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Research Office Collection Procedure
Effective with proposals submitted on or after February 1, 2016:
I. Overview
II. Definitions
III. Who is affected by this Procedure?
IV. Procedures
V. Appendix
I. OVERVIEW
The University of Delaware receives sponsored project awards from various governmental and private entities. As a recipient of federal, state, and privately sponsored grants and contracts, the University is required to comply with all policies and regulations set forth by the federal and state government and private sponsors, including compliance with the Office of Management and Budget (OMB) Uniform Guidance. Sponsors generally require an invoice or cash drawdown request before paying the University for an award. Invoices/Cash drawdowns are generated in accordance with the requirements set forth by the sponsor in the agreements. The Research Office Billing Team manages the billing and collections activities for all sponsored projects while working closely with the Principal Investigator (PI), department, and the Office of Sponsored Programs Pre and Post Award Administration teams.
While most sponsors pay invoices reliably, occasionally a sponsor is unable/unwilling to pay the award they made to the University. This procedure provides guidelines in collecting accounts receivables and writing off uncollectible balances.
Grants Receivable — Any amounts billed for a sponsored project by means of an invoice/cash drawdown. Receivables include billings for expenditures on a reimbursement basis, payment schedule, or a fixed price contract. Invoices are generated via the University’s financial system in accordance with the award agreements. Once an invoice has been emailed, mailed, or a cash drawdown has been completed, a Billing Coordinator in the Research Office tracks the invoice to confirm payment. The assigned Billing Coordinator is responsible for updating receivable comments within the University’s financial system when a payment is past due.
Aging report — A list of outstanding receivables grouped or summed by category in the University of Delaware’s financial system. Categories are based on the invoice due dates. These categories include: <30(Current), 31-60, 61-90, 91-120, 121-150, 151-180, 181-365, 366-730 and >731 days. For this accounting process, aging is determined by the due date of the invoice. Using the Research Office Aging Report, collections efforts and comments are logged on a daily basis by the Research Office Billing Team.
Write-off of Uncollectible Balances— After a thorough collection process is followed by the University and it is determined that an invoice will not be paid in a reasonable time, the balance is no longer considered collectable and revenue should be adjusted accordingly. The process of removing the balance from the accounts receivable balance on the financials is called a write-off.
III. WHO IS AFFECTED BY THIS PROCEDURE
This procedure applies to all sponsored projects and programs as of January 1, 2016. It must be understood and followed by Principal Investigators (PIs), Department/College Managers and Staff, Department Chairs, Deans, and the Research Office. All University faculty, staff, and students who are responsible for administering federal, state and privately sponsored grants/contracts should be familiar with this collection procedure.
IV. PROCEDURES
This section describes the procedures to follow during the collection process. Throughout the process, it is critical that communication between the Research Office, Principal Investigator (PI) and department administrators (Deans, Chairs, and Departmental/College Administrators) be both timely and consistent. The steps are designed to obtain uniform results of high collection rates and maintain a working relationship with the sponsor.
The Research Office should continue to use prudent judgment in collection efforts until all avenues of resolution have been exhausted. These methods may include phone calls to the sponsor, continued notifications and legal letters, legal action or other means to continue contact and collect past due invoices. The following procedures should be followed based upon the aged date of the receivable.
At any time, the Associate Deputy Provost, Research Administration (ADP) in coordination with the appropriate parties to include the PI, Dean or Research Dean and Deputy Provost for Research and Scholarship (DPRS) may order the work stopped or to proceed at risk. If the decision is to continue the project, the PI and his/her department will become wholly responsible for all additional deficits that occur after the date of the stop work order. For state or federally funded awards, ceasing work will be evaluated on a case-by-case basis. This information will be relayed to the Associate Director, Post Awards Administration (ADPA), and the ADP.
A. 30 Days Outstanding Receivables 30 days or less are considered current.
B. 31 to 60 Days Outstanding Receivables 31 to 60 days outstanding will be reviewed by the assigned Billing Coordinator. The following initial steps should be taken by the assigned Billing Coordinator:
- Contact the sponsor to confirm receipt of the invoice and verify accuracy of email and/or physical address
- Determine if there may be problems with the invoice that prevent payment
- Determine if a revised invoice or second notice is necessary
- Alert the Department Administrator and PI if the sponsor is “Industry”
- Document the initial steps taken in the award file using the Aging Report/Accounts Receivable Collection Efforts Log
If the sponsor refuses to pay due to work performance (deliverables, reports, and other technical functions) the Assistant Director, Billing & Receivables (ADBR) should be notified. These sponsor’s comments regarding work performance will be relayed to the PI, Department/College Administrator and ADPA via email or memorandum. If either party feels the situation warrants it, a meeting will be scheduled to discuss the account status before any decision regarding further collection is made. All Accounts Receivables will continue to age and be subject to all other collection procedures at 61-90, 91-120, and >120 as stated below, even if collection efforts with the sponsor have been temporarily suspended. The assigned Billing Coordinator will be notified when collection efforts with the sponsor can resume.
If, at any time during the collection process, a sponsor notifies either the Research Office or the PI that they do not believe the receivable is their obligation, notification will be sent by the ADBR to the ADPA and the ADP, for their assistance and opinion in considering the validity of the claim. Until Research Office and/or the PI resolve the issue, all other collections procedures may cease. As part of the review process, the ADP may engage the appropriate parties depending on risk factors, to determine if work should continue.
C. 61 to 90 Days Outstanding When a receivable has been outstanding for 61-90 days, the following steps should be taken by the assigned Billing Coordinator:
- Email or mail correspondence to the sponsor informing them of the outstanding invoice
- Send a copy of the email/mailed correspondence to the PI and Department/College Administrator depending on risk factors
- Place a phone call to sponsor to ensure contact information is valid
- Contact the Research Office Contract & Grant Specialist to identify any other sponsor contacts if necessary
- Document the steps taken in the award file using the Aging Report/Accounts Receivable Collection Efforts Log
D. 91-120 Days Outstanding When a receivable has been outstanding for 91-120 days, the ADBR will notify the ADPA in a monthly report. The report will identify those awards which have not been settled due to the fault of the University and those that are not the fault of the University.
When a receivable has been outstanding for 91-120 days, the following steps should be taken by the assigned Billing Coordinator:
- Email or mail a letter to the sponsor informing them of the outstanding invoice
- Send a copy of the email/mailed correspondence to the PI and Department/College Administrator
- Inform the ADBR that the invoice is 90 days past due and provide background/corresponding information
- Contact the Department/College Administrator and inform him/her of the outstanding payment
- Document the steps taken in the award file using the Aging Report/Accounts Receivable Collection Efforts Log
E. After 120 Days When a receivable has been outstanding for more than 120 days (121-180 days), The ADPA will notify the ADPA and the ADP in a monthly report. The report will identify those awards which have not been settled due to the fault of the University and those that are not fault of the University.
When a receivable has been outstanding for 121-180 days, the following steps should be taken by the assigned Billing Coordinator/ADBR:
- Email or mail correspondence to the sponsor informing them of the outstanding invoice
- Contact the Department/College Administrator and inform of the outstanding payment
- Document the steps taken in the award file using the Aging Report/Accounts Receivable Collection Efforts Log
F. After 180 Days
After 180 days, the ADBR and Assistant Director Post Award Administration will submit a report to the ADPA and the ADP for possible referral to UD’s General Counsel for legal recourse. UD’s General Counsel will review existing information as provided by the ADP and determine if legal action is necessary. The ADP shall be kept informed accordingly.
When a receivable has been outstanding for 181-365 days, the following steps should be taken by the assigned Billing Coordinator/ADBR:
- Email or mail correspondence to the sponsor informing them of the outstanding invoice
- Contact the Department Administrator and inform him/her of the outstanding payment
- Document the steps taken in the award file using the Aging Report/Accounts Receivable Collection Efforts Log
G. After 365 Days
If after 365 days, all collection efforts fail, including examination of legal recourse, the Research Office will notify the PI and dean of the status of the receivable. The Research Office will provide information to University Finance to determine the best course of action on an award by award basis. If a privately held company has defaulted on a debt, ADP will engage DPRS to determine if further contract assignments should be accepted by the University of Delaware. For federal or state funded projects that have defaulted on a debt, further contract assignments will be evaluated on a case-by-case basis by the Research Office. Upon review by ADPA and ADP items deemed uncollectible may be submitted for Write-Off.
H. After 2 years
If after 2 years, a receivable is deemed uncollectible by the ADPA and ADP, regardless of the actions taken by the sponsoring agency, it will be written off. If payment is received after it has been written off, the ADP will review and issue credit for payment to the appropriate parties.
V. APPENDIX
Responsible Parties
The financial management of sponsored projects resides with the Principal Investigator(s) and their respective department(s)/college. It is incumbent on the faculty and/or staff who manage projects to:
- Understand the budget as awarded and planned
- Monitor the financial activities on a timely basis
- Know the costing/budget policies associated with their programs
- Review Billing & Collection information in UDATAGLANCE
Closeouts
There are a number of scenarios under which costs may not be reimbursed. This situation may come to be known at any time throughout the life of a project. In order to timely assess the reasons and potential resolution of any outstanding invoices or deficit, it is critical that the financial closeout activity occur within the timeframe documented in the Automated Closeout Report (ACR) escalation process, and prior to the closeout period, as defined by the sponsoring agency for the project in question.
Aging Report Schedules
- An aging report is generated monthly and managed by the Research Office Billing Team. Collections efforts are logged and comments are added for each invoice that is past due
- An aging report is generated quarterly and is shared with the DPRS and Office of the Vice President for Finance and Administration documenting outstanding invoices by Sponsor type (Federal, State, and Other)
- A Sponsored Programs Receivable Report is prepared semi-annually for the Board of Trustees Finance Committee Meeting. This aging report reflects aging as of February and August month end
Exceptions to Write Offs
- In the event of a No-Cost Extension, the ADBR and the ADPA will review and take the appropriate internal actions to update the receivables
- If an invoice is outstanding due to an unfinished task or un-met deliverable(s), the ADBR and the ADPA will review and take the appropriate internal actions to update the receivables within the University’s financial system
Institutional Responsibility Issue
If the costs are allowable and the payment is delayed due to a late technical report submission or other resolvable situation, the Billing Coordinator will:
- Send an email notice to the PI and Department Administrator requesting resolution within two weeks (completing the report/deliverable or providing and update of when the task will be completed)
- A reminder email will be sent to the PI and Department/College Administrator after the two weeks
- If a path-forward (resolution) is not provided to the Billing Coordinator after a month, a follow up email will be sent to the PI with copies to the PI’s chair/dean, departmental administrator, college business officers, ADBR and ADPA
- If the problem is not resolved the issue will be escalated to ADPA