Accounts Receivable Management
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Policy No.: 6084
Effective Date: 09/26/13
Revised Date: DRAFT
Reviewed Date: 07/01/16
Accounts Receivable Management Policy
Basis for Policy
It is the policy of the University of Nebraska Medical Center (UNMC) to track all invoices to external customers for timely payment and accounting within a central Accounts Receivable System.
Accounts Receivable: Money owed by entities to UNMC from the sale of products &/or services provided.
Biller: The person submitting the details to be invoiced (products/services rendered, amount, cost object & G/L account to credit money once collected, along with any supporting documentation and special instructions for invoicing).
Invoice: A UNMC-generated document provided to an entity describing the products/services provided, the amount due, and the requested date for payment.
Invoices are to be created using the Accounts Receivable (A/R) subsystem available within the UNMC Management Resources on-line application. Billers using the system submit their invoice detail online, assign a cost object and G/L account to the invoice for deposit purposes (posting to SAP), and attach supporting documentation as needed for the customer to process/remit payment to UNMC.
The intent of this system is focused towards external customers. External customers are defined as entities located off UNMC’s campus and not part of the University of Nebraska system. Examples include Creighton University, the Veterans Administration (& other federal governmental agencies), Methodist Hospital, & Omaha Public Schools.
Internal charges by UNMC Departments and Intercampus billings that can be addressed via SAP journal entry are transactions not to be accounted for using the A/R subsystem. UNMC Departments billing phone charges, dietary tickets, printing services, & intercampus tuition billings (billed via SAP journal entry) are examples.
State agencies with invoices paid via Interagency Billing Transfer (IBT) qualify as external customers that can be billed through the A/R system. Examples would include the Nebraska Department of Health & Human Services, Medically Handicapped Children’s Service, the Nebraska Department of Education, and other state agencies receiving state funding that clear invoices using IBTs.
Departments are responsible for generating accurate, timely invoices to external customers for non-sponsored receivables. Sponsored Programs Accounting (SPA) is responsible for generating accurate, timely invoices to external customers for sponsored receivables.
Other specific invoicing requirements may render the A/R subsystem not applicable/efficient for use. For example, contractual terms may require wording, terminologies, etc. that are unworkable with the current invoice template. These exceptions will be reviewed on a case by case basis by the Controller and Finance Cashier’s Offices.
The standard payment term to be applied to invoices generated in the A/R subsystem is net 30 days.
As mentioned above, the A/R subsystem is not designed for internal (on campus) or intercampus charges. Examples would include UNMC departments billing each other (phone charges, copy charges, dietary tickets, etc.) and intercampus charges (UNO, UNL, UNK, etc.). Transactions that can be accounted for solely within SAP via journal entry are not applicable to the intent of what is invoiced via the A/R subsystem.
Entering Invoices Within Management Resources
Billers can obtain access to the A/R subsystem with a request to the Finance Cashier’s Office. Once accessed, billers can enter customer and contact information for invoicing purposes, with the ability to then submit invoicing details to approved customer/contacts. Administered by the Finance Cashier’s Office, the subsystem is monitored daily for newly entered customers and contacts. In addition, they review, generate, and mail submitted invoices as instructed by billers.
The Finance Cashier’s Office will monitor the outstanding invoices generated through the subsystem, following up with billers as needed and process payments as they are received.
The A/R subsystem will interact with SAP in that when payments are processed, the money collected will then be allocated to the respective cost objects as submitted by the biller when entering the invoice information.
Agreements or contracts may determine the billing structure as to when an invoice is to be generated (monthly or quarterly, for example). Such structured invoices should be created within 10 business days as agreed upon. In the event of no invoicing schedule, billers should initiate the invoice process upon completion of a transaction and when the amount to be charged a customer is known/determined.
Collection and Write-off of Delinquent Balances
Collection Procedures for Invoices Outstanding
- greater than 30 days – A/R staff will send second request billing to vendor
- greater than 60 days – A/R staff will communicate with biller to determine who will follow up with vendor
- greater than 180 days – A/R will send a revised invoice with service charges to vendor
- Invoices outstanding greater than 180 days will be assessed service charges at the rate of 16% per annum from the invoice due date
- Vendors will be placed on credit hold (new sales/services for delinquent vendors cannot be accepted) until all delinquent and written off balances are paid. The Accounts Receivable/Cashiering Office will provide written notification to the vendor, the department and the Vice Chancellor of Business and Finance
Write-off of Delinquent Balances
- Delinquent balances greater than 240 days will be written off from the A/R system. Write-offs must be submitted to the Vice Chancellor of Business and Finance (VCBF) for approval. The VCBF will determine if written off balances will be:
- turned over to campus legal counsel
- turned over to a collection agency
- retained by UNMC Accounts Receivable/Cashiering Office
Payments received by UNMC outside of this policy (not invoiced using the A/R subsystem) may not be recorded to departmental accounts as timely and these delays can result in inaccurate financial information. Complications often result in electronic payments received with no supporting backup. With no ability to properly account for them, these unclaimed receipts (checks, ACH, & wire payments) will be listed in the Cashiering Office website for review, updated regularly as needed. After 90 days of receipt, payments will be removed from the listing and retained by the Controller’s Office.
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