Debt Management Procedures
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Debt Management Procedures APPROVAL DATE: July 2014 REVIEW DATE: July 2017 DEBT MANAGEMENT PROCEDURES DOCUMENT CONTROL Document Title: Debt Management Procedures Procedure Type: Operational Responsible Branch: Financial Services Responsible Officer: Manager Financial Services Document Status: Draft Approved By: TBA Adopted Date: July 2014 Review Date: July 2017 These Procedures should be read in conjunction with the Warrnambool City Council Debt Management Policy. Page 2 of 22 Policy Type: Debt Management Procedures; Responsible Branch: Finance; Approved Date: July 2014; Review Date: July 2017. DEBT MANAGEMENT PROCEDURES TABLE OF CONTENTS 1. INTRODUCTION ................................................................................................................................ 4 1.1. Purpose .......................................................................................................................................... 4 1.2. Scope.............................................................................................................................................. 4 1.3. Definitions...................................................................................................................................... 5 1.4. References ..................................................................................................................................... 6 2. PROCEDURE ..................................................................................................................................... 6 2.1. Rate Debtor Procedures............................................................................................................... 7 2.1.1. Issuing of Rates Notices ............................................................................................................................... 7 2.1.2. Collection of Rate Debts ............................................................................................................................... 7 2.1.3. Interest on Outstanding Rates and Charges ........................................................................................ 8 2.1.4. Authority to Alter Rate Payment Arrangements .................................................................................. 8 2.2. Non-Rate Debtor Procedures ...................................................................................................... 8 2.2.1. Reference Checks........................................................................................................................................... 9 2.2.2. Issuing of Debtor Invoices.......................................................................................................................... 10 2.2.3. Standard Payment Terms .......................................................................................................................... 13 2.2.4. Collection of Debt .......................................................................................................................................... 13 2.2.5. Debt Collection & Legal Action ................................................................................................................ 13 2.2.6. Interest on Outstanding Monies ............................................................................................................... 16 2.2.7. Freeze Credit................................................................................................................................................... 16 2.2.8. Recognition of Debts for Provision or Write-Off ................................................................................ 16 2.2.9. Approval and Conditions for Writing-off Bad Debts ......................................................................... 16 2.2.10. Receipting procedures ................................................................................................................................ 17 2.2.11. Refunds and credit notes ........................................................................................................................... 17 2.2.13. Reconciliation of Accounts Receivable subsidiary ledgers .......................................................... 18 2.2.14. Reporting to Council ..................................................................................................................................... 18 2.3. Supporting Documentation ....................................................................................................... 18 3. GOVERNANCE ................................................................................................................................ 18 3.1. Owner ........................................................................................................................................... 18 3.2. Review .......................................................................................................................................... 18 3.3. Compliance Responsibility ........................................................................................................ 19 3.4. Charter of Human Rights Compliance ..................................................................................... 19 4. APPENDICES................................................................................................................................... 20 4.1. Appendix A .................................................................................................................................. 20 4.2. Appendix B .................................................................................................................................. 21 4.3. Appendix C .................................................................................................................................. 22 Page 3 of 22 Policy Type: Debt Management Procedures; Responsible Branch: Finance; Approved Date: July 2014; Review Date: July 2017. DEBT MANAGEMENT PROCEDURES 1. INTRODUCTION 1.1. Purpose To outline Warrnambool City Council’s (the Council) Debt Management practices in relation to rates, fees and charges raised by the Council. Council will exercise its debt recovery powers in order to maximize the outcomes for the Warrnambool community. It will be guided by the principles of: transparency by making clear the obligations of debtors and the processes used by Council in assisting it to meet its obligations; efficiency and effectiveness by making the processes used to recover outstanding debts clear, simple to administer and effective. Such processes will also support overall Council policies and the various undertakings run by the Council; capacity to pay in determining appropriate arrangements for different groups within the community, along with recognising various levels of vulnerability of these groups and; equity by treating all debtors consistently and in a fair manner. 1.2. Scope Applies to all Council services and Council employees authorised with the responsibility of providing credit, invoicing and recovery of outstanding debt as follows: Rate Debtors General rates Differential rates Special rates and charges Municipal charge Waste charges Interest and miscellaneous charges. Non-Rate Debtors Early Years Learning & Development - Centre based childcare fees - Family day Care fees - Kindergarten fees - After kinder care fees Active Ageing & Inclusion - Archie Graham room hire fees - Hydro pool fees - Planned Activity Group fees Page 4 of 22 Policy Type: Debt Management Procedures; Responsible Branch: Finance; Approved Date: July 2014; Review Date: July 2017. DEBT MANAGEMENT PROCEDURES HACC Services - Meals on Wheels - Respite fees - Planned Activity Group fees - Home Care and Personal Care fees - Home Maintenance Fees Recreation & Culture - Aquazone Fees and charges - Gymnastic fees - Out of School Hours Care fees - Stadium Hire fees - Lighthouse Theatre fees - Art Gallery fees Tourism Services - Foreshore Caravan Park fees - Flagstaff Hill fees - City Strategy & Development fees Building Services - Statutory Certificate Charges Health & Local Laws - Dog and Cat Registrations - Infringements – Animal Local Laws and Parking Fines - Food and Health Regulations - Footpath Trading Permits (Local Laws) - Community Housing Rents Other - Planning Fees - Rental Charges - Saleyards Fees - Sundry Debtor Fees and Charges - Any other fee or charged raised via an invoice 1.3. Definitions Term Definition Accounts Receivable. Credit Account. Debt. All terms refer to an amount owed to Council Service. Includes goods supplied or delivered, provision of services, admission, sale of items, hire of facilities or items - supply of information and any other matter giving rise to a fee or charge being made by Council. Page 5 of 22 Policy Type: Debt Management Procedures; Responsible Branch: Finance; Approved Date: July 2014; Review Date: July 2017. DEBT MANAGEMENT PROCEDURES Term Definition Debtor. Any person, corporation, business or other entity owing money to Council Provision for Doubtful Debts. An estimate of the amount of debt raised that is unlikely to be collected. Council employee. Mailing House An officer or staff member is a person employed by Warrnambool City Council, including the Chief Executive, Directors, Managers and any person engaged as a short term employee or a contractor undertaking duties on behalf of Council. An external company employed to collate, print and distribute invoices directly to clients on behalf of the Council. 1.4. References Acts Local Government Act 1889 Penalty Interest Act 1983 Standards or Guidance Materials Australian Accounting Standards Related Policies/Procedures Annual Budget (including Fees & Charges, Rating Strategy) Councillors Code of Conduct Staff Code of Conduct Fraud Prevention & Control Policy Debt Management Policy Cash Collection and Handling Procedures Aquazone Membership Policy Centre Based Child Care Pricing Policy Family Day Care Independent Fee Setting Policy Family Day Care Invoicing and Debt Collection Policy Family Day Care Finishing Care Policy Records Management Policy Complaints Handling Policy Instrument of Delegation 2. PROCEDURE The Council’s debt consists of two major categories, being: Rate Debtors, which are the responsibility of the Manager Revenue and Property and can only be raised by this unit; and Non-Rate Debtors, of which the Manager Financial Services oversees and can be raised by Service Managers, Managers or Directors in their relevant roles. Page 6 of 22 Policy Type: Debt Management Procedures; Responsible Branch: Finance; Approved Date: July 2014; Review Date: July 2017. DEBT MANAGEMENT PROCEDURES 2.1. Rate Debtor Procedures 2.1.1. Issuing of Rates Notices Rate notices will be issued by the Manager Revenue and Property for all properties where rates and charges are levied in accordance with the Local Government Act 1989. The issue of notices will be in accordance with relevant legislation. The formal instruments of delegation pursuant to Section 98 of the Local Government Act 1989, to empower the Manager Revenue and Property to collect/represent the Council is detailed each year in the motion to levy and collect rates and charges when the annual budget is adopted. Rates are raised using Council’s rating software system. properties is maintained within this database including: Information regarding all Assessment Number, Assessment ID, Property Address, Legal Description, Owner/Ratepayer, land use, type of assessment; Raising of annual rates and charges; Issuance of instalments; Amounts owing and past transaction history; Valuation details; Memos. Differential rates to be applied to properties are calculated by the Manager Revenue and Property in conjunction with the Finance Manager. The Council’s approved rates are input into the rates system to generate rates notices and are reviewed for accuracy by the Manager Financial Services. This independent review ensures that no errors have occurred during the process of uploading new rates into the live rates system. All changes to property master files must be supported by relevant and approved information providing an accurate and complete audit trail. Through the use of computer user names, all changes are able to be tracked to individual staff members whilst also limiting access to only those staff members authorised to do so. All information regarding any supplementary valuations is also maintained within this system. All building permits granted by the Council are input into the planning system via an electronic file. The data is extracted and uploaded directly in the valuations system at least twice before any scheduled quarterly supplementary valuations. A final reconciliation is performed for such supplementary valuations, ensuring that all valuations referred to the valuer are complete and any deferred to the next supplementary batch have been accounted for accordingly. 2.1.2. Collection of Rate Debts Rate payments can be made by any of the following methods: In person at any Australia Post Office or at the Civic Centre by either cash, cheque or EFPTOS; Page 7 of 22 Policy Type: Debt Management Procedures; Responsible Branch: Finance; Approved Date: July 2014; Review Date: July 2017. DEBT MANAGEMENT PROCEDURES By telephone and internet through BPay; By telephone and internet through POSTbillpay; By direct debit – direct debit forms are available from the Council’s Customer Service Centre. Outstanding rates and charges not received by respective due dates will be issued reminder and final notices for payment by the Revenue Office. Failure to respond to that demand will result in the assessment being referred to Council’s appointed debt collection agency by the Manager Revenue and Property for further recovery action. Payment arrangements will be considered and negotiated for those ratepayers experiencing financial difficulty. Written applications received by the Manager Revenue and Property for deferment or waiver of rates and charges will be considered in accordance with Council’s ‘Deferment/Waiver of Rates, Charges and Interest due to Financial Hardship’ policy. Council staff will, in acting to recover outstanding debts, make use of all available courses of action while at all times encouraging debtors to communicate with Council and enter into payment arrangements where appropriate. Where rates and charges have been outstanding for a period of three years or more, statutory procedures may be undertaken pursuant to Section 181 of the Local Government Act 1989 Sale of Land for Unpaid Rates and Charges. Prior to proceeding with Section 181 the matter must be reported to Council. 2.1.3. Interest on Outstanding Rates and Charges Interest charges will be applied to outstanding amounts in accordance with the Local Government Act and the prescribed interest rate as stated in the Council’s Fees and Charges schedule contained within the Annual Budget as determined by the Minister for Local Government. 2.1.4. Authority to Alter Rate Payment Arrangements Unpaid rates and charges, including legal costs incurred in the recovery of those rates and charges, remain a charge against the property. The Manager Revenue and Property assesses the probability of collecting long outstanding debts. This will include a comparison of the value of the outstanding rate debt (inclusive of any interest) to the value of the property. The Manager Revenue and Property will undertake this assessment, and prior to taking action under Section 181 of the Local Government Act to sell the land, will seek a Council resolution. 2.2. Non-Rate Debtor Procedures In addition to the collection of rates, Council also collects a diverse range of fees and charges. This income represents a significant component of Council’s Budget. The Council is a single entity, and as such any debt that accrues to any branch or division of the Council remains a debt to the Council entity. Page 8 of 22 Policy Type: Debt Management Procedures; Responsible Branch: Finance; Approved Date: July 2014; Review Date: July 2017. DEBT MANAGEMENT PROCEDURES 2.2.1. Reference Checks Council will allow the issuing of credit terms (creation of debtor accounts) without a reference check for all charges resulting from commercial transactions where the total value is expected to be less than $100 per month, and charges raised under Statutory Authority. Where the value resulting from a commercial transaction is estimated to be between $100 and $500 per month it must be determined whether the debtor has previously used Council services or is a ratepayer and assess their payment history. If a poor payment history exists for services or rates, then the Service Manager or Manager should make an assessment if credit is provided. All Service Managers and Co-ordinators should review the following spreadsheets: “Debts – Written Off” and “Debtors at Debt Collection” before providing any service to ensure the intended recipient is not a previously defaulting or an “at risk” debtor. These spreadsheets will be located on a common drive – under Accounts Receivable and are regularly maintained. If the debtor has not previously used Council services or is not a ratepayer then the service unit manager/supervisor is required to make a judgment based on their service operations and the likely material nature of the debt. For camping fees raised at the Caravan Parks, these amounts must be paid in full prior to arrival. If the credit is likely to exceed $500 per month, the Service Manager must determine whether the debtor has previously used Council services (from the “Debtors Written Off and Debtors at Debt Collection spreadsheets) or is a rate payer and check if they are listed on either the Debts – Written Off or Debtors at Debt Collection list. If determined to have a poor payment history, then new credit must be approved by the Senior Accountant, Finance Manager or Manager Revenue and Property prior to any credit for service being provided. The above amounts are guidelines and any Service Manager/Manager may enforce tighter credit controls where they deem necessary. Where Council has an overriding obligation to provide service and cannot deny service for financial reasons under a service agreement (eg HACC services) necessary steps should be put in place to limit Councils exposure. With regard to Community Services, where services are unable to be denied, if there is a history of default every effort must be made for a pre-payment arrangement to be entered into (or a Centrelink Request for Deduction form completed) before services are commenced. For all other areas, services must be denied or pre-payments made. No further credit is to be extended to persons with a history of debt being written off with the Council; nor should a person currently in the hands of our Debt Collection Agency be provided additional services. Page 9 of 22 Policy Type: Debt Management Procedures; Responsible Branch: Finance; Approved Date: July 2014; Review Date: July 2017. DEBT MANAGEMENT PROCEDURES Should a Manager request this to be reviewed the Manager Financial Services will consider all aspects including but not limited to the individuals social situation (domestic violence, overall welfare of the child) , the need for service i.e. is it a discretionary service, and credit history. Where credit is re provided a repayment plan must be established and met. If the repayment plan is not satisfied and the debtor makes no contact then any line of credit must be terminated. All prior debts written off must be paid in full including legal costs, if applicable, prior to the provision of any new service. Where private works are requested the Manager Finance Services (MFS) or the Manager of Infrastructure Services (MIS) shall be responsible for granting credit. These Managers shall review the debtor for any past history debt by referring to the Finance spreadsheets: “Debts – Written Off” and “Debtors at Debt Collection”. These spreadsheets will be located on a common drive – under Accounts Receivable and are regularly maintained. If greater than $5,000 the MIS shall discuss with the Finance Manager prior to approval. Invoices may be generated by any Co-ordinator, Service Manager, Manager, Director or the Chief Executive. Invoices raised through Council’s Financial System shall be raised by either a file generated from on of the Council’s other systems or through the completion of a “Request for Debtor Invoice” (RDI) form, available on Council’s Noticeboard. 2.2.2. Issuing of Debtor Invoices Council service units will raise invoices for service fees and charges in accordance with the various Statutory Acts & associated Regulations and Local Government resolutions, as provided for in the Statement of Fees and Charges contained in the Adopted Budget. Once the appropriate reference checks have been completed and approved, staff must complete a RDI form immediately an amount becomes due and payable. This form must be completed by relevant Co-ordinator, Service Manager, Manager or Director and forwarded directly to the finance department for processing. Council will attempt to raise all debtors through Technology One to provide a central point for all debts. Where information is gathered through third part software Council shall attempt to import such files into Technology One. The following table summarizes such procedures: Page 10 of 22 Policy Type: Debt Management Procedures; Responsible Branch: Finance; Approved Date: July 2014; Review Date: July 2017. DEBT MANAGEMENT PROCEDURES Service Provided Subsidiary System Details of Import Printing and Distribution Frequency of Invoices Frequency of Statement Family Day Care Harmony Software Imported via an ETL into Technology One. Printed and distributed by Council via mail. Fortnightly Fortnightly Centre Based Childcare Harmony Software Imported directly into Technology One Printed and distributed by Council direct to client. Fortnightly Fortnightly After Kinder Care Harmony Software Raised direct in Technology One from a data base Printed and distributed by Council. Fortnightly Fortnightly Out of School Hours Care Harmony Software Imported directly into Technology One. Printed and distributed by Council via mail. Fortnightly Fortnightly Monthly Monthly Term based Term based Monthly Monthly Monthly Monthly As raised Monthly Yearly Monthly As raised As per relevant legislative requirements. Gymnastics Excel Spreadsheet Imported directly into Technology One via a text file. Kindergarten Excel Spreadsheet Imported directly into Technology One via excel file. Meals on Wheels & Planned Activity Group Sharikat Koo Software Imported via an ETL into Technology One. Home Care & Maintenance Sharikat Koo Software Imported via an ETL into Technology One. Archie Graham Room Hire Excel spreadsheet Manual enter into Technology One Dog and Cat Registrations Technology One Debtors raised from Animal module within Technology One Infringements Technology One Debtors raised from Animal module within Technology One. Mailing House prints and directly distributes invoices once Accounts Receivable Officer reviews and gives approval. Mailing House prints and directly distributes invoices once Accounts Receivable Officer reviews and gives approval. Mailing House prints and directly distributes invoices once Accounts Receivable Officer reviews and gives approval. Mailing House prints and directly distributes invoices once Accounts Receivable Officer reviews and gives approval. Printed and distributed by Council. Mailing House prints and directly distributes invoices once Accounts Receivable Officer reviews and gives approval. Parking infringement is printed out at time of offence. Animal infringements manually prepared and given at time of offence. Page 11 of 22 Policy Type: Debt Management Procedures; Responsible Branch: Finance; Approved Date: October 2012; Review Date: October 2014. DEBT MANAGEMENT PROCEDURES Service Provided Subsidiary System Details of Import Printing and Distribution Frequency of Invoices Frequency of Statement Food & Health Act Registrations Health Management Software Imported directly into Technology One via electronic text file. Printed and distributed by Council. Yearly Monthly Aquazone Centaman Software Imported via an ETL into Technology One. Printed and distributed by Council. Monthly Monthly Caravan Parks RMS software Individual debtor accounts are maintained within the RMS system. A debtors’ control account is held within Technology One. Printed and distributed by Council. As raised Monthly Flagstaff Hill Centaman Software Imported via an ETL into Technology One. Printed and distributed by Council. Monthly Monthly Saleyards Weekly Return of Sales Dockets Directly entered into Technology One Printed and distributed by Council. Weekly Monthly Lighthouse Theatre Debtors request form Directly entered into Technology One Printed and distributed by Council. As raised Monthly Sundry Debtors Debtors request form Directly entered into Technology One Printed and distributed by Council. As raised Monthly Page 12 of 22 Policy Type: Debt Management Procedures; Responsible Branch: Finance; Approved Date: October 2012; Review Date: October 2014. DEBT MANAGEMENT PROCEDURES 2.2.3. Standard Payment Terms The Council’s standard payment terms for Non-Rate Debtors are 14 Days from date of invoice. Payment terms will differ for invoices/fines issued from the following departments: Food and Health Regulations’ invoices, these accounts must be paid within 45 days of being issued. Where extra ordinary circumstances have arisen and debts have been raised regarding the Foreshore Caravan Parks, campers will have seven days to pay from the outstanding date. 2.2.4. Collection of Debt The Service Manager that requests the creation of the debtor and provides the service is responsible for ensuring that Council is entitled to collect the debt when the invoice is raised. Service units are responsible for ensuring the processes outlined in the above Section 2.2.1 are satisfied prior to the debtor being created. Council must ensure that debt is managed in a way which is fair and equitable to the debtor and efficient for both parties. Council acknowledges that a debtor’s capacity to pay may need to be considered and that financial circumstances can change. As a result, if financial difficulties are experienced or are anticipated, a debtor is encouraged to promptly initiate discussions with Council to seek alternative arrangements such as Centre Pay deductions and/or payment plans. The process for collecting overdue debtors’ accounts for the various Council departments is illustrated on the following flow chart, commencing with a tax invoice being raised and issued. 2.2.5. Debt Collection & Legal Action Prior to referring any debt to a collection agency or taking legal action the Service Manager/Manager must consider the individual circumstances of the debt before incurring additional costs which may not be recouped. Items to consider include: Amount of the debt Debtors credit history Social situation of the individual Capacity to pay If future Council services are likely to be called upon Continuation of service provision Page 13 of 22 Policy Type: Debt Management Procedures; Responsible Branch: Finance; Approved Date: October 2012; Review Date: October 2014. DEBT MANAGEMENT PROCEDURES FINANCE DEPARTMENT FINANCE DEPARTMENT INDIVIDUAL DIRECTORATES Incorrect Invoice Cancel or Reissue Invoice Commence Formal Debt Collection Warning Letter (App A) Tax Invoice raised & issued 14 days to pay Statement issued with 7 days to pay Referral to Service Manager or Co-Ordinator Issued 28 days after original invoice Review & authorise appropriate action within 7 days 7 days to pay Cancel Services (App B) Prosecution Letter (App C) Debt Collection Agency 10 days to pay Write Off Debt Payment Plan Financial Hardship or Exceptional Cases If failure to pay, referred back to Service Manager or CoOrdinator EM/ CoOrdinator must approve recommencement of any future services. Write off Debt Page 14 of 22 Policy Type: Debt Management Procedures; Responsible Branch: Finance; Approved Date: October 2012; Review Date: October 2014. DEBT MANAGEMENT PROCEDURES The above flowchart does not apply to the following types of outstanding invoices: Parking, Dog and Cat, Food Act and Local Law Fines Where a fine remains unpaid, a Penalty Reminder Notice will be issued followed by a Final Notice. If the amount still remains outstanding, and is greater than $100, a Summons to Court will be issued. Prosecution of such debts needs to proceed within 12 months from the issue date of the original infringement as per statutory requirements. Health Act Premises/Registration Renewal If the amount has been outstanding for greater than 90 days, a 50% late payment fee will be added to the original registration renewal. This is also accompanied with the threat of prosecution within the Court system as the premises will now be classified as operating unregistered. Food Act Premises/Registration Renewal If the amount has been outstanding for greater than 90 days, a 50% late payment fee will be added to the original registration renewal or an infringement will be issued. This is also accompanied with the threat of prosecution within the Court system as the premises will now be classified as operating unregistered. Footpath Trading Permits (under Local Laws eg. Tables/Chairs, A/Frame signs & Goods on Footpath) Renewal accounts (with permit stickers enclosed) are issued during June of each year. A Local Laws Officer will visit all entities post 31 July to ensure compliance. After 7 days, where permit fee has not been paid and footpath space continues to be utilised, an infringement may be issued. Community Housing Rental Arrears In general it is required that rent is paid to the Council via the CentrePay system, this is established through the Tenancy Agreement. Annual rental reviews are conducted and where rents are adjusted, tenants are advised accordingly. Any rental arrears are notified in writing to the tenants. Tenants are then contacted personally within 14 days if unpaid. Failure to pay arrears can result in either threat of eviction or referral to the Residential Tenancies Tribunal (VCAT). All circumstances are considered on an individual basis concerning such community housing. Family Day Care Family Day Care debtors are issued 14 day accounts and issued with a Warning letter (Appendix A) after these 14 days requesting payment. If no response is received 7 days following the Warning letter then the Service Manager will be required to give approval for a Cancellation letter to be sent. A clients Educator will be informed of any cancellation for liability purposes. Centre Based Childcare Centre Based Childcare debtors pay fortnightly in advance. These invoices are provided direct to clients when they attend the centres. Where accounts fall behind the staff at the relevant centre will make first contact requesting payment and then Warning and Cancellation letters may follow. Page 15 of 22 Policy Type: Debt Management Procedures; Responsible Branch: Finance; Approved Date: October 2012; Review Date: October 2014. DEBT MANAGEMENT PROCEDURES 2.2.6. Interest on Outstanding Monies Interest charges may be applied to outstanding amounts in accordance with the Local Government Act and the prescribed rate as stated in the Council’s Fees and Charges schedule contained within the Annual Budget. 2.2.7. Freeze Credit The Accounts Receivable Officer is responsible for monitoring all outstanding debtor balances. Where debtors do not make payment within the above timelines, and do not contact the Accounts Receivable Officer to enter special payment arrangements, the Manager Financial Services is authorized to freeze the debtor’s credit with Council across all services. The relevant Service Manager is to be advised prior to this occurring and must ensure that no further services are provided to the debtor. Services may be provided, and credit extended, where debtors with frozen accounts repay the amount outstanding in full and subject to an analysis of the credit that may be provided as per section 2.2 above. The Manager Financial Services has the authority to re-instate a debtor and unfreeze credit where an amount has not been paid in full, however this will only occur in exceptional circumstances. 2.2.8. Recognition of Debts for Provision or Write-Off Council must assess the probability of collecting long outstanding debts and provide for the possibility of non-receipt of monies or writing off amounts as “Bad Debt”. The Senior Accountant will undertake this assessment. The Senior Accountant will liaise with each Service Manager to determine the provision or write off of debt based on the following criteria: All other Health and Local Law Notices sent to Court will be provided for as Doubtful Debt. All Sundry Debtors sent for debt collection will be reviewed to determine their likelihood of receipt and provided as Doubtful Debt if deemed by the agency as uncertain. Doubtful debts will be raised against the service unit that provided the service. This will show as a cost that offsets their revenue in their budget. Bad Debts will be recognised only after all collection procedures have been exhausted. All debt write-offs will adjust the debtor’s account against the provision for doubtful debts. 2.2.9. Approval and Conditions for Writing-off Bad Debts One of the following conditions must be satisfied before a debt can be regarded as irrecoverable: The debtor cannot be located; It is uneconomical to finalise recovery action due to the relatively small value of the debt and/or the potential costs of recovery; Policy Type: Debt Management Procedures; Responsible Branch: Finance; Approved Date: October 2012; Review Date: October 2014. DEBT MANAGEMENT PROCEDURES The social, medical, financial or domestic circumstances of a particular debtor at that time does not warrant the taking of recovery action or further recovery action; and Legal proceedings through the courts have proved, or on legal advice would prove, unsuccessful. The debtor is bankrupt, in receivership or in liquidation. Further action may be taken if funds subsequently become available. The Manager Financial Services will have the discretion to write off any single debtor invoice amount of less than $5,000. Any instance where this discretion is exercised will form part of the Monthly Management Executive Reports and will contain a summary of the number of invoices and amount of debt written off. All information relating to the process undertaken by Council staff in attempting to collect this amount will be available to Councilors’ upon request. Where the value of a debt is greater than $5,000 and it is considered to be a bad debt, Council will receive a report prepared by the Manager Financial Services as to the nature of the debt, all collection processes undertaken to recover outstanding monies and a recommendation to write off the value. Subsequent collection of all amounts provided for as Doubtful Debts or written off as Bad Debt will be recognised as revenue in the year in which they are received. 2.2.10. Receipting procedures With the two exceptions noted below, invoices can be paid via the following options upon which a receipt will be issued by The Council: Cash or cheque in person at Civic Centre Cheque via post. Cash, cheque or EFTPOS at Australia Post. BPay. Post Billpay Payments for Day Care Centre invoices, where paid in person, must be paid at the relevant Centre and cannot be accepted at the Civic Centre. Other payment methods are available such as BPay, by cheque and via EFTPOS. All infringements notices must be paid by cheque via Australia Post or in person at the Civic Centre. 2.2.11. Refunds and credit notes Service Managers or Managers may request a credit note or refund on a debtor. Such requests should be made to the Accounts Receivable officer via email clearly outlining the reasons why. Once clearly identified and authorised by Senior Accountant or Finance Manager, the refund or credit note shall be processed through Accounts Payable or Accounts Receivable. Policy Type: Debt Management Procedures; Responsible Branch: Finance; Approved Date: October 2012; Review Date: October 2014. DEBT MANAGEMENT PROCEDURES 2.2.13. Reconciliation of Accounts Receivable subsidiary ledgers Rate debtors shall be reconciled on a monthly basis by the Senior Revenue Officer and approved by the Manager Revenue and Property. On a monthly basis, the Accounts Receivable Officer reconciles all subsidiary ledgers to the general ledger. Any variances identified are investigated in full and accounted for accordingly. This reconciliation will form part of the Balance Sheet monthly reconciliation process. This monthly reconciliation process is reviewed by the Senior Accountant and signed as evidence of such review. The monthly debtor reconciliation is also reviewed by either the Senior Accountant or Account to provide a secondary review over the ageing of non-rate debtors. 2.2.14. Reporting to Council Monthly reports for all outstanding amounts will be collated by type and by ageing to be presented to MEG and to Council. Amounts which have been approved for write off will also be presented, including a detailed comparison as to amounts raised during the same period. 2.3. Supporting Documentation The following documents and electronic files are maintained for future reference: Request for debtor invoice with all supporting documentation. Credit notes – all authorised, supporting document. Direct debits – spreadsheet with all supporting documentation such as copies of electronic remittance advices, bank statements. Saleyards dockets. All text files and hard copy files obtained by the Finance Department and filed for future reference. 3. GOVERNANCE 3.1. Owner MEG is responsible for approving the Debt Management Procedures. The Manager Financial Services is responsible for implementing this procedure and the ongoing monitoring of the application of the procedure. The Senior Accountant is responsible for the day to day application of the procedure. 3.2. Review The Manager Financial Services will review these procedures for any necessary amendments no later than two years after its formulation or after the last review. Policy Type: Debt Management Procedures; Responsible Branch: Finance; Approved Date: October 2012; Review Date: October 2014. DEBT MANAGEMENT PROCEDURES 3.3. Compliance Responsibility This procedures document applies to all staff of the Council and must be adhered to accordingly. 3.4. Charter of Human Rights Compliance It is considered that this policy does not impact negatively on any rights identified in the Charter of Human Rights Act (2007). Warrnambool City Council is committed to consultation and cooperation between management and employees. The Council will formally involve elected employee health and safety representatives in any workplace change that may affect the health and safety of any of its employees. Policy Type: Debt Management Procedures; Responsible Branch: Finance; Approved Date: October 2012; Review Date: October 2014. DEBT MANAGEMENT PROCEDURES 4. APPENDICES 4.1. Appendix A D «DebtorNo» (03) 55594926 (Date) «FirstName» «LastName» «Address1» «Address2» «PostalCode» Dear «FirstName» (ACCOUNT TYPE) OVERDUE ACCOUNT Council understands that on occasions payments can be overlooked for a number of reasons. If payment has been made in the last few days, thank-you and please ignore this notice. However, our records indicate that your (Account Type) account is now overdue. We require urgent payment of the overdue amount. Payment options were included on your invoice and include BPay, Post Billpay, mail, in person, Australia Post, or over the counter at the Council Office. Centre Pay deductions can be arranged through the Family Day Care Co-ordination unit, but please inform the Finance Department of any arrangement on 5559 4926. If you are currently having difficulty paying please call us on 5559 4926 to discuss available options. If you are entitled to the Health Care Card/Pension Rebate please come in and claim as soon as possible. Failure to act within 7 days will result in your (Account Type) being cancelled. If you are cancelled your position with your Educator cannot be guaranteed. Your Educator has been informed. Thank you for your co-operation. Stephen Kerr Manager Financial Services Page 20 of 22 Policy Type: Debt Management Procedures; Responsible Branch: Finance; Approved Date: October 2012; Review Date: October 2014. DEBT MANAGEMENT PROCEDURES 4.2. Appendix B «DebtorNo» (03) 55594926 DATE «FirstName» «LastName» «Address1» «Address2» «PostalCode» Dear «FirstName» CANCELLATION OF (ACCOUNT TYPE) SERVICE Our records show that you have not responded to our last letter regarding payment of your (account type) Account. If payment or contact with Council has been made in the last few days, thank-you and please disregard this notice. The Agreement you signed when you joined (account type) stated that you would pay your accounts. As this agreement has been breached, the only course of action available for the Council is to discontinue providing the (account type) Service. You are therefore formally notified that service is immediately ceased, until the debt is paid in full. Council is willing to enter into repayment plans to have the full amount paid by instalment if this would assist. If you fail to contact Council your debt will be placed in the hands of Councils collection agency. Your Care Provider will be notified accordingly. Regardless of the method to pay your account (i.e. Bpay, Internet, cash or cheque) you must contact Council so your service can be reinstated. Your Family Day Care Educators cannot accept your child/children back into care until notified by Council. If you are entitled to claim a rebate on your account because you hold a Health Care or Pension Card please come in and claim this as soon as possible. Further service will not be possible until the above debt is paid in full. Any further discussion must be directed to Finance Department at this office on telephone no 55594926 Yours faithfully Stephen Kerr Manager Financial Services Policy Type: Debt Management Procedures; Responsible Branch: Finance; Approved Date: October 2012; Review Date: October 2014. DEBT MANAGEMENT PROCEDURES 4.3. Appendix C [Date]12 March 2016 Debtor Number [XXXX] [Debtor Name] [Debtor Address] [Warrnambool Vic 3280] [Dear Mr/Ms], RE: Court Action on Unpaid Accounts Council records indicate that a [Debtor Type] account in your name is overdue for an amount of [$XXX]. Please disregard this notice if the account has been paid in the last few days. An invoice, statement, warning and cancellation letter’s have previously been sent, requesting payment or contact with Council, which have been ignored. If this Account is not paid within 7 days of the date of this letter, Council may take follow-up action by way of the issuing of a summons for the matter/s to be heard in the Magistrates Court. If you wish to avoid further costs and legal action in regard to this matter, please pay the full amount of the account within the next 7 days. Please ignore this notice if Account/s has been paid in the last few days. Please contact Carol in the Finance Department on 5559 4926 Monday to Thursday if you have any queries regarding this Final Notice. Yours faithfully, Grant Cook Grant Cook PROSECUTIONS OFFICER Policy Type: Debt Management Procedures; Responsible Branch: Finance; Approved Date: October 2012; Review Date: October 2014.
