after the money becomes due. If a debt that was written off is reactivated, the municipality must record interest from the date the debt was written off until the debt is paid. 7.07 The interest calculated is not to be compounded. 7.08 Interest will be adjusted only when interest was charged as a result of the Municipality’s error or omission. It shall be at the discretion of the Treasurer to decide whether or not the interest amount should be adjusted in such cases up to the amount budgeted for write-offs in the annual budget and no more than the purchasing policy limits. 8.0 Collection Action 8.01 Departments will be responsible for the initial contact with overdue accounts, at the 30-day point. This policy does not apply to contractual arrangements containing a specific provision not to set-off. 9.05 Staff must initiate set-off action to protect the Municipality's interest for any goods or services provided prior to the date of appointment of a receiver or of an assignment in bankruptcy. Any residual amount payable is to be paid to the receiver or trustee in bankruptcy, as appropriate.
Staff must consult with its legal counsel if there is any doubt as to the legality of the payment. 9.06 Before initiating a trust account set-off, staff must obtain a legal opinion that this action is acceptable, either under statutes governing the trust or under the trust instrument itself. 9.07 When a set-off is made, the debtor must be informed in writing of the gross payment, the set-off amount, and the net payment. 9.08 With the exception of salary overpayments, staff must provide employees who owe money to the municipality with written notice of the intent to set-off. The third party demand must stipulate that interest is accruing. 10.05 Normally, staff should not initiate a demand on a third party until at least 90 days after the debt was incurred. In certain instances, however immediate collection may be warranted. A third party demand must be requested promptly and normal means of collection can be bypassed or shortened at the discretion of Treasurer after thoroughly reviewing the circumstances surrounding the debt. 10.06 A third party demand on an employer must not exceed 30 per cent of the net wages or salary per pay period of the employee (debtor) except where the Municipality considers it is unlikely that the remainder of the debt will be collected, or the debtor will remain employed with that employer. 10.07 The debtor shall be notified by the Municipality at the same time and in the same manner as a demand is made on a third party. 10.08 When a debt to the municipality is paid in full, all demands and set-offs for that debt shall be cancelled. Surplus funds received from the third party or from the debtor shall be returned promptly. 10.09 Verbal instructions to the third party by a Municipality staff member are sufficient to cancel a demand notice.We are a non-profit group that run this service to share documents. We need your help to maintenance and improve this website. A cash sale results in the collection of cash at the time of the sale.
A credit sale results in an invoice being created and given or sent to the purchaser who will then send payment back at a later date. Wherever possible cash sales should be made for the following reasons: Cash in the bank earns interest income Credit sales incur costs in creating and distributing invoices and statements Some credit sales result in non-payment or are very difficult to recover resulting in significant costs being incurred Cash payments can be made by cheque, EFT-POS and credit card. Existing Debtor Accounts In order to make a Credit sale a Debtor Account must be used, if the University has previously allowed credit to the purchaser then an account will exist. A list of all debtor accounts is available by accessing the Debtor Chart within Finance One. All Debtors Accounts that have not had any activity for more than 13 months are made status “Inactive” this means no transactions can be put against the account. To reactivate the account an Application For New AR Form must be completed to ensure the correct details are recorded. An account number must be entered onto the invoice at the time of the sale. New Debtor Accounts All new accounts require a completed Application For New AR Form. This is to reduce the processing cost of these small value transactions. The Department should investigate the option of establishing a web based sale interface that accepts credit card payments, this is the most cost effective way to process high volume low value transactions. Where a pattern of regular but relatively low value transactions is likely then a new Debtors Account should be established to process these, rather than using a Sundry Debtors account as this aids the collection of outstanding amounts. To request a Debtor account, Departments are required to complete the Application For New AR Form. This form completed and signed by the Debtor is essential in order to properly manage the collection process, in the event that the debt becomes overdue.
Maintenance of Debtor Accounts The Revenue Management Office is responsible for the maintenance of the debtors account list. Where no transactions have been entered against a debtor account in the previous nine months the account will be removed from the Debtors list and the procedures for the creation of an account will apply. Creation of an Invoice An invoice is required in all circumstances where a cash sale is not made. Invoices must be created using Finance One. Credit Notes Credit Notes are used to cancel invoices either in whole or part (only issue a partial Credit Note if a part payment has been made). They are not to be used to write off uncollectable debts. Legitimate uses include the correction of errors in the original invoice, to account for the return of goods or to amend a disputed price. Because GST is paid by the University to the IRD as soon as a GST invoice is issued it is important that any credit notes be issued promptly. For information about how to create a Credit Note please refer to the Finance One Accounts Receivable Manual. Debt Collection The Revenue Management Office manages the collection of debt in the University. For any one debtor numerous departments may issue numerous invoices in any one month. These invoices along with any payments received will be summarised onto a debtor statement which is printed and posted to the debtor monthly. The collection action adopted by the Revenue Management Office is based on the length of time an invoice has been outstanding, measured in months since issue. Current A Debtor Statement is sent to the debtor at the end of the beginning of the following month. University policy is all invoices on these Statements are to be paid by the 20th of the month following (normal commercial practice). One Month The debtor is sent a statement clearly noting “OVERDUE ACCOUNT”. Two Months The Debtor Statement (i.e. 60 days overdue) “FINAL NOTICE” statement is sent.