FIND/COLLECT OVERDUE BALANCES

Make monthly collection phone calls

Based on review of the monthly Aging Report (see ZAR2 - Run aging report by dunning area), A/R personnel will determine which customers have account balances overdue more than 60 days. Each of these customers will be contacted and reminded of their overdue balance.

Note: A/R makes no collection efforts on behalf of Alumni, Benefits Accounting, or CAES, but distributes again reports to these departments for this purpose. (Aging reports are printed automatically to each department printer.)

A/R Procedure:

  1. divide aging reports among A/R staff,
  2. review aging reports,
  3. mark customers requiring reminder calls,
  4. for each customer call,
    • enter the collection (or accounting) notes maintenance screens (see FD02 - Maintain accounting notes)
    • review previous collection notes
    • call customer
    • enter new collection notes

Process mail

A/R receives and opens mail each day. Much of this is routine office mail. Particular types of mail to be segregated for special review and handling include:
  1. Returned (undelivered) form letters

    These must be investigated as to appropriate address. If a more appropriate address can be found, the customer master record must be changed to reflect it (see FD02 - Change customer master records). In addition, the return of the mail as "undeliverable" and/or "change of address" should be noted in the customer's collection notes (see FD02 - Maintain accounting notes) and the letter filed in A/R customer files.

  2. Replies to payroll deduction letters

    These must be reviewed to determine whether the customer is objecting to the payroll deduction. If this is the case, the A/R Supervisor will discuss the letter and receivable with the Assistant Controller responsible for A/R and jointly arrive at a course of action for further collection. If the customer is merely acknowledging the receipt of the letter, a copy of the letter should accompany the receivable when forwarded to Payroll. In addition, reply and resolution, if any, should be noted in the customer's collection notes (see FD02 - Maintain accounting notes) and the letter filed in A/R customer files.

  3. Replies to final collection letters

    These must be reviewed to determine whether the customer is stating his/her intention to pay the outstanding balance. In addition, reply and resolution, if any, should be noted in the customer's collection notes (see FD02 - Maintain accounting notes) and the letter filed in A/R customer files.

  4. All correspondence that contains checks

    These must be reviewed to determine the nature of the payment. Not all will necessarily be A/R customer payments. Subsequently, all checks and any supporting documentation should be forwarded to the Cashier's Office for posting to their system, and in the case of actual receipts, A/R entry via lockbox processing. In addition, payments should be noted in the customer's collection notes (see FD02 - Maintain accounting notes) and the letter filed in A/R customer files.

Use outside collection services

Based on review of the monthly Aging Report (see ZAR2 - Run aging report by dunning area) and MIT parameters for outside collection (described below), A/R personnel each month prepare a list of customers to be placed with an outside collection agency. This list will be forwarded to the Assistant Controller responsible for A/R for approval.

Customer balances will be brought to zero ($0) by means of a credit memo (see F-27 - Enter credit memo) with an offsetting debit to the Cost Center/Profit Center of the originating department. In addition, customers placed in collection will be blocked (see FD05 - Block/unblock customer services/ charges/ payments) from further posting in SAP with appropriate notification to departments.

MIT parameters for outside collection:

  • accounts overdue in excess of 120 days,
  • receivable balance in excess of $50,
  • departments have been notified not to provide the customer services,
  • the customer has been blocked in SAP from further posting,
  • a final notice (dunning level 3) of MIT's intention to place the receivable with an outside agency has been sent to the customer

Use payroll deduction

Based on review of the monthly Aging Report (see ZAR2 - Run aging report by dunning area), MIT receivable payroll deduction parameters (described below) and regular monthly collection processes, A/R personnel will determine which overdue customers are candidates for MIT payroll deduction.

A standard form letter is completed for each customer and forwarded to the Assistant Controller responsible for A/R for approval and signature. The form letter is a negative confirmation; therefore, no response is taken to mean that the employee does not object to the payroll deduction. If, within the next 30 day cycle, the employee does not object to the payroll deduction, the information will be forwarded to Payroll for entry into the Payroll system.

If a customer contacts A/R within the next 30 days and objects to the deduction, no deduction will be made. In these cases the Assistant Controller and the A/R Supervisor will jointly determine further courses of action and resolution of the receivable.

Receivable Payroll Deduction parameters:

  • accounts overdue in excess of 60 days,
  • customer is an MIT employee,
  • a standard form letter (negative confirmation) has been sent to the employee informing them of MIT's intention to deduct,
  • the employee does not object to the payroll deduction

Subsequent to the payroll deduction, AR personnel need to F-27 - Credit customer for payroll deduction

Copyright © 2002, Massachusetts Institute of Technology. All rights reserved.