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					                                                      Office of Finance                                              PROCESS
                                                Delinquent Account Services                                           GUIDE

                                             Past Due Collections
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                                   Business Process Guide for Fiscal Officers


TABLE OF CONTENTS
Summary ......................................................................................................................... 2
IUPUI FIS A/R Collections Timeline: ............................................................................... 4
Background Information .................................................................................................. 4
Process Steps ................................................................................................................. 5
   Step 01: Org Contacts Customer (ORG01.15days) ............................................................... 5
   Step 02: Org Phones Customer (ORG02.30days) ................................................................. 7
   Step 2A: Org Collections in Progress .................................................................................... 9
   Step 03: Accounts Receivable Services sends letter (AR03.45days) ...................................10
   Step 04: Accounts Receivable Services- Referral to DAS (AR04.60days) ............................11
   Step 4A: Accounts Receivable Services - Collections In Progress .......................................13
   Step 4B: Accounts Receivable Services-Collections Exempt. ..............................................13
   Step 05: DAS sends letter (05.DAS.61days) ........................................................................14
   Step 06: DAS sends Final Letter (06.DAS.76days) ..............................................................17
   Step 06A: Delinquent Account Services - Collections In Progress .........................................18
   Step 07: DAS refers to External Collection Agency (07.DAS.91days) ...................................20
   Step 08: DASCOL-DAS sends first letter (08.DASCOL.61days) ...........................................22
   Step 09: DASCOL-DAS sends Final Letter (09.DASCOL.91days)........................................25
   Step 09A: Delinquent Account Services - Collections In Progress .........................................25
Payment Processing: .................................................................................................... 28
   Payments prior to referral to a collection agency: ..................................................................28
   Payments after referral to a collection agency: ......................................................................28
IUIE Report: AR Past due Invoices ............................................................................... 29
   Output Sample #1:            Correct Collection Schedule...................................................................30
   Output Sample #2:            Incorrect Collection Schedule ...............................................................31
   Output Sample #3:            Banking Fee – Needs Credit memo ......................................................31
   Output Sample #4:            Returned Check ....................................................................................32
Process Flow Chart ....................................................................................................... 33
Change Control Log ...................................................................................................... 35
      See Change Log for record of revisions and current revision date.




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Summary
This document will outline the processing steps for collecting FIS past due invoices at IUPUI. This
document may refer to, but will not outline the write-off process related to FIS Invoices.

The collections process has three stages conducted by:

               1. the department initiating the invoice
               2. IUPUI Accounts Receivable Services
               3. IUPUI Delinquent Account Services (DAS) (accounts >$25)

Once an invoice reaches the third stage of collections, it will be “assigned” to DAS. When that occurs:
       No department or Accounts Receivable Services staff member (s) can pursue collections per
       Federal Fair Debt Collection Practices Act.
       The department will incur a 30% service charge for all amounts collected on their behalf. If no
       payments are made, the department is not charged for the services.

The collections efforts and process will be tracked based on “notes” added to the FIS invoice. This
success of this process is dependent on the use of the use of “notes” section and the codes in the chart
below. Every contact with the customer by the department, Accounts Receivable Services and DAS must
be documented by adding a note to the FIS invoice.




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The chart below lists the code to be used preceding the note placed on the FIS invoice for specific
actions. Any invoice not following the regular collections schedule, needs a note(s) explaining why
collections are delayed.
                                                                                                              updated 1.21.09 gb
  Codes Used By*            Code                              Description                                 Comments
 Departments             ORG01          Org Reminder sent by Dept
 Departments             ORG02          Org Phone call made by Dept
 Departments             IPDEPT         In progress-Department                                Comments required to explain why
                                        (not referred according to schedule)                  this should not be referred to
                                                                                              collections
 Departments             ORG…           Notes made by Dept                                    Any notes added by department
                                                                                              should start with "org"
 AR                      ADDR           New Address per AR
 AR                      AR03           Accounts Receivable Services past due letter sent
 AR                      AR04           Accounts Receivable Services PRE DAS letter sent
 AR                      AR…            Notes made by Accounts Receivable                     any notes added by Accounts
                                                                                              Receivable should start AR
 AR                      DNCOL          Do not collect per AR                                 Comments required to explain the
                                        (add reason of bankrupt or Deceased, if applicable)   exemption from collections
 AR                      IPAR           In progress-Accounts Receivable Services              Comments required to explain why
                                         (not referred according to schedule).                this should not be referred to
                                                                                              collections
 DAS                     DAS05          DAS 1st letter sent
 DAS                     DAS06          DAS Final Letter sent
 DAS                     DAS07          Referred to Collection Agency
 DAS                     DAS08          DASCOL 1st letter sent
 DAS                     DAS09          DASCOL 2nd letter sent
 DAS                     DASCOL         Collections being pursued by DAS                      Will not be referred to agency; DAS
                                                                                              will do collections though
 DAS                     DAS….          Notes added by DAS                                    notes added by Delinquent Account
                                                                                              Services should start "DAS"
 DAS                     DASWF1         W &F 1st Placement
 DAS                     DASWF2         W & F 2nd Placement
 DAS                     DASWF3         W & F 3rd Placement
 DAS                     DASM1          RMS 1st placement
 DAS                     DASM2          RMS 2nd placement
 DAS                     DASM3          RMS 3rd placement
 DAS                     DASXX          Collections activity discontinued
 DAS                     DASREF         Referral Received by DAS
 DAS                     IPDAS          In progress-Delinquent Account Services
 DAS                     PPLAN          Payment Plan Active with DAS
 DAS                     PPLANX         Payment Plan Default with DAS
 AR or DAS               BKP            Bankruptcy Pending
 AR or DAS               RETCK          Returned Check
 AR or DAS               WROF           Written Off
 AR or DAS               WROFPMT        Payment after Write-Off
*Users: A/R=Accounts Receivable; DAS=IUPUI Delinquent Account Services


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Fiscal Officers will regularly run the “AR Past Due Invoices” IUIE report to identify unpaid and past due
amounts. Using that report, the department can take action to collect the invoice, minimally completing
Steps 1 and 2. Accounts Receivable will run the same report monthly and using the “notes” section will
continue collections by completing steps 3 and 4. Delinquent Account Services will continue collections
after step 4 is completed.

The IUIE report, “AR Past Due Invoices” IUIE report retrieves all past due FIS invoices (per the
parameters specified) shown in 15-day past due aging categories. (See appendix for instructions on
parameters.)

          IUIE Navigation: Master CatalogFinancialAccounts ReceivableAR Past Due Invoices

IUPUI FIS A/R Collections Timeline:
 Days Past
                             Suggested Action
   Due
                             15 Days: Organization Contacts Customer with Friendly Reminder Letter (01.ORG.15days)
0-15 days       Step 1
                             This is intended to let the customer know that the invoice is past due.
                             30 Days: Organization Contacts Customer by Phone-- This phone call is intended to enable the
16-30 days      Step 2       organization and the customer to identify and discuss any problems with the sale or merchandise
                             or to identify reason for late payment. (02.ORG.30days)
                             45 Days: IUPUI Accounts Receivable Services sends customer past due letter (03.AR.45days)
31-45 days      Step 3       with a copy to the department. This notifies the customer and department of impending referral to
                             collections department.
                             60 Days: IUPUI Accounts Receivable Services refers invoice for collection (at 60d past due);
46-60 days      Step 4
                             sends notice (04.AR.60days) to customer and to department.
                             61 Days: DAS sends collections letter (05.DAS.61days) to customer; sends an email to originating
61-75 days      Step 5
                             dept with a CC to Accounts Receivable Services.
                             76 Days: DAS sends final collection letter (06.DAS.76 days) and places phone calls. This is
76-90 days      Step 6       intended to give the customer one last opportunity to pay prior to turning the invoice over to a
                             collection agent.
                             91 Days: DAS makes first placement of debt with collection Agency; sends letter (07.DAS.91days)
91-120 days Step 7           to department with CC to Accounts Receivable Services notifying them of collections placement
                             and “no contact” henceforth.


Background Information
Indiana University Financial Management Services (FMS) has published “AR Collections and Write-off
Procedures”, see http://www.fms.iu.edu/ar/ . The FMS guidelines for the timing of the collections process
are shown below. IUPUI has developed a slightly more accelerated process which is outlined in section
above.

IU Policy I-490 relates to “Non-Student (external) Accounts Receivable Services, annual write-off report.
An excerpt from that policy reads: All University operations billing for goods or services to external
organization has an independent Accounts Receivable Services system first approved by the campus and
then by FMS. Accounts Receivable Services records and reports must be prepared on the accrual basis
of Accounts Receivable Services for quarter and year end. All receipts for FIS Accounts Receivable
Services invoices must be deposited via the lockbox or via electronic funds transfer. Currently, it is the
responsibility of the department and the campus to determine and record allowances for bad debt and

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departmental write-offs. Organizations with average non-student Accounts Receivable Services greater
than $20,000 must compute and record an Allowance for Doubtful Accounts on their balance sheet.

Process Steps
Step 01: Org Contacts Customer (ORG01.15days)
The originating department will monitor payment status of the invoice. When an invoice remains unpaid
fifteen (15) days after the due date the originating department will send a letter and add a “note” to the
FIS invoice.

Template for 15-day note on the FIS invoice:




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Template for the Org 15-day letter:




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Step 02: Org Phones Customer (ORG02.30days)
The originating department will monitor payment status of the invoice. When an invoice remains unpaid
thirty (30) days after the due date the originating department will make a phone call to inquire about
payment and make a note on the FIS invoice with leading coding to read, “02.org.30days”. Include as
much information as possible to explain situation and reason for non-payment. This note will help in
future collections process.

Template for the 30-day note on the FIS invoice:




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Outline for Phone Call made on or before the 30th day past due:




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Step 2A: Org Collections in Progress
If a department (i.e., organization) feels payment is imminent and collections are in progress, a note
coded with “IPDEPT” needs to be put on the account. That code will indicate to Accounts Receivable
Services and to Delinquent Account Services that the department is pursuing collections. Those two
offices will audit these notes periodically; the department will be contacted in regard to any old unpaid
invoices with this type of note.

Template for the “In Progress Department” note on FIS invoice:




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Step 03: Accounts Receivable Services sends letter (AR03.45days)
When an invoice is forty-five (45) days past due, IUPUI Accounts Receivable Services will send a letter to
the organization with a CC to the originating department. This letter informs the organization and the
department of impending collection referral. Accounts Receivable Services will also add a note on the
FIS Invoice (see example below).

Template for 45-day letter:




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Template for 45-day note on FIS Invoice:




Step 04: Accounts Receivable Services- Referral to DAS
(AR04.60days)
When invoice is sixty days (60) past due and the customer has not contacted IUPUI Accounts Receivable
Services or the originating department to make payment arrangements, Accounts Receivable Services
will send a letter to the organization with a CC to the originating department. This letter (see text below)
informs the organization and the department that the invoice has been referred to Delinquent Account
Services and how to contact that office. Accounts Receivable Services will also add a “note” on the FIS
invoice (see example below).

Template for 60-day note on the FIS invoice:




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Template for the 60-day letter:




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Step 4A: Accounts Receivable Services - Collections In Progress
If Accounts Receivable Services feels payment is imminent and collections are in progress, a note coded
with “IPAR” needs to be put on the account. That code will indicate to Delinquent Account Services that
collections are still in progress. Delinquent Account Services will audit these notes periodically and
contact Accounts Receivable Services in regard to any old unpaid invoices with this type of note.

Template for the “In Progress Accounts Receivable Services” note:




Step 4B: Accounts Receivable Services-Collections Exempt.
There are some vendors, agencies, customer invoices that are exempt from collections. Example:
Clarian associated invoices. Accounts Receivable Services will add a note coded “DNCOLC” to exclude
these invoices from the collections process.

Template for the “Do Not collect” note:




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Step 05: DAS sends letter (05.DAS.61days)
Using the “AR Past Due Invoices” report, DAS will identify invoices coded “AR04”. When an invoice has a
note coded “AR04”, DAS will initiate collections efforts by: 1) sending a letter to the customer, 2) sending
an email to the originating department (cc to Accounts Receivable Services) and 3) adding a note on the
FIS invoice.

Note: For customers who are identified by IUPUI Accounts Receivable as “DASCOL” (Delinquent
Account Services internal collections only, no referral to external collection agencies), Step 08 and Step
09 replace Step 05 through Step 07. See Step 08 and Step 09 for different wording on collection letters.

Template for 61-day note:




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Template for the 61-day email:




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Template for the 61-day letter




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Step 06: DAS sends Final Letter (06.DAS.76days)
DAS will monitor the payment status of invoices coded for collection (any invoice with a note starting
“DAS”).

When an invoice has a note coded “das05” and it remains unpaid with no payment arrangements noted,
DAS will call the customer and send a final contact via letter with customer before referral to an outside
collection agency. See examples below.

Note: For customers who are identified by IUPUI Accounts Receivable as “DASCOL” (Delinquent
Account Services internal collections only, no referral to external collection agencies), Step 08 and Step
09 replace Step 05 through Step 07. See Step 08 and Step 09 for different wording on collection letters.

Template for the 76-day note:




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Step 06A: Delinquent Account Services - Collections In Progress
If Delinquent Account Services feels payment is imminent and collections are in progress, a note coded
with “IPDAS” needs to be put on the account with details indicating payment expectations.

Note: For customers who are identified by IUPUI Accounts Receivable as “DASCOL” (Delinquent
Account Services internal collections only, no referral to external collection agencies), Step 08 and Step
09 replace Step 05 through Step 07. See Step 08 and Step 09 for different wording on collection letters.

Template for the “In Progress Delinquent Account Services” note:




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Template for 76-day letter




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Step 07: DAS refers to External Collection Agency (07.DAS.91days)
DAS will monitor the payment status of invoices coded for collection (any invoice with a note starting
“DAS”).

When an invoice has a note coded “das06” and it remains unpaid with no payment arrangements noted,
DAS will refer the debt to an outside collection agency and inform the originating department with a CC to
Accounts Receivable Services. See examples below.

Note: For customers who are identified by IUPUI Accounts Receivable as “DASCOL” (Delinquent
Account Services internal collections only, no referral to external collection agencies), Step 08 and Step
09 replace Step 05 through Step 07. See Step 08 and Step 09 for different wording on collection letters.

Template for 91-day note:




Template for 91-day note about referral to agency:




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Template for 91-day email to department & IUPUI Accounts Receivable
Services:




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Step 08: DASCOL-DAS sends first letter (08.DASCOL.61days)
NOTE: This step replaces Step 05 for customers identified by IUPUI Accounts Receivable as DAS
internal collections only (no referral to external collection agencies).

Using the “AR Past Due Invoices” report and the listing of internal collections customers from IUPUI
Accounts Receivable, DAS will identify invoices coded “AR04”. When an invoice has a note coded
“AR04”, and the customer is on the DASCOL listing, DAS will initiate collections efforts by: 1) sending a
letter to the customer, 2) sending an email to the originating department (cc to Accounts Receivable
Services) and 3) adding two notes on the FIS invoice.

Templates for DASCOL 61-day notes:




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Template for the DASCOL 61-day email:




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Template for the DASCOL 61-day letter




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Step 09: DASCOL-DAS sends Final Letter (09.DASCOL.91days)
NOTE: This step replaces Step 06 for customers identified by IUPUI Accounts Receivable as DAS
internal collections only (no referral to external collection agencies).

Delinquent Account Services will monitor the payment status of invoices coded for collection (any invoice
with a note starting “DAS”).

When an invoice has a note coded “DAS08” and it remains unpaid with no payment arrangements noted,
DAS will call the customer and send a final contact via letter to customer before halting collections
activities. See examples below.

Template for the DASCOL 91-day note:




Step 09A: Delinquent Account Services - Collections In Progress
If Delinquent Account Services feels payment is imminent and collections are in progress, a note coded
with “IPDAS” needs to be put on the account with details indicating payment expectations.

Template for the “In Progress Delinquent Account Services” note:




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Template for DASCOL 91-day letter




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Note: Additional internal collection efforts for the DASCOL population will be attempted prior to write-off,
in concert with IUPUI Accounts Receivable staff.




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Payment Processing:
Payments prior to referral to a collection agency:
     1. All payments prior to referral to a collection agency should be sent to and posted by Accounts
        Receivable Services.
     2. When the invoice is paid in full it will not show on the past due invoices report and therefore, not
        in “collections” anymore.

Payments after referral to a collection agency:
At the beginning of each month, DAS will:
     1. Reconcile IUPUI invoice balance to the balances report from agency.
     2. Notify agency of any payments made directly to IUPUI
     3. Identify payments made directly to agency by reviewing monthly agency reports and,
            a. Verify that amount on payment report = amount of wire transfer $$ received
            b. Forward payment report to Accounts Receivable Services who will post payments
            c. Bill 30% of payment amount as a service fee to the initiating department




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IUIE Report: AR Past due Invoices
IUIE Navigation: Master CatalogFinancialAccounts ReceivableAR Past Due Invoices

Example: Parameters used to list all past due invoices for your org code.




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Output Sample #1: Correct Collection Schedule
This invoice is 90 days past due. The department has made two contacts and Accounts Receivable has
sent one letter per the timeline. The invoice is in collections and has been sent to an agency (as indicated
by the DAS07.WF1 note).




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Output Sample #2: Incorrect Collection Schedule
Invoice 90 Days past due, dept and AR have sent notices and now the account is in collections as
                                          st
indicated in the notes column (“DAS05 1 letter sent). This example doesn‟t follow the revised timeline
for collections outlined in this document because the organization did not make contact for 60 days.




                                                                                              …




………

Output Sample #3: Banking Fee – Needs Credit memo
Frequently payment is made electronically by the vendor and a “banking fee” is deducted from the total
amount paid. When that occurs, Accounts Receivable will make a note on the invoice (see example
below) indicating the amount of the service fee.

When this note appears on the IUIE report, Accounts Receivable will prepare a credit memo charging the
fee to the originating department. Note: If multiple accounts are reflected on the invoice, Accounts
Receivable will ask department which account to charge the banking fee expense.




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Output Sample #4: Returned Check
Sometimes a check is returned from the bank. When that occurs, the organization needs to create an
invoice to record the unpaid receivable for that vendor.

You may add a return check service charge. The returned payment service charge, as authorized by
Indiana law, is $27.50 or five percent of the payment, whichever is greater, not to exceed $250

The notes section should being with the code, “RETCK” and include the reason check was returned,
Check number and the original document number. See example below.




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Process Flow Chart
Page A-1




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                                                      Office of Finance                                         PROCESS
                                                Delinquent Account Services                                      GUIDE

                                             Past Due Collections
                                                                                                              Page 35 of 35
                                   Business Process Guide for Fiscal Officers



Change Control Log
 #          Change Description                                                                 Date           Completed By


 1          1st draft created                                                                   In progress   Gabrielle Bovenzi

 2          Updated summary section & “suggested action” section                                09.18.2007    Gabrielle Bovenzi

 3          Updated with text of letters & “notes” for FIS Documents                            10.15.2007    Gabrielle Bovenzi


 4          Reviewed and approved by working group; changes made to chart of page 3;            11.07.2007    Gabrielle Bovenzi
            added codes to chart on page 2 (NSF and RETCK)

 5          Updates as result of meeting with group, Camy and MPC                               11.15.2007    Dan Youngblood
            Updates based on notes taken at 11.15.-07 meeting
 6          -added text to “summary”; added WROFPMT code for notes; changed wording             12.11.2007    Gabrielle Bovenzi
            of letters to „Accounts Receivable Services”.
 7          Added appendix and text on the IUIE report                                          01.08.2008    Gabrielle Bovenzi

 8          Updates based on notes at 01/08 meeting with the group.                             01.08.2008    Dan Youngblood

 9          Updates based on notes at 1.08 mtg with the group; added sample #3 and              01.21.2008    Gabrielle Bovenzi
            sample #4
 10         Final draft completed per working group feedback – ready to distribute to fiscal    02.07.2008    Gabrielle Bovenzi
            officers –
 11         Added new URL for IUPAY                                                             02.08.2008    Gabrielle Bovenzi

 12         Revisions based on fiscal officers meeting in Feb. 08                               05.08.2008    Gabrielle Bovenzi

 14         “v1” Created. Updated notes codes and letter templates; added new templates         01.26.2009    Dan Youngblood
            for DASCOL (internal DAS) collections.




Revised 01.26.2009                                                                                                     Page 35
FIS AR Process Guide Fiscal Officers v1.doc

				
DOCUMENT INFO
Description: Collections Letter Template document sample