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HomeMy WebLinkAboutFIN 030-005 Accounts and Rents Receivable ProcedureCity Procedure Procedure Title: Accounts and Rents Receivable Procedure Procedure Number: FIN 030-005 Reference: Date Originated: January 2010 Date Revised: Approval: Chief . ministr % icer Point of Contact: Manager, Accounting Services V Procedure Objective To establish procedures for issuing invoices, collections and write-offs of uncollectible accounts receivables other than property taxes. Index 01 Definitions 02 Accounts Receivable and Collections 03 Accounts Receivable for Recreation Programs, Memberships and Facility Bookings 04 Uncollectable Invoices and Receivables Write-offs 05 Long Term Agreements — Receivables and Collections Appendix 1 Requisition for Invoice 01 Definitions 01.01 Accounts Receivable — any monies owed to the City of Pickering for goods and/or services rendered other than property taxes 01.02 City — The Corporation of the City of Pickering 01.03 Treasurer — the Director, Corporate Services & Treasurer 02 Accounts Receivable and Collections All City invoices are to be issued by the Accounting Services section of the Corporate Services Department except for invoices that are generated through an automated system, such as the Class Facility Booking Module which issues permits for facility rental fees owing. Regardless of who is responsible for issuing an invoice, only amounts due that exceed $25.00 are to be invoiced. Amounts due for $25.00 or less are to be paid in advance or at the time the debt is incurred. The Accounting Clerk I will monitor compliance to this requirement. The City's standard term of payment is 30 days from the invoice date 02.01 Requesting an Invoice Requesting department staff initiate invoices by completing a Requisition for Invoice form (see Appendix 1). The authorizer's signature indicates that the request is accurate and complete. The authorized request is forwarded to the Accounting Clerk together with any backup documentation to support the request and any information to be mailed with the invoice. The Accounting Clerk I reviews the requisition to; • verify the applicability of PST and GST and the mathematical accuracy of the invoice requested; and ensure that the invoice requested is supplemented with the backup documentation. The Accounting Clerk I prepares the invoice, issues it and forwards a copy to the originator as confirmation. The Accounting Clerk I reviews the numerical sequence of invoices issued every month, and the reason for any missing invoices is determined, documented and reported to the Supervisor, Accounting Services for appropriate action. Interdepartmental invoicing through the receivable process is not permitted. All interdepartmental transactions resulting from providing goods and services to City departments are to be processed by Interdepartmental Journal Vouchers. Procedure Title: Accounts and Rents Receivable Procedure Page 2 of 8 Procedure Number: FIN 030-005 02.02 Cancelling an Invoice The department that initiated an invoice may request that the invoice or a portion thereof be cancelled if it is discovered that an error has been made on the invoice, or if new information is received rendering the original invoice as inaccurate. The department must submit a written request outlining the reason for the cancellation to the Manager, Accounting Services. The Division Head or Director of the individual who signed the original requisition for the invoice must authorize the request. 02.03 Overdue Invoices and Interest Charged Payment of invoices issued is due 30 days from the date of issue. The City adds interest at the beginning of the following month to all invoices that are 30 days or more overdue with the exception where special payment terms have been arranged by the Division. The interest rate charged will be consistent with the annual rate charged on property taxes in arrears. As delegate under section 04, the Manager, Accounting Services has the authority to cancel interest up to $50 when necessary or appropriate. Amounts greater than $50 require the Treasurer's. approval. 02.04 Collection of Outstanding Invoices The Accounting Clerk I is responsible for following up on all invoices issued and will utilize any or all of the following methods to collect outstanding invoices: During the first 90 days, the Accounting Clerk I; • issues statements to the debtor on a monthly basis indicating outstanding invoices and accrued interest; • advises the originating department of all invoices that are more than 60 days past due for follow-up; and • follows -up with the debtor by telephone and/or in writing, fully documenting all communication to ensure a complete record. Procedure Title: Accounts and Rents Receivable Procedure Page 3 of 8 Procedure Number: FIN 030-005 After 90 days, Accounting Services section may use any or all of the following methods to collect outstanding invoices; • drawing on any security held by the City in accordance with and subject to its terms and conditions, upon proper notification from the originating department; • adding the outstanding amount to a tax account, if authorized by applicable legislation; • forwarding the outstanding invoice to a collection agency; and • forwarding the matter to the City Solicitor to commence legal action if appropriate. Any discussions with the debtor regarding terms of payment and extensions of those terms must be documented and copies provided both to the debtor and the file. The City's Solicitor may be consulted as problems become apparent and once any invoice remains outstanding after three months. 03 Accounts Receivable for Recreation Programs, Memberships and Facility Bookings 03.01 Procedures Recreation and Operations Centre staff who use the automated Class system for program registrations, membership sales and/or facility bookings are responsible for documenting their procedures with respect to the following items; • processing registration, membership and facility booking • application of interest; • adjustments and cancellation of accounting transactions; • review of accounts receivable aging reports; • collection of outstanding accounts; and • write-offs of uncollectable amounts. Any such procedures shall be reviewed by the Treasurer or designate. Where possible, there should be segregation of duties between the individual processing the program registration, membership sale or facility booking and the individual receiving payment. Procedure Title: Accounts and Rents Receivable Procedure Page 4 of 8 Procedure Number: FIN 030-005 03.02 Collection of Accounts Receivable Recreation and Operations Centre management staff are responsible for monitoring their accounts receivable and initiating any collection actions that may be required (i.e. phone calls, reminder letters, repayment agreements, etc.). As part of their monitoring responsibilities, staff must produce and review accounts receivable aging reports for follow-up at least once a month. The Accounting Services section provides an oversight role regarding the collection of Division or Department accounts receivable. The Supervisor, Accounting Services will review the monthly aged accounts receivable reports and remind Recreation and Operations Centre staff as required of any significant amounts outstanding. The Corporate Services Department may require that any accounts receivable be transferred to the Accounting Services section for collection. When collection actions have been exhausted (e.g. after 90 days), Recreation or Operations Centre staff should advise the Accounting Services section in writing of the outstanding account(s) and provide necessary account information. If it is deemed in the best interests of the City, further collection efforts will be undertaken by an external collection agency and may include legal action, if necessary. The use of a collection agency is to be administered by the Corporate Services Department. 04 Write-offs of Uncollectable Invoices and Receivables As provided in the Financial Control Policy, the Treasurer is authorized to write- off outstanding amounts owing to the City deemed as uncollectible provided that such amount shall not exceed $10,000 and is not an amount raised as taxation or deemed to be taxes. The authority to write off outstanding amounts owed to the City has been delegated in limited cases, as described in the following sections. 04.01 Write-offs of Uncollectable Invoices When the originating department deems an invoice as uncollectible or has been advised that the Accounting Services section's efforts at collection have been unsuccessful, the originating department must request Accounting Services to write off the invoice. The request must be made in writing to the Manager, Accounting Services and be authorized by the Division Head or Director. Any write-offs of uncollectable invoices in excess of $500 must also be approved by the Treasurer. Procedure Title: Accounts and Rents Receivable Procedure Page 5 of 8 Procedure Number: FIN 030-005 On a quarterly basis, the Accounting Services section should assess the need to write-off any outstanding accounts. All amounts outstanding for more than two years, for which due process has been followed, should be written off. The above procedures for writing off these amounts are to be followed. 04.02 Write-offs of Uncollectable Amounts for Recreation Programs, Memberships and Facility Bookings If collection actions have been unsuccessful, Recreation and Operations staff, with the approval of the Division Head or Director, may recommend write-off of uncollectable accounts receivable. A record of the collections action taken must be maintained to support the write-off(s). Any write-offs of uncollectable accounts in excess of $500 must be approved by the Director and be forwarded to the Treasurer for approval. At least once a year, Recreation and Operations Centre staff should assess the need to write-off any outstanding accounts. All amounts outstanding' for more'than two years, for which due process has been followed should be written off. The above procedures for writing off these amounts are to be followed. 04.03 Write-off of Small Balances Owing to the City The. Accounting Clerk I and Recreation and Operations Centre staff have the authority to write-off small balances owing to the City up to $5.00 after 120 days. 05 Long Term Agreements — Receivables and Collections This procedure applies to rents and other receivables for long-term agreements involving the use of City property. It does not apply to facility bookings, such as meeting room or arena bookings. For the purposes of this section "rent" includes fixed rental or lease payments, aswell as payments due as a result of agreements which are based, in whole or in part, on percentages of sales or revenues. It is the originating Division's or Department's responsibility to advise the Supervisor, Accounting Services of all new agreements, renewals, and terminations along with copies of all corresponding documentation. Tenants are required to supply post-dated cheques to the Supervisor,. Accounting Services for deposit in accordance with the rental agreement. The Civic Complex cashier deposits the cheques as they become due. Procedure Title: Accounts and Rents Receivable Procedure Page 6 of 8 Procedure Number: FIN 030-005 For agreements that are subject, in whole or in part, on percentages of sales or revenues, the occupier of the facility is responsible for forwarding payments and supporting documentation to the Supervisor, Accounting Services as outlined in the agreement. The Supervisor, Accounting Services is responsible for checking the amount paid to the supporting documentation to ensure accuracy of payment. Payments are then forwarded to the Civic Complex cashier for deposit. Where applicable, a tenant's monthly statements of receipts and/or annual financial statements shall be forwarded to the Supervisor, Accounting Services for review or audit purposes. Any discrepancies noted in payments and statements will be reported to the Director or Division Head and Treasurer for appropriate action. For audit purposes, the Supervisor, Accounting Services shall maintain a payment record for all agreements. The Department or Division may be required to follow-up on any outstanding payments. If the Department or Division deems a payment to be uncollectible, the Supervisor, Accounting Services must be advised. Any unpaid rents receivable more than 90 days overdue shall be subject to the collection procedures as outlined in 02.04. Appendix 1 Requisition for Invoice Procedure Title: Accounts and Rents Receivable Procedure Page 7 of 8 Procedure Number: FIN 030-005 To: Accounts Receivable Name/Company Name Street Address Address 2 City, Province Postal Code Contact Person Telephone No. Fax No. Amount Of To Cover Special Instructions Prepared By Please Invoice Appendix 1 Requisition for Invoice This form should be used when billing a customer Complete only if new customer Date Customer # ¢ /100 dollars $ Charge Account # *GST *PST 4296 4295 * If Applicable Dept. Approval Amount $ Procedure Title: Accounts and Rents Receivable Procedure Procedure Number: FIN 030-005 Page 8 of 8