HomeMy WebLinkAbout(2004, 04/13) - F-24 - AdoptedF -24
POLICY FOR COLLECTIONS AND WRITE -OFF OF ACCOUNTS RECEIVABLE
Guided by the policy provided herein, the Administrative Services Director shall
establish specific procedures and dollar thresholds regarding collections and the write -
off of accounts receivable to the City. From an accounting perspective, aging accounts
receivable should generally be written off during the fiscal year in which the account is
no longer expected to be collectable. However, the decision regarding actual collection
efforts is separate. (Subsequent collection of an account previously written -off is treated
as new revenue.)
The Administrative Services Director or his designee shall establish and maintain
consistent working guidelines for the point at which collection efforts will no longer be
feasible or cost effective. Notwithstanding these guidelines, exceptions will sometimes
be appropriate on case -by -case basis. Each type of account and each account may have
specific legal or administrative nuances that may reasonably impact expectation of
collection.
The following guidelines should be applied in regarding aging accounts receivable:
Aging accounts receivables should be reviewed monthly to encourage timely
payment. Dunning notices should be mailed and penalties should be imposed
where appropriate.
The estimated cost of collection should not exceed the value of the delinquent
account. Delinquent accounts over the current deemed minimum account balance
threshold ($25.00 in 2004) and 90 days past due should be promptly sent for
collection. The reasonable cost of any contract collection efforts should be added
to the delinquent balance but the collection fee should not be recognized as
revenue until the amount is received.
Sometimes it may not be readily evident and /or practical to determine the precise
time a receivable becomes uncollectible on an individual account basis. On an
interim basis, the Revenue Division may elect to estimate and maintain an
allowance for uncollectible accounts as a contra asset account as a best estimate of
the value of uncollectible accounts that still remain on the City's balance sheets.
Receivables in general, should be substantiated by documentation evidencing the
amount and validity of the receivable. However, further written evidence should
be maintained by the Revenue Division to substantiate the probable collection for
any account deemed collectible over three years old.
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To the maximum practical extent, consistent application of policy in this area is the goal.
However, circumstances vary, and prudent judgment by staff is relied upon in making
exceptions.
Adopted - April 13, 2004
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