Accounts Receivable

Customers with delinquent balances will be subject to dunning (see F150 - Print dunning letters). Only one schedule of dunning has been established within SAP (60-90-120 days). Customized dunning letters have been developed for each dunning area.

Dunning can be blocked for a customer/dunning area or line item (see subtasks FD02 - Block/unblock dunning of customers by dunning area and ZFBL5N - Block/unblock dunning of line items).

No dunning letters will be generated for outstanding balances less than $5.

Before printing dunning letters, Accounts Receivable staff will sort letters into three batches:

Batch Description

What to Do

Benefits Accounting Office letters

Letters forwarded to Benefits Accounting for review and mailing

Letters with internal MIT mail addresses

Dunning letters for which the customer has specified delivery by MIT internal mail will be bundled and forwarded to the MIT mail service for delivery

Letters with external mail addresses

Dunning letters for which the customer has specified delivery to his/her home will be bundled and forwarded to the MIT mail service for delivery

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 Benefits Accounting but distributes aging reports to Benefits for this purpose.

A/R Procedure

  • Review aging reports
  • Mark customers requiring reminder calls
  • 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

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

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 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 complete F-27 - Credit customer for payroll deduction.

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