Account Receivable Procedures

  1. Accounts Receivable Policy – (approved January 8, 2007)
    University accounts receivable include receivables from students (for tuition, fees, housing, etc.) and from other individuals and businesses (for catering, advertising, athletic sponsorships, etc.) which are referred to as general receivables. All university revenues are recorded on the accrual basis of accounting. This requires that revenues be recorded at the time goods or services are provided. If a customer does not make cash payment at the time of service an account receivable must be established.

    Accounting for Receivables - University receivables, both student and general, are accounted for using the University’s centralized accounts receivable system under the direction of the Student Financial Services Office. Any exception must be approved by the University Controller.

    Extensions of Credit – Students are automatically extended credit for normal university charges unless they do not meet published payment deadlines. Other receivable customers of all campus departments must submit a credit application to Student Financial Services to be considered to receive an extension of credit. Student Financial Services will use information from the credit application, credit reporting agencies and other customary business sources to obtain additional credit information. Student Financial Services will also consult with the credit granting department in making credit decisions.

    Accounting for Uncollectible Receivables – University receivables are reviewed and adjusted to their expected net realizable value at least annually. Auxiliary, loan and other similar funds are responsible for expenses resulting from uncollectible receivables relating to their individual operations. Accounts receivable that are considered completely uncollectible are removed from the university accounting records as described in the Asset Write-Off Policy.

    Collection Practices – The University will employ all reasonable and customary business practices to collect receivables and loans owed to the university under terms specified in its various contracts, credit applications and publications. Such practices include, but are not limited to: terminating current student registration or restricting students’ ability to register for future classes; credit reporting; use of collection agencies and litigation. Students and other customers who do not meet their financial obligations will be held responsible for all collection fees and related expenses incurred by the University.

    APPLICABILITY
    This policy applies to all university organizations offering services or products for sale.

  2. General University Responsibility for Accounts Receivable

    The Student Financial Services Office (SFS) shall provide general oversight for all university receivable accounts.

  3. Accrual Accounting and Revenue Recognition

    BYU records revenues on the accrual basis. Therefore, if cash is not received at the time a product or service is delivered, an account receivable should be established.

  4. Types of University Receivable Accounts

    • Receivables from Students - normal extensions of credit to enrolled students for tuition, fees, housing, traffic fines, activity fees, etc.
    • Receivables from Employees – normal extensions of credit to faculty (for purposes of this policy faculty are considered employees), staff and administrative employees for a wide variety of campus services. Although BYU may apply different administration and collection procedures to these accounts, they will generally be commingled with student receivables in the University’s accounting systems.
    • Receivables from 3rd Parties – receivables from customers of the University who are not currently students, or employees. These parties may be either individuals or businesses who purchase goods or services from BYU. These receivables are generally referred to as general receivables and are accounted for separately from student and employee receivables.
    • Other Department Receivables – Departments will sometimes establish “Department Receivable Accounts” using account number 1200. These accounts should generally only be used for inter-departmental receivables. On rare occasion such accounts may be used to account for receivables from outside Church related entities. These accounts may also be established when industry billing practices make it difficult for BYU’s centralized billing systems to accommodate unique billing requirements. The use of these Departmental Receivable accounts for anything but inter-departmental billing must be approved by the University Controller.
  5. Extensions of Credit

    • Automatic granting of credit for students

      Students who have been admitted to BYU are automatically granted credit for tuition, housing, other charges and student loans without the necessity of obtaining a credit application or checking credit references. However, BYU may obtain a credit report or check credit references as needed. This automatic extension of credit may be withdrawn for students who become delinquent in payments to the University (refer to section 7).
    • Partnering with departments in credit granting decisions

      The process of granting credit to entities other than students is a cooperative effort between SFS and the various departments which are providing the product or service and who bear ultimate financial responsibility for the receivable. All individuals (other than students) or other entities wishing to be extended credit must complete a BYU credit application, which can be obtained from the SFS Collection Manager.

      • Student Financial Services – SFS will assist by obtaining credit reports. BYU utilizes the services of major credit reporting agencies to provide individual and business credit reports. SFS will review the application and the credit report and make an initial recommendation to the department granting credit.
      • Department extending credit - The department extending credit reviews the application, credit report, and the SFS recommendation and makes the final credit granting decision.

      All copies of credit reports provided to individual departments shall be promptly destroyed following the credit granting decision. SFS will maintain official copies of the credit reports in accordance with the Fair Credit Reporting Act.

    • Use of cosigners

      BYU may require a cosigner for individual credit transactions or for classes of transactions (certain types of loans, etc.). Cosigners shall receive copies of billing statements and all other communications relating to the collection of an outstanding debt once the account is sixty days old. All collection practices described in this procedure are also applicable to cosigners.

  6. Accounting for Uncollectible Receivables

    • Establishment of an Allowance for Doubtful Accounts - BYU uses allowances for doubtful accounts to reduce outstanding accounts receivable to estimated net realizable value. All accounts are reviewed at least annually for collectability. Allowance accounts are established at either the individual department level or at a University-wide level. The bad debt expense, which is incurred when establishing or adjusting an allowance for doubtful accounts, is recorded by the department which recorded the revenue from the transaction.
    • Review of the Allowance for Doubtful Accounts – The various allowances for doubtful accounts will be reviewed for adequacy prior to year end by the Director of Student Financial Services. This review will typically be performed using October or November balances.
  7. Collection Practices

    • Adherence to Collection Laws

      The following state and federal laws define acceptable collection practices for entities engaged in debt collection practices. The FDCPA is not directly applicable to BYU because BYU is considered a “1st Party Collector”, i.e. BYU is collecting debts owed to BYU, rather than on behalf of a third party. This law relates specifically to 3rd party debt collectors. However, as a matter of good business practice, BYU requires that these practices be followed by both its own collection personnel, and by external collection firms collecting on behalf of BYU. The other acts have provisions which are directly applicable to BYU.

      Federal or State Law Applicable Summary
      Fair Debt Collection Practices Act (FDCPA) - Federal This law regulates the activities of those who regularly collect debts from others.  It requires that debt collectors treat debtors fairly by prohibiting certain methods of debt collection such as: harassment, false statements, and unfair practices.
      Fair and Accurate Credit Transactions Act (FACTA) - Federal This law provides victims of consumer fraud with greater ability to protect themselves including access to fraudulent credit applications using their name, requirements for disposal of credit reports, the ability to dispute falsely reported credit information and the ability to place “fraud alerts” on personal financial accounts.
      Fair Credit Reporting Act (FCRA) - Federal This law requires that users and furnishers of credit data must comply with provisions of privacy and security, have permissible purposes for obtaining a credit reports and maintain procedures ensuring that supplied data supplied is current and accurate and have procedures to correct bad data.
      Consumer Credit Protection Act (CCPA) - Utah This law requires any entity with access to consumer personal information including name, social security number, drivers license number, and banking information to protect such information from unlawful use or disclosure.
    • Partnering with departments in collection decisions

      The process of collecting past due accounts is a cooperative effort between Student Financial Services and the various other departments which are providing the product, service or loan and who bear ultimate financial responsibility for the receivable. General procedures are as follows:

      1. Student Accounts - SFS meets with the billing/lending departments and explains BYU’s normal billing and collection procedures. These procedures are applied to all student receivables. Consistency in the application of procedures results in greater efficiency for BYU and less confusion for students.
        Occasionally, standard billing and collection procedures for student accounts will not meet the unique requirements for the department involved. In this case SFS meets with the billing/lending department to develop specific collection procedures. These procedures are then generally applied by SFS without specific involvement of the billing/lending department. On rare occasion SFS will consult directly with the billing/lending department on specific accounts prior to applying collection or write-off procedures.
      2. General Receivables – SFS meets with each billing department and determines what collection procedures to employ, including whether SFS or the department will make initial and/or follow-up collection contact, when to send the account to outside collection agencies and when to write-off the account. These customized procedures are then applied to all accounts for a particular department. Additional specialized procedures can be applied to individual general receivable customers based on communications between SFS and the department.
      3. Employee Receivables – Due to the sensitivity of receivables from employees, collection efforts for all such accounts are handled by SFS under the direction of the SFS Director.
    • Basic Student Receivable Collection Time-line

      SFS follows a basic time-line for communicating with students regarding their receivable accounts and for subsequent referral to outside collection agencies and eventual write-off of past due accounts. This basic time-line may be modified as dictated by individual circumstances.

      Time Communication or Activity
      Initial billing notice Delivered by billing department or system when services/products are rendered.  Amounts are considered due when billed.
      30 days past due SFS delivers a statement via e-mail.
      60 days past due SFS delivers a written statement via U.S. mail.
      90 days past due Pre-collection letter service by collection agency.  The agency sends a written final demand letter notifying of intent to start formal collection, including collection fees, in 30 days.
      120 days past due Collection agency notifies student in writing that account is now in formal collection, collection fees have been added to account, and that failure to pay may further damage credit.
      After 1 year with Agency Unpaid accounts with no recent activity will generally be written-off and holds will be placed on students’ account restricting future ability to register, receive diplomas, transcripts, etc.

      Note that the time-line above is approximate. Actual communications are based on a monthly processing calendar rather than on the specific age of individual accounts. Generally, collection procedures will not accelerate faster than indicated in the time-line above.

    • Organization of SFS relative to Collection duties

      The Student Financial Services Office is organized as follows relative to accounts receivable and collection activities:

      Director – Oversees all accounts receivable and collection activities.

      Student Accounts Manager – Manages and communicates with all student accounts which are not past due for more than approximately 120 days.

      General Receivable Manager – Manages and communicates with all general receivable customers which have not been referred to external collection agencies.

      Collection Manager – Manages and communicates with all student receivable accounts which are past due and all general receivable accounts which have been referred to an external collection agency.

    • Collection Agencies

      • Use of Collection Agencies – Use of external collection agencies in the collection of past due accounts is considered the most efficient way to collect past due accounts which have not responded to routine billing requests and limited collection efforts by BYU employees. BYU does not generally restrict methods used by the external agencies. However, BYU does make reasonable efforts to ensure that external agencies follow all applicable federal and state laws and are generally professional in their efforts.
      • Authorizing Collection Agencies – Appropriate procedures are followed by SFS and BYU’s Purchasing Department to ensure that the agencies employed are professional, have a good reputation and have procedures which accommodate BYU’s internal procedures. BYU generally uses only 3-4 different agencies at any one time. BYU may, but is not required to, discriminate between the agencies based on type of accounts referred, collection fee schedules, or other considerations.
    • Use of Credit Reports

      SFS may use credit reports in making credit granting decisions or in its ongoing collection efforts. Other BYU departments may request credit reports for similar purposes, but may not obtain such reports independently. SFS will ensure that credit reports are obtained and used for verifiable permissible purposes and that all such reports are secured as required by FCRA and the Utah Consumer Protection Act. Note that BYU’s Purchasing Department also obtains business credit reports for the purpose of validating vendors. This procedure is not meant to restrict the Purchasing Department’s ability to obtain credit reports for that purpose.

    • Litigation

      BYU may litigate to collect past due accounts. Collection lawsuits may be brought directly by BYU’s Office of General Counsel,(or at their direction, by other practicing attorneys in Utah or other jurisdictions) or through external collection agencies and their internal or external attorneys. The Director of Student Financial Services must approve all litigation entered into for any collection purposes. All external attorney invoices will be directed to BYU’s Office of General Counsel for review and payment.

    • Credit Reporting by BYU

      BYU reports both positive and negative payment histories to the major credit reporting agencies for all Student and general receivable accounts. Reporting and updating procedures are in compliance with FCRA

    • Negotiating payments

      BYU recognizes that various circumstances may indicate that the best way to collect a past-due account is to enter into a payment negotiation. The SFS Director is authorized to approve all reduced payment arrangements which will generally be negotiated by the Collection Manager. Final approvals of write-offs resulting from negotiated settlements are also approved by the CFO, President or others when the write-off request is submitted for approval. This approach provides for both timely negotiation and high level supervision of negotiation activities.

    • Collection Committee

      SFS will maintain a Collection Committee which will meet at least quarterly to discuss general collection issues and any significant past due-accounts. The purpose of the committee is to help collect specific accounts and to identify procedures which will help limit past-due accounts in the future. Members of the Collection Committee shall include:

      • SFS Collection Manager (Chairman)
      • SFS Director
      • Student Accounts Manager
      • General Receivable Manager
      • Representative from BYU’s Office of General Counsel
    • Collection Costs

      Students and other customers who do not meet their financial obligations will be held responsible for all collection fees and related expenses incurred by the University.

  8. Financial Holds

    When students are past-due in the payment of their financial obligations the university may place financial holds on their ability to register, or to obtain diplomas and transcripts. Financial holds will generally be placed in the following circumstances:

    • When any of a student’s receivable sub-accounts (tuition, housing, health center, etc.) individually exceed $100 in past due charges.
    • When a student’s account is referred for collection (either internally or externally).

    Holds will generally be automatically released within 24 hours after payment-in-full has been received by the university. Holds may also be immediately released under the direction of the Student Accounts Manager, Collection Manager or Enrollment Services Manager upon receipt of payment-in-full or other satisfactory arrangements. Other University departments desiring that financial holds for individual student accounts either be applied or released may make their requests to the Student Accounts Manager. Such requests will be granted or denied based on individual circumstances, providing the request is based primarily on the student’s satisfaction of financial obligations to the university.

  9. Appeals

    Students may appeal any of the provisions of these procedures for unusual or uncontrollable circumstances by completing a written petition. Petition forms are available in Student Services in D-155 of the ASB. Petition forms may also be obtained on-line at (to be determined). Petitions based on unfamiliarity with university policies, forgetfulness, or failure to make adequate personal financial arrangements will likely be denied.