Financial Services

Debt Recovery Management Policy

This policy details how to deal with situations in which a debt has been incurred but not paid on time.

Policy statement

Financial Services supports Business Units in monitoring debt management and recovery of all monies owing to the University except debts which are:

  • written off as authorised by an Act
  • irrecoverable at law
  • uneconomical to pursue.

The following details key procedures undertaken by Financial Services to ensure this responsibility is fulfilled. The related Business Unit will be consulted where necessary throughout recovery management, but no recovery action is required from the Business Unit unless they fail to provide the required information, which results in a reversal of the debt and subsequent re-billing.

Letters of demand

Financial Services as part of administrating University debtors:

  • must ensure that proper accounts and records are maintained for each debtor of the University
  • must promptly bring all debtors to account in the accounting records of the University
  • follow-up with a reminder notices if the debt is not paid within the University's normal terms of trade conditions
  • promptly forward a letter of demand to a debtor seeking payment in full of an amount owing to the University where necessary
  • refer the matter for debt collection where this is appropriate.

A debtor can be any individual, corporation, company, institution or government agency (or any other body) that has been provided with goods and/or services by the University under credit arrangements. Debtors can also include persons who have received overpayments such as salary, stipend or allowances.

To facilitate the recovery of debts, the following process will normally be followed for any debtor who has outstanding monies owing to the University:

  • A monthly statement showing the balance of all invoices outstanding. This is required under the Credit Act but also serves to keep contact with customers and ensure the debts recorded are correct from the customer prospective. A statement is a record of account and is not a demand for payment.
  • Once an invoice remains unpaid for 30 days, a letter is sent reminding the debtor of our trading terms and the obligation to pay the amount outstanding.
  • Once an invoice remains unpaid for 60 days, a letter of demand is sent asking for immediate full payment of the amount outstanding.
  • Promptly forward a final letter of demand to a debtor seeking payment in full of an amount owing to the University at 90 days. This letter also indicates that failure to pay the amount outstanding may result in the listing of the debt with the Credit Reference Association of Australia and further recovery action through the University's debt collection agency without further notice
  • Refer the matter for debt collection where this is appropriate and after consultation with the Business Unit. Costs of debt collection may result in charges to the Business Unit. The customer's credit standing recorded on out system will also be reviewed and normally downgraded.
  • Where payment is not received, following consultation and advice from the debt collection agency legal action will commence if appropriate. In other cases the original debt will be reversed back to Business Unit accounts and formally reported as written off.

Repayment of debt by installment

  • All amounts owing to the University should be paid in full immediately when they become due and payable. There may be situations, however, where it is not possible for an amount to be paid in full immediately, such as where full immediate repayment would lead to unreasonable financial hardship on the debtor. Only School Managers/equivalents, in consultation with Team Leader Revenue may agree to recovery of debts by instalment.
  • In cases of claimed financial hardship, the debtor will be required to provide evidence of their financial position, by statutory declaration and supported by any other relevant documentation, sufficient to satisfy the University that the debtor is unable to discharge the amount other than by instalments.
  • Conditions for repayment by instalments are specified in a "Deed" to ensure that the University recovers the amount as soon as is reasonably practicable, having regard to the debtor’s ability to repay. This signed undertaking also ensures that the debtor understands and accepts their obligation in repaying the amount owing. The repayment arrangements will be reviewed annually, to determine whether a higher rate of instalment should be sought.
  • Only School Managers/equivalents, in consultation with Team Leader Revenue, may agree to recovery of debts to be implemented from a deferred date (such as on return from extended leave of a debtor). Such arrangements would only be appropriate if recovery may be affected in full, or by a limited number of instalments, on or from the deferred date.
  • If debtors who agree to conditions imposed on them regarding repayment by instalments subsequently default on their repayments, action will be taken to recover in full the balance of the debt owing.
  • Suitable records will be maintained for each debtor repaying debts by instalments and will include the amount of the original debt, the instalment amount, the balance owing and the pay-out date.
  • Where an employee of the University who is also a debtor by virtue of an overpayment of salary, stipend or allowances is leaving, or has left the University, the amount of any recoverable overpayments may be deducted from any salary and/or pay in lieu of long service leave, recreation leave or other monies owing to the person on termination where approval has been obtained.

Debt collection agency

  • If the debtor fails to repay the outstanding amount following the letter of demand, the debt may be referred to the University's debt collection agency. The use of commercial debt collection agencies to recover outstanding debts will not be commenced without due consideration of the economic viability of such action. The costs associated with the use of these agencies include direct costs incurred in the recovery action as well as a commission retained on all monies recovered. Cost may be incurred in some cases and these will be charged to the Business Unit concerned.

Legal procedings

  • Legal action for the recovery of large debts will be coordinated though the University's Legal Office.

Non-recovery

  • Only School Managers/equivalents, in consultation with Team Leader Revenue, may approve the non-recovery of a debt and then only under any of the following conditions:
    • the non-recovery has been authorised by an Act
    • the delegate is satisfied that the debt is not legally recoverable
    • the delegate considers that it is not economical to pursue recovery of the debt.
  • When, in the delegate's judgement, the recovery of a debt would leave the University financially worse off than it would have been had recovery not been undertaken, then the debt could be regarded as uneconomical to pursue and non-recovery of the debt could be approved. The recovery of a debt could be considered to be uneconomical to pursue if, for instance, the debtor is known to be destitute and without the financial means to settle the debt and there is no prospect of their financial situation improving in the foreseeable future.
  • The act of approving the non-recovery of a debt does not expunge the debt in law. If the circumstances that led to the debt being irrecoverable materially change, then recovery of the debt will be reinstated.
  • An amount owed by a bankrupt, or a company in liquidation, should not be formally regarded as irrecoverable until the bankrupt has been discharged from bankruptcy, or the liquidation of the company has been finalised or advice of the extent of the likely distribution of funds has been received from an official receiver or trustee in bankruptcy, or from a liquidator in the winding-up of a company. Whilst awaiting bankruptcy or liquidation proceedings, the debt will be regarded as a doubtful debt in the University's financial statements.

Key controls

  • Segregation of duties: responsibilities for billing (raising invoice) adequately segregated from those for collection, deposit of funds and credit issuance.
  • Reviewing and approving of credit notes as per University Financial Delegation.
  • Prompt investigation of credit issuance and disputes with billing amount.
  • Establishment of a documented Revenues and Receivables procedures and controls to ensure all staff know the processes they are expected to follow.
  • Periodic review and approval by legislative bodies of rate of taxes, fines, fees, programs of tax exemption, rate schedules and the like.
  • Regular review on delinquent accounts and take prompt action to collect or consider them for write-off on a timely basis.
  • Retention of records for audit purposes.