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External Billing Procedures: Information Session

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Agenda

Introduction 5 minutes

Topic 1: Why is the University Implementing the Cash and Billing Policy?

5 minutes

Topic 2: Billing Procedures Key Points 30 minutes

Topic 3: Question and Answer 15 minutes

Next Steps 5 minutes

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Logistics

Participate Ask questions Turn off cell phones One person at a time Location of washrooms Emergency procedures

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Session Objectives

At the completion of this session, you will be able to:– Explain why the University is implementing the new Cash and

Billing Policy– Explain the key points within the External Billing procedures– Manage and process invoices effectively and efficiently– Explain where to go for assistance and help on the policy and

procedures

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Session Structure

Reviews/Questions/Answers

Presentation

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Why is the University implementing a new Cash and Billing Policy? Auditor General’s Report

– Address potential fraud issues– Provide clear guidelines and proper

controls to ensure employees are not placed in a harmful position

Decentralized processes– Processing of invoices is managed in a

variety of ways– Results in lack of internal controls– Results in invoices not being processed

correctly – Increases AR effort in matching payment

and invoice

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Why is the University implementing a new Cash and Billing Policy? Clarify accountability Implement best practices Improve internal controls Ensure customers are credit worthy Ensure the University is compliant

with legislation Create efficiency through

standardization of processes and procedures

– University invoice format standardized

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How do these changes impact me?

You may need to:– Ensure you are aware of the

changes and new procedures and have a clear understanding of your role and responsibility

– Communicate to your Department staff the implications of the policy

– Update your internal processes to align with the policy and procedures

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Topic 2: Key Points

Invoicing Approval of Invoices Granting Credit Cost Recovery Responsibilities of a Billing Unit Wire Payments Collections

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Invoicing

All billing / invoices are to be processed through the Finance, Supply Chain Management and Research (formerly PeopleSoft) system (FSR), Billing Module

Key points– Word documents or manual invoices are not

an acceptable format– If billing outside of FSR in another system,

contact the AR Department– Exceptions: Tuition, Donations, Retail Sales

and approved exceptions

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Approval of Invoices

Department Heads– Individual with the authority for approval (e.g., Manager,

Researcher, etc.)– Approves all invoices created for Faculty / Department

Two methods– Recorded on invoice’s supporting documentation

• For example: Signed Contract, PO Document

– Documented on a pro forma invoice (printed copy of invoice prior to invoice being set to ready in FSR)

• Applicable supporting documentation attached to approved pro forma invoice

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Granting Credit

Department chooses to invoice– Customer rather than obtain payment at

time good / service, or– When a recoverable cost is paid

Decision to extend credit rests with the accountable Department Head

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Granting Credit

Department / Department Head responsible to– Determine credit worthiness of that customer– Be responsible for associated credit risks

• Charges to be charged to Department bad debt account

– Notify AR of any changes to customer information

Only those authorized by AR may grant credit to a customer

– Request submitted in writing to Accounts Receivable using the Request for New AR Customer/Change in AR Customer Information form

• New customer is created in FSR so that the invoice can be processed properly

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Cost Recovery

With a Markup: If amount is > amount paid

= recovery with a mark-up (sale)

GL account credited must be Revenue account and not an expense account

GST is charged as it would be for a normal sale of good/service

With a Markup: If amount is > amount paid

= recovery with a mark-up (sale)

GL account credited must be Revenue account and not an expense account

GST is charged as it would be for a normal sale of good/service

Without a Markup: If amount is not > amount

paid = recovery without a markup (true recovery)

GL Account credited must be expense account to which original charge posted

Unrecoverable portion of GST included in recovery as part of base expense; recoverable portion not to be included

No GST charged on the invoice

Without a Markup: If amount is not > amount

paid = recovery without a markup (true recovery)

GL Account credited must be expense account to which original charge posted

Unrecoverable portion of GST included in recovery as part of base expense; recoverable portion not to be included

No GST charged on the invoice

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Cost Recovery: GST example

Without a Markup:Original Cost = $100 + $5 GSTAmount charged to the expense account is $100 +

$1.67 (1/3 unrecoverable portion of GST)Amount invoiced as a recovery = $101.67No amount should be included as GST on the invoice

Without a Markup:Original Cost = $100 + $5 GSTAmount charged to the expense account is $100 +

$1.67 (1/3 unrecoverable portion of GST)Amount invoiced as a recovery = $101.67No amount should be included as GST on the invoice

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GST Treatment

GST Treatment– Department is responsible to ensure correct GST assessment

of invoice• Five applicable GST assessment codes

– FSR Billing Module automatically calculates the applicable GST depending on the code assigned

• Ensure you check the default code prior to overriding• Driven by customer setup and address and assigns GST treatment

based on address

– Contact AR if unsure of how to apply GST

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Responsibilities of Billing Unit

Timing– Bill only within the current month– Bills outstanding at month end, must be resolved by 11:00

a.m. on the first business day of the following month• Unprocessed items will be deleted by AR

– New invoices are not to be backdated to prior period– Posting after the period or backdating causes significant

system errors

Invoice Request Form– AR can provide billing services for those Faculties /

Departments who process < 10 billings per year– Invoice Request Form should be completed and forwarded to

AR

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Payments

All payments are to be sent directly to Accounts Receivable

– Internal mail should not be used– Department advises customer to send future payments

directly to AR – Hand-delivered to AR– Should not be deposited at the Cashier’s Office or

included in Departmental deposits

Invoice number – System generated alpha numeric characters

Cheques must be payable to the University of Calgary

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Incoming Wire Payments

Banking Information– Only AR is authorized to communicate University banking

information– Against policy to forward University’s banking information to a

Department, Faculty or Customer– Requests must be send to AR via Request for Banking

Information Form

Form– Accounts Receivable sends out form to customer which

outlines all information AR requires to accept and allocate payments

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Collections

Department Collections– Expectations and directions are clearly identified through

procedures• Aged Receivables Report

– Communicate back to AR collection activities that have been conducted and status

Resulting bad debt charged to Department initiating invoice

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Topic 3: Question and Answer

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Next Steps: Where to go for Help

Financial Services Website– http://www.ucalgary.ca/financial/con

troller/accounts_receivable

Contact:– ar@ucalgary.ca

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www.ucalgary.ca/financial

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Next Steps

Accounts Receivable is currently assessing training requirements

Future Training – Instructor-led courses– Online self-study courses– Reference material

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Session Evaluation

Please complete the session evaluation