8.20 Invoicing and Accounts Receivable

Policy Information

Purpose and Summary

To provide policies and procedures for invoicing and recording accounts receivable for sales to external (non-University) customers for goods and services.

Source

Arizona Board of Regents Policy, including but not limited to 3-410
Governmental Accounting Standards Board
National Association of College and University Business Officers, Financial Accounting and Reporting Manual for Higher Education (FARM), including but not limited to ¶300

Scope

This policy applies to all University locations and units, including all University extensions, satellite locations, and off-site campus units, both domestic and international.

This policy does not apply to billing for activities within the Sponsored Projects account series (3xxxxxx or 4xxxxxx). 

Definitions

1. Accounts Receivable: The amount of money owed to a department for goods or services that have been delivered or provided to external customers and payment is not immediately received. The amount should be recorded as an asset and the associated revenue recognized in the proper fiscal year. Amounts owed by other departments are NOT considered as accounts receivable for financial statement purposes because these funds will remain within the University.
2. Allowance for Doubtful Accounts: An estimate of the accounts receivable that will not be collected.
3. External Customers: External parties who purchase and/or contract for goods or services from the University and pay with funds not already in the University financial system.
4. Write-Offs: Accounts receivable amounts that are deemed uncollectible and removed from accounts receivable once all collection efforts have been exhausted.

Policy

1. The University will follow U.S. generally accepted accounting principles (GAAP) in the preparation of its annual financial statements. 
2. University departments are required to record and report to Financial Services all outstanding accounts receivable as of June 30 of each fiscal year to ensure compliance with GAAP as it relates to receivables. 
3. University departments are responsible for invoicing and collecting monies due for sales and services provided to non-University customers. If the department is selling a tangible or taxable item, refer to policy 8.11 Sales Tax.

Procedures

Invoicing

1. Departments can create a custom invoice. The following information should be included on the custom invoice that will be sent to the customer:
   1. Invoice date
   2. Customer name
   3. A description of the goods or services provided
   4. Total dollar amount owed
   5. Sales tax or shipping and handling, if applicable
   6. Appropriate payment terms
   7. Remit address
2. Departments can also use the Invoice template. The same information should be included as discussed above.
3. Departments should make reasonable attempts to collect outstanding receivables. For advice on methods for successfully collecting receivables or for information on collection agencies, contact the Bursar’s Office Accounts Receivable department.

Recording a Payment

4. Payments should generally be remitted directly to the billing department. 
5. When the department receives payment via cash or check, a Cash Receipt should be completed un UAccess Financials with the appropriate account number and object code, referencing the invoice number in the description field, adding a copy of the invoice to the document, and forwarding the payment to the Bursar’s Office.
6. When payments are received by ACH or wires, the department is responsible for claiming all payments in UAccess Financials, accessible from the Home screen under Accounting and Electronic Payment Claim. If a department needs more detailed information in regard to an ACH or wire, the Unclaimed ACH | Wires | Checks Report in UAccess Analytics is also available. For assistance, contact FNSV-cashandclearning@arizona.edu.

Fiscal Year-End Reporting

7. For the required fiscal year end reporting, University departments must record and report to Financial Services all outstanding accounts receivable as of June 30 of each fiscal year.  Information to provide includes any of the following that may apply:
   1. A memo signed by a dean, director, or department head, which summarizes the aged receivables by account number and object code.
   2. Individual schedules detailing aged receivables by customer (one schedule for each account number).
   3. A schedule of customers who have prepaid (unearned revenue) for future goods or services.
   4. A schedule of customers with credit balances (customer has overpaid).
   5. A schedule of uncollectible accounts receivable that were written-off during the fiscal year.
   6. Current year and three-year history of the total dollar amount of accounts receivable and the amount written-off each year.
   7. A proposed allowance for doubtful accounts receivable and the basis for the allowance.
8. The Accounts Receivable Worksheets to be completed and submitted to Financial Services can be found on the Financial Services website.  For questions regarding the accounts receivable year-end procedure, contact your Fund Accountant.

Frequently Asked Questions

1. When should accounts receivable be recorded?
   Accounts receivable are recorded in UAccess Financials annually as of June 30. Departments can choose to record accounts receivable quarterly, monthly or more frequently depending on departmental reporting needs.
2. How are accounts receivable reflected in UAccess Financials?
   Accounts receivable post to accounts as assets. 
3. When should accounts receivable be written off?
   An accounts receivable is written off when all collection efforts have been exhausted and the specific receivable is therefore deemed uncollectible.
4. Why should a receivable that is due from another University department not be recorded?
   The University is one entity for financial statement purposes, therefore we cannot owe ourselves.

Related Information

8.11 Sales Tax
Bursar’s Office
Invoice template
Cash Handling Training
Accounts Receivable worksheets
Fund Accountant Services

* Please note that sections titled Frequently Asked Questions and Related Information are provided solely for the convenience of users and are not part of the official University policy.