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					  Non-Sponsored
Accounts Receivable
    and Billing

           FSUN
 General Membership Meeting
     November 19, 2009
 Accounts Receivable and Billing
            Topics
• Non-Sponsored AR
  Revenue Recognition Model
• Billing/AR Transaction Lifecycle
  – Collections
• AR and Reports
• Electronic Funds Transfer
• Foundation Transfers
        Accounting Method
         Cash vs. Accrual
• Cash Basis
  – Revenue recorded when cash received
  – Expenses recorded when cash paid


• Accrual Basis
  – Revenue recorded when earned
  – Expenses recorded when incurred
 Bill Preparation & Revenue Recognition
      Pre-EFS                    Using EFS

• Bill Preparation          • Bill Preparation
  – Manual                    – Cluster Billing Specialists
  – Department Subsidiary       enter via EFS Billing
    System                      Module


• Revenue Recognition       • Revenue Recognition
  – Most departments          – Accrual Basis
    recorded revenue on
    Cash Basis
   Billing and Accounts
  Receivable Transaction
      Lifecycle in the
Enterprise Financial System
 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)
• Invoice Request
  Form
• UM 1696
• UWide Forms
  Library
 Billing/AR Transaction Lifecycle

• Billing Entry (Preparer)
  Cluster Billing Specialist
  – Verifies customer
    set-up
  – Enters bill
    information
    via EFS
    Billing Module
 Billing/AR Transaction Lifecycle

• EFS Billing Module
  – Bill is processed
  – Invoices printed and mailed daily.    Invoice

  – Transaction sent
    to General Ledger         Billing
                                               Accounts
                                              Receivable
  – Transaction sent
    to Accounts Receivable
                                    General
                                    Ledger
 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)
 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
             Accounts     General
            Receivable    Ledger
 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
 Billing/AR Transaction Lifecycle
• What if customer does not pay?
• Invoice ages and is classified into
  different aging “buckets”
0-30        31-60       61-90       90+
Days        Days        Days        Days
 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 > Receivables
         Analysis > Aging
 Billing/AR Transaction Lifecycle

• Collections
  – Statements of Account
     • Sent monthly to customers
       with open invoice > 60 days old
  – Telephone calls
     • To customers with open invoice > 90 days old
• Sample
  Statement
  of Account
 Billing/AR Transaction Lifecycle

• Bad Debt Write-Off
  – Completed in consultation with department
  – Performed centrally
    by Accounts Receivable Services
 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
AR and Reports
           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
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
 Account Budget Status
 for Current Non-Sponsored Funds
                                                             Revenues /
                      Account    Account Description         Expenditures
Resources
            Prior Year Carryforward (Cash)
                          900102 FYE Carryfwd (Cash-Based)            0.00

            Revenues less Accounts Receivable
                         520205 Consulting Services               1,000.00
                         110000 A/R - Central Billing            -1,000.00
            Subtotal Revenues less Accounts Receivable                0.00

Total Resources                                                       0.00

Expenditures
                         720902 Bad Debt                              0.00

Transfers

Ending Balance                                                        0.00
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
 Account Budget Status
 for Current Non-Sponsored Funds
                                                             Revenues /
                      Account    Account Description         Expenditures
Resources
            Prior Year Carryforward (Cash)
                          900102 FYE Carryfwd (Cash-Based)            0.00

            Revenues less Accounts Receivable
                         520205 Consulting Services               1,000.00
                         110000 A/R - Central Billing                 0.00
            Subtotal Revenues less Accounts Receivable            1,000.00

Total Resources                                                   1,000.00

Expenditures
                         720902 Bad Debt                              0.00

Transfers

Ending Balance                                                    1,000.00
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
 Account Budget Status
 for Current Non-Sponsored Funds
                                                             Revenues /
                      Account    Account Description         Expenditures
Resources
            Prior Year Carryforward (Cash)
                          900102 FYE Carryfwd (Cash-Based)            0.00

            Revenues less Accounts Receivable
                         520205 Consulting Services               1,300.00
                         110000 A/R - Central Billing              -300.00
            Subtotal Revenues less Accounts Receivable            1,000.00

Total Resources                                                   1,000.00

Expenditures
                         720902 Bad Debt                              0.00

Transfers

Ending Balance                                                    1,000.00
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
 Account Budget Status
 for Current Non-Sponsored Funds
                                                             Revenues /
                      Account    Account Description         Expenditures
Resources
            Prior Year Carryforward (Cash)
                          900102 FYE Carryfwd (Cash-Based)            0.00

            Revenues less Accounts Receivable
                         520205 Consulting Services               1,300.00
                         110000 A/R - Central Billing                 0.00
            Subtotal Revenues less Accounts Receivable            1,300.00

Total Resources                                                   1,300.00

Expenditures
                         720902 Bad Debt                           -300.00

Transfers

Ending Balance                                                    1,000.00
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
 Account Budget Status
 for Current Non-Sponsored Funds
                                                             Revenues /
                      Account    Account Description         Expenditures
Resources
            Prior Year Carryforward (Cash)
                          900102 FYE Carryfwd (Cash-Based)            0.00

            Revenues less Accounts Receivable
                         520205 Consulting Services              21,300.00
                         110000 A/R - Central Billing           -20,000.00
            Subtotal Revenues less Accounts Receivable            1,300.00

Total Resources                                                   1,300.00

Expenditures
                         720902 Bad Debt                           -300.00

Transfers

Ending Balance                                                    1,000.00
Account Budget Status
for Current Non-Sponsored Funds
• Year-end roll
• Carryforward calculation process
 Account Budget Status
 for Current Non-Sponsored Funds
                                                             Revenues /
                      Account    Account Description         Expenditures
Resources
            Prior Year Carryforward (Cash)
                          900102 FYE Carryfwd (Cash-Based)        1,000.00

            Revenues less Accounts Receivable
                         520205 Consulting Services                   0.00
                         110000 A/R - Central Billing                 0.00
            Subtotal Revenues less Accounts Receivable                0.00

Total Resources                                                   1,000.00

Expenditures
                         720902 Bad Debt                              0.00

Transfers

Ending Balance                                                    1,000.00
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
  Account Budget Status
  for Current Non-Sponsored Funds
                                                             Revenues /
                      Account    Account Description         Expenditures
Resources
            Prior Year Carryforward (Cash)
                          900102 FYE Carryfwd (Cash-Based)        1,000.00

            Revenues less Accounts Receivable
                         520205 Consulting Services                   0.00
                         110000 A/R - Central Billing            20,000.00
            Subtotal Revenues less Accounts Receivable           20,000.00

Total Resources                                                  21,000.00

Expenditures
                         720902 Bad Debt                              0.00

Transfers

Ending Balance                                                   21,000.00
Electronic Funds Transfer
  Electronic Funds Transfer
• EFT Process in EFS
               Accounts      EFT
    Billing   Receivable   Payments
                                      Treasury




               General
               Ledger
   Electronic Funds Transfer
• Billing Event
• Cluster billing specialist enters a bill into
  EFS Billing Module.
  – Customer
  – Dollar Amount
  – Chartstring
• Invoice is mailed to customer
   Electronic Funds Transfer
• Customer initiates ACH or Wire
  Transfer
• Customer provides remittance
  information
  – Mail
  – Fax
  – E-mail … arpaymnt@umn.edu
  – Via data transmitted along with payment
   Electronic Funds Transfer
• When payment arrives it will be applied
  to the open AR item by Accounts
  Receivable Services.

• Key to process improvement:
  EFS Invoice Number
Foundation Transfers
       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
             Questions?
• Financial Help Line
  – finsys@umn.edu
  – 612-624-1617
• Accounts Receivable Services
  – 612-625-2392
• David Laden
  – laden003@umn.edu
  – 612-624-0929

				
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