COLLECTING RECEIVABLES - 8293

(Renumbered: 10/2020)

(Revised and renumbered from 8776.5)

It is the responsibility of each agency/department to immediately notify the debtor and collect amounts owed to the state in the most effective and efficient manner. Each agency/department should have written policies and procedures in place to ensure that past due receivables are followed-up promptly and in a manner that is cost effective to the state. The agency’s/department’s written procedures should include, but are not limited to, the following:

 

• The collection tasks to be performed.
• A timeframe for completing each procedure.
• The roles and responsibilities of staff involved in the process.
• Supervisor and management review of delinquent accounts to ensure staff act timely on collection actions.

The Accounts Receivable (AR) collection procedures differ depending on if the receivable is owed to the state by an employee or non-employee. The procedures are specified in the following SAM sections:

• Collecting Non-Employee Accounts Receivable-SAM section 8293.1
• Collecting Employee Accounts Receivable-SAM section 8116.3 and 8293.2
• Collecting From Another State Agency/Department- SAM section 8293.

ARs include revolving fund advances issued to employees. The longer ARs and revolving fund advances remain outstanding, the greater the risk they may become uncollectible, resulting in the loss of state funds.

 

If the AR is from former state employees, follow the collection procedures for Non-Employee ARs. In addition, notify the SCO, Division of Personnel/Payroll Services of the situation by sending a Personnel Action Request form, STD.680A, and ask to be notified if the person reenters state service. See SAM section 8593.3.

 

Collection Best Practices

 

Agencies/departments should use collection best practices that are cost-effective and consistent with their program goals and legal authority. Below are collection best practices that should be used when practical:

 

• Obtain identification numbers from customers when possible (e.g., federal identification number, driver’s license number, or other taxpayer identification number).
• Make contact with the debtor as soon as the debt is due, but no later than 30 days. The agency/department stands a better chance of collecting accounts, the quicker it acts.
• Send an invoice and three separate notices of nonpayment also known as dunning letter. At a minimum, the first notice should be sent within 30 days of when the receivable arises. Usually, the notices are sent at 30-day intervals. However, agencies/departments may consider sending notices at intervals sooner than 30 days if it will improve the chances of receiving payments. These notices should include the potential consequences of not paying timely.
• Consider a payment plan that allows debtors to pay back their debt over time in instances where the debtor is unable to pay in full.
• Withhold permits/license/registration until outstanding receivables are paid.
• Offset amounts owed to a debtor by using it to pay outstanding receivables. See SAM section 8293.4 for offset procedures.
• Consult with the agency/department legal staff to determine if legal action is appropriate and cost-effective.
• Consider using private collection agencies to supplement agency/department collection efforts when a determination has been made that this will be more cost-effective than internal collection efforts.
• Allow debts to be paid through electronic payments, such as credit cards, debit cards, and other online methods when feasible.

Statute of Limitations

 

The statute of limitations to collect on different types of receivables varies. Agencies/departments should be aware of the statute of limitations to collect on their specific receivables. Monitor outstanding debts before they reach their statute of limitations to allow sufficient time to conduct thorough collection efforts.