Process Group/Policy Details
Subject: Accounts Receivable
Process Group: Billing
Title of Policy: AR_Billing
Effective Date: 07/01/2014
Approved/Revision Date: 07/01/2014
Approved by: State Controller
In This Policy
Process Group Description:
Billing
The billing process group includes the instructions for generating invoices and statements, as well as procedures for processing finance charges related to an outstanding receivable. Within the billing process group, a department may generate invoices, statements, or both in order to bill customers. A department may initiate invoice billing either on demand, or through batch processing. To initiate the use of statements, a department shall use batch processing. A department may view generated invoices and statements online and reprint invoices and statements when needed.
The BPRO table is configured to define the billing profile for customers. The BPRO is linked to a customer on the CACT table. (See AR.PR.01.1 for more information on configuring the billing profiles.) A department uses a billing profile for customers to receive invoices, statements, both, or no billing at all. Depending on the billing profile used for the customer, the billing characteristics in the billing policy group may or may not apply.
Rationale or background to policy:
CORE provides a variety of functionality related to the billing and invoicing options related to receivables. In order to ensure that the functionality is properly and consistently applied, policy is required.
Policy Statement:
AR.PO.04 AR_Billing
Billing processes shall follow the timeline as described in the Accounts Receivable Collections Administrative Rule. Configuration related to the billing processes feed into the BPRO, which is maintained by the Office of the State Controller. A department may manually override certain invoicing options for individual invoices. However, a department shall obtain OSC approval for any permanent changes to BPRO set-up billing.
Procedures:
AR.PR.04.1 AR_ Process Current and Past Due Invoices – Batch
The invoice generation process automatically creates invoices for a customer when the invoice processing option is selected in the BPRO table and one of the following occurs:
An original receivable is accepted by the system
A modification, other than the application of penalties or interest charges has been made to a receivable
An invoice has been selected for on-demand print or reprinting (see details of on-demand printing at AR.PR.04.2)
The Due Date field in the vendor section of an RE transaction indicates the date of when the customer should pay the State. This is a required field depending on the setting of the Billing Type field in the BPRO table. If the Billing Type field in the BPRO table is set up for Invoice or Both, the Due Date field on the Receivable transaction will be inferred by CORE. The default value for the Due Date field is calculated by adding the number of days specified in the BOPT table to either the user-entered date of record, or the current system date, whichever is greater. If the Billing Type specifies Statement, the Due Date field on the Receivable transaction must be left blank and will be calculated by the billing process.
When processing original RE transactions associated with customers that are set up for invoicing, CORE automatically adds the receivable information to the INVQ table with a Pending status. Summary receivables do not update the Invoice Inquiry table because invoicing cannot be completed for summary receivables. For more information on summary receivables, see AR.PR.02.2. Records on the INVQ that are marked with a “pending” status are selected by the system for printing during the invoice generation process, which runs on a nightly basis. This process can generate invoices for original or modified receivables. The batch invoice processing will not take place for customers if a department has suppressed invoicing for those customers.
After an invoice has been printed, CORE will automatically change the status on the INVQ table to show that the invoice has printed. CORE will also add a record to the INVHS table, which includes invoice details, such as type of invoice printed (original or revised), print time and date, receivable number, and customer name and address.
CORE can also automatically generate dunning notices and collection letters to notify customers of overdue account balances. The dunning message is a reminder that a payment is past due. The collection letter is a notice to the customer for a delinquent account and informs the customer that further collection actions will be taken if the account is not paid in full within a specified time. The text included on these notices, the amount of time between notices, and the number of notices that are generated, are all specified when setting up the billing profile on the BPRO table (see details of billing profile set-up at AR.PR.01.1). The invoicing, dunning, and collections letters normally run on a nightly basis and the appropriate letters are generated for each invoice that meets the late criterion, which is defined on the collection tables and feed into the billing profile.
AR.PR.04.2 AR_ Process Current and Past Due Invoices – Manual
Departments are able to print invoices prior to the scheduled invoice generation process if necessary. This is done by using the INVQ table. Only original invoices can be printed on-demand. If an invoice has already been printed once, the replacement printing method must be used for departments to complete reprints (see below for details on reprints). On-demand printing allows departments to print invoices as part of the automatic print process for customers for which billing has been suppressed. To print an invoice on-demand, a department will use the INVQ table to view and select the desired receivable that needs printing. Then the department will click the print button on the RE transaction and follow the system prompts to complete the printing. The on-demand print process will change the print status on the INVQ table to “printed”. The system will also record information about the receivable, including the User ID of the person who requested the on-demand print, on the INVHS table.
If a department needs to request reprints of a previously issued invoice, the department will change the print status from “printed” to “replacement pending” on the INVQ table and save the changes. When changing the print status, the print status can only change from printed or replacement. When the invoice generation nightly process runs, the replacement invoice will be printed.
AR.PR.04.3 AR_Generate Statements – Batch
The statement generation process automatically creates invoices for a customer when the statement processing option is selected in the BPRO table and balances or activity exists within the statement period for the customer linked to that BPRO. CORE uses the STATD table to capture and display transaction activity that appears on the customer statement. If there is activity affecting customer account balances related to the following accounting transactions, the activity is tracked on the STATD and included in statement generation:
Original Receivables
Cash Receipts
Write Offs
Payment Vouchers (for customer refunds)
If an RE transaction is modified one or more times within a single statement print period, the statement generation process summarizes the changes into one net amount.
Transaction activity captured on the STATD table is grouped according to the parameters defined on the Statement Line Type STMCH table, which determines the sections that will appear on the statement to be sent to customers. The STMCX table is associated with the STMCH table, and maps each accounting event captured on the STATD table to the section of the statement in which it should appear. The result of this process is the printing of statements. Once this statement activity is printed, CORE will update the STMTHS table with the information from all printed statements. The information stored on the STMTHS table includes customer number, billing profile, bill number, print date, print time, type of transaction printed, billing location, billing name, billing address, and user ID. As part of the printing process, CORE also updates the STMTQ table with a summary of the statements printed and the STATD table with the date the statement was generated.
Departments can view summary or detail statement information, including viewing the history of all printed statements, using the STMTQ table. A department is able to search statement information by several different attributes, such as customer name, customer number, billing profile, RE transaction number, print status, and date (if statement activity has already been printed on a bill).
Previously issued statements can be reprinted if necessary. This is done by changing the print status from printed to replacement pending on the STMTQ table. Once the change is saved, the reprinted statement will be generated in the nightly process.
Departments also have the option to suppress the printing of statements based on minimum dollar thresholds that are entered within CORE. This option is also set up on the BPRO table. If this option is being used, in order to determine if a statement should be printed, CORE will first consider the current balance for the customer account, which is calculated as: Prior Account Balance + Total Charges - Total Write Offs – Total Payments + Total Refund. If the current balance is greater than the minimum amount specified in the billing profile, CORE will generate a statement. Statements that have not been printed will still update the STATD table to allow for inquiry if needed.
The printing of statements can be suppressed by selecting the “suppress billing” indicator on the CACT table. When a statement is suppressed, it will still be generated and update the STMTQ table; however, the statement will not be included in the print process. This process of generating but not printing the statement allows the department to view the statement if needed.
AR.PR.04.4 AR_Process Finance Charges
Finance charges can be assessed automatically on delinquent receivables based on the billing profile set-up on the BPRO table. The finance charge process can generate two different types of fees, which include a flat fee or interest fee. The flat fee is used for a one-time or periodic penalty fee. Interest fee is a variable fee which is calculated as a percentage of the outstanding amount and is charged periodically. A department has the option of overriding the fees for a particular receivable if necessary. For example, when a receivable is under protest, the fees may be suppressed until the protest is resolved. In the case of summary receivables, CORE automatically suppresses finance charges, as these cannot be assessed against a summary receivable.
The FNCHG table is the main table used to define the characteristics of fees used in the finance charge process. The FNCHG table feeds into the BPRO table and is linked to a customer on the CACT table. The BPRO table and all the tables feeding into it are maintained at the central level. If a department needs to set up or modify a billing profile, please refer to AR.PR.01.1 and AR.PR.01.2. When changes are made to the FNCHG, the changes take effect immediately, but do not apply to past finance charges.
The following characteristics related to finance charges are included on the FNCHG table:
Finance fee charge type - Flat fee or interest
Flat fee amount - one-time, recurring
Interest percentage - simple, compound
Frequency - for automatically applying flat fee or interest charges
Posting type of finance charge - for example, interest, late fee, administrative fee
Chart of accounts information - Specifies chart of accounts fields to which a finance charge is distributed.
The finance charge process within CORE is an automatic offline process that checks for overdue receivables and imposes applicable penalties. The offline process identifies the overdue receivables subject to the application of finance charges, calculates fees, and modifies the RE transactions to add one or more fee accounting lines. This process excludes any receivables that have a negative accounting line and these receivables are listed on this process’s exception report. If a department needs to manually apply finance charges to a receivable, this is done through an RE modification. See AR.PR.02.5 for more details on manually applied finance charges.