NonSponsored Accounts Receivable and Billing

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Non-SponsoredAccounts Receivable and Billing
FSUN General Membership Meeting November 19, 2009
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Accounts Receivable and BillingTopics

• Non-Sponsored AR Revenue Recognition Model
• Billing/AR Transaction Lifecycle
• Collections
• AR and Reports
• Electronic Funds Transfer
• Foundation Transfers

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Accounting MethodCash vs. Accrual

• Cash Basis
• Revenue recorded when cash received
• Expenses recorded when cash paid
• Accrual Basis
• Revenue recorded when earned
• Expenses recorded when incurred

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Bill Preparation Revenue Recognition

• Pre-EFS
• Bill Preparation
• Manual
• Department Subsidiary System
• Revenue Recognition
• Most departments recorded revenue on Cash Basis

• Using EFS
• Bill Preparation
• Cluster Billing Specialists enter via EFS Billing
  Module
• Revenue Recognition
• Accrual Basis

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Billing and Accounts Receivable Transaction
Lifecycle in the Enterprise Financial System
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Billing/AR Transaction Lifecycle

• Billing Event
• Gather pertinent information (Initiator)
• Customer name, address, contact, etc.
• Description and quantity of items to be billed
• Price of items to be billed
• Chartstring to record revenue
• Invoice Request Form (Optional)

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• Invoice Request Form
• UM 1696
• UWide Forms Library

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Billing/AR Transaction Lifecycle

• Billing Entry (Preparer)Cluster Billing
  Specialist
• Verifies customer set-up
• Enters bill informationvia EFS Billing Module

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Billing/AR Transaction Lifecycle

• EFS Billing Module
• Bill is processed
• Invoices printed and mailed daily.
• Transaction sent to General Ledger
• Transaction sent to Accounts Receivable

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Billing/AR Transaction Lifecycle

• When a bill is processed, the following
  transaction is recorded to the General Ledger
• DR Accounts Receivable
• CR Revenue
• Example
• DR 1026-12011-20098-110000 (system generated)
• CR 1026-12011-20098-520205 (user entered)

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Billing/AR Transaction Lifecycle

• Customer mails check to Lockbox
• Bank deposits check
• EFS Accounts Receivable Module
• Loads lockbox data from bank
• Payment is applied to AR item
• Transaction sent to General Ledger

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Billing/AR Transaction Lifecycle

• When a payment is applied, the following
  transaction is recorded to the General Ledger
• DR Cash
• CR Accounts Receivable
• Example
• DR 1000-12000- -103000
• CR 1026-12011-20098-110000

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Billing/AR Transaction Lifecycle

• What if customer does not pay?
• Invoice ages and is classified into different
  aging buckets

0-30 Days
31-60 Days
61-90 Days
90 Days
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Billing/AR Transaction Lifecycle

• Accounts Receivable Monitoring
• Aging reports available
• Aging by Chartfield (DeptID)
• Customer, invoice number, amount, age
• Aging Detail or Summary by DeptID Tree Node
• Customer, invoice number, amount, age (detail)
• Customer, amount, age (summary)
• Available in Reporting Instance
• Navigation Accounts Receivable gt Receivables
  Analysis gt Aging

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Billing/AR Transaction Lifecycle

• Collections
• Statements of Account
• Sent monthly to customers with open invoice gt 60
  days old
• Telephone calls
• To customers with open invoice gt 90 days old

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• SampleStatementof Account

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Billing/AR Transaction Lifecycle

• Bad Debt Write-Off
• Completed in consultation with department
• Performed centrally by Accounts Receivable
  Services

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Billing/AR Transaction Lifecycle

• When a write-off is completed, the following
  transaction is recorded to the General Ledger
• DR Bad Debt Expense
• CR Accounts Receivable
• Example
• DR 1026-12011-20098-720902
• CR 1026-12011-20098-110000

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AR and Reports
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AR and Reports

• Accrual basis of accounting
• Department receives "credit" at time invoice is
  processed
• However, a corresponding "AR" is also recorded
• Account Budget Status report
• Available Balance or cash basis report
• Adjustments needed for Accounts Receivable

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Account Budget Status for Current Non-Sponsored
Funds

• Transaction 1
• Department engages in consulting services with
  external customer
• Enter bill for 1,000
• DR 1026-12011-20098-110000 1,000.00
• CR 1026-12011-20098-520205 -1,000.00

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Account Budget Status for Current Non-Sponsored
Funds
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Account Budget Status for Current Non-Sponsored
Funds

• Transaction 2
• Customer pays 1,000
• Accounts Receivable Services applies payment to
  open invoice.
• DR 1000-12000- -103000 1,000.00
• CR 1026-12011-20098-110000 -1,000.00

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Account Budget Status for Current Non-Sponsored
Funds
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Account Budget Status for Current Non-Sponsored
Funds

• Transaction 3
• Department engages in consulting services with
  external customer
• Enter bill for 300.00
• DR 1026-12011-20098-110000 300.00
• CR 1026-12011-20098-520205 -300.00

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Account Budget Status for Current Non-Sponsored
Funds
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Account Budget Status for Current Non-Sponsored
Funds

• Transaction 4
• Customer does not pay invoice
• Collection efforts not successful
• Write-off bad debt of 300.00
• DR 1026-12011-20098-720902 300.00
• CR 1026-12011-20098-110000 -300.00

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Account Budget Status for Current Non-Sponsored
Funds
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Account Budget Status for Current Non-Sponsored
Funds

• Transaction 5
• Department engages in consulting services with
  external customer
• It is June 25th, near the end of the FY
• Enter bill for 20,000
• DR 1026-12011-20098-110000 20,000.00
• CR 1026-12011-20098-520205 -20,000.00

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Account Budget Status for Current Non-Sponsored
Funds
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Account Budget Status for Current Non-Sponsored
Funds

• Year-end roll
• Carryforward calculation process

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Account Budget Status for Current Non-Sponsored
Funds
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Account Budget Status for Current Non-Sponsored
Funds

• Transaction 6
• Customer pays 20,000
• Invoice was created in previous FY
• Accounts Receivable Services applies payment to
  open invoice.
• DR 1000-12000- -103000 20,000.00
• CR 1026-12011-20098-110000 -20,000.00

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Account Budget Status for Current Non-Sponsored
Funds
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Electronic Funds Transfer
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Electronic Funds Transfer

• EFT Process in EFS

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Electronic Funds Transfer

• Billing Event
• Cluster billing specialist enters a bill into EFS
  Billing Module.
• Customer
• Dollar Amount
• Chartstring
• Invoice is mailed to customer

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Electronic Funds Transfer

• Customer initiates ACH or Wire Transfer
• Customer provides remittance information
• Mail
• Fax
• E-mail arpaymnt_at_umn.edu
• Via data transmitted along with payment

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Electronic Funds Transfer

• When payment arrives it will be applied to the
  open AR item by Accounts Receivable Services.
• Key to process improvementEFS Invoice Number

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Foundation Transfers
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Foundation Transfers

• Lifecycle Same as for all other Billing/AR
  transactions
• University of Minnesota Foundation (UMF) cash
  transfer policy
• Monthly transfer
• First business day of each month
• Deadlines for transfer established by UMF
• Utilize Donor Management System (DMS) to check
  status of invoices

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Questions?

• Financial Help Line
• finsys_at_umn.edu
• 612-624-1617
• Accounts Receivable Services
• 612-625-2392
• David Laden
• laden003_at_umn.edu
• 612-624-0929