Management of Research Receivables

University of Rhode Island

Office of the Controller

Management of Research Receivables

Policy No. 05-01

Issuance Date:July 1, 2005

Revised:June 1, 2011

The management of research receivables at the University of Rhode Island consists of granting credit, billing accounts, Dean’s pledges, making collections, analyzing and aging outstanding receivables, providing for bad debts, and charging expenses to deans’ accounts for over-expenditures, unallowable expenses or failure by Principal Investigators (PI) to meet the requirements of the grant/contract.

Guidelines:
Granting Credit:

The granting of credit is normally not a function of the University or the State of Rhode Island; therefore, credit will be granted to sponsors as outlined below:

Credit to research sponsors from the U.S. government, foundations, municipalities, state agencies, and agencies from the State of Rhode Island is granted during the period claims for reimbursement are outstanding.
Credit should normally not be extended to for profit corporations. Payment options should be limited to one third upon signing the contract, one third upon two thirds of project completion and the final one third, thirty days after the completion of the project.
Monthly cost reimbursement to for profit companies should only be offered with the approval of the VP for Research and Economic Development.
Credit for deans’ pledges is given only when a dean pledges facilities and administrative funds (overhead), with the understanding that any expenditure not chargeable to the award will be charged to the appropriate dean’s/department’s overhead account.

Billing:

Prompt billing for the reimbursement of expenses is the single most important factor in managing receivables. Information must be maintained for all unbilled receivables and deans’ pledges to be sure that every required effort has been taken in order that bills may be issued as soon as possible.

For awards that are billed by tasks or milestones, it shall be the responsibility of the Principal Investigator to advise in writing the office of Sponsored and Cost Accounting that a particular milestone or task has been met.

An e-mail reminder should be sent by the Office of Sponsored Research to the Principal Investigator periodically to find out if the milestone of task has been reached.

Collection of Receivables:

The Office of Sponsored and Cost Accounting is primarily responsible for the collection of research receivables. Receivables not collected through standard routine follow-up may be referred for collection after approval by the Controller.

Aging Analysis:

Adequate information concerning the age of outstanding receivables is vital for the proper management, controls and allowance for bad debts.

Information on aging of billed/unbilled receivables must be collected, maintained, and used in a consistent manner.
Every effort in record keeping and collection of receivables must be utilized to achieve success.

Provision for Bad Debts:

In order to properly reflect realized revenues on the University’s books, allowance for bad debts must also be recognized.

The Universitywill maintain an allowance for bad debts and write-off any accounts deemed uncollectible. Allowance for bad debt will be calculated every fiscal year. All account write-offs over $5,000 must be approved by the Controller.

Control Procedures:
Billing Grants and Contracts:
Expenses originating from Sponsored Research must be billed promptly and accurately. After each monthly closing, priority must be given to billing tasks, whether done via letter of credit, WAWF billing,and standardUniversityinvoices or by other means.
Final claims for reimbursable expenses must be submitted within 90 days of the completion of the term of the award, contract or other agreement.
Unbilled expenditures for awards, contracts or other instruments should normally exist only under the following circumstances:
Deans’ pledges in anticipation of receiving awards.
Awards that come under tasks, milestones, quarterly billing or similar circumstances.

Collection:

The prompt collection of these receivables is important because they represent substantial amounts of money, therefore, a definite sequence of collection efforts must be followed. Billing records should be checked for accuracy before the outlined collection process begins:

When an account becomes 30 days overdue, a phone call should be made or a letter/e-mail similar to the one in exhibit 1 should be sent with a copy to the Principal Investigator.
When an account becomes 60 days overdue, a letter/e-mail similar to the one in exhibit 2 should be sent with a copy to the Principal Investigator, Director of Sponsored Research and Assistant Controller.

Non-respondents, other than state and federal accounts, should be reported to the University Controller.
When an account becomes 90 days overdue, a letter/e-mail similar to the one in exhibit 3 should be sent with a copy to the Principal Investigator, Dean, Director of Sponsored Research and Assistant Controller.
Non-respondents, other than state and federal accounts, should be reported to the University Controller.
The Controller will send a final letter similar to the one in exhibit 4demanding payment with a copy to the Principal Investigator, Dean, Director of Sponsored Research, Assistant Controller, VP for Research and Economic Development, VP for Administration & Finance and Legal Counselwith the understanding that the account might be frozen and no further expenses will be allowed if a satisfactory response is not received from the delinquent party within 15 days after the letter is sent.
The Controller shall recommend whether the delinquent account should be turned over to a collection agency or Legal Counsel to seek a settlement.
If payment or a satisfactory answer is not received, the Controller may decide to freeze the account and reports on results or progress may be withheld and may not allow any further expense.
Additionally, all other means of obtaining payments, where the costs of collection do not exceed the collectible, must be fully exhausted before the University determines the receivable uncollectible.
Collection follow-up procedures for state and federal accounts should take advantage of existing direct contact available including Principal Investigators involvement before resorting to freezing of accounts.

Write-off Guidelines:

The Director or Chief Accountant of Sponsored and Cost Accounting will prepare at year-end a schedule of uncollectible accounts and submit it to the Assistant Controllerfor approval, who will then forward to the Controller for final write-off approval.
Deans’ pledges expenses not allowed by award restrictions shall be written off to the deans/departments overhead(F&A) accounts after notifying the Dean and the Principal Investigator in writing.
If for any reason, the Principal Investigator does not fulfill the terms of the award, any outstanding receivable will be written-off to the relevant dean’s or departments overhead account.
If the award is overspent,Office of Sponsored Researchwill email the Principal Investigatorand Business Manager a deficit/write-off notice (Exhibit 4). Upon its return, the deficit will be written off to the chartfield outlined on the form. If the form is not returned in the prescribed time (30 days), Office of Sponsored Research will notify Sponsored and Cost Accounting to process a journal entry to write off the deficit to the college and department where the F&A was originally distributed.

Collection Agencies:

Before an account (other than federal or state) is referred to a collection agency, a determination should first be made as to whether the amount to be collected exceeds $1,000 and no response has been received by Controller. The Office of Sponsored and Cost Accounting shall submit the account to Student Loan and Miscellaneous Accounts Receivable Office who will send it to a collection agency after receiving approval by the Controller. Collection Agency fees will be paid by agency.

Analysis of Receivables:

The Sponsored and Cost Accounting Chief Accountantshall prepare a monthly aging analysis of the following schedules and send to the Assistant Controller, Director of Sponsored Cost Accounting, Controller and Director of Sponsored Research for reporting:

Billed receivables
Unbilled receivables
Deans’ pledges
Deferred revenue

The Chief Accountant responsible for collections will prepare a report that will outline the steps taken for collection follow-up and reasons for nonpayment.
A copy should be sent to the Assistant Controller for further review.

OFFICE OF THE CONTROLLER

110 Carlotti Building

75 Lower College Road

Kingston, RI 02881 USA

p: 401.874.2378

f: 401.874.2589

uri.edu/controller

EXHIBIT 1- Letter 1 – Friendly Reminder

Date

Agency Name

Agency Address

RE: Award # Invoice #, Invoice date:

Dear

As of our records indicate The University of Rhode Island has not received payment for the above invoice and is over 30 days outstanding. We are providing you with this reminder and ask that you bring your account current by sending your payment.

If you have already sent your payment, please disregard this notice. If your records do not agree with ours, or if there are any other issues that need to be discussed, please do not hesitate to contact me.

Thank you for your attention and cooperation.

Sincerely,

, Chief Accountant

Office of Sponsored Accounting

70 Lower College Road

Kingston, RI 02881

401.874.

@uri.edu

c:Principal Investigator

OFFICE OF THE CONTROLLER

110 Carlotti Building

75 Lower College Road

Kingston, RI 02881 USA

p: 401.874.2378

f: 401.874.2589

uri.edu/controller

EXHIBIT 2- Letter 2 – Not So Friendly Request

DateSECOND REQUEST

Agency Name

Agency Address

RE: Award # Invoice #, Invoice date:

Dear

Our records indicate the enclosed invoice(s) regarding the above award as of has not been paid and is past due more than 60 days. You have disregarded our request for payment previously mailed to your office. We must insist on full payment of the enclosed invoice(s) within (10) days from the date of this letter.

We prefer to resolve this letter amicably and therefore ask for your immediate attention to this urgent matter.

Your failure to return payment or contact this office as requested will result in further steps being taken to protect this institution. These measures may include withholding services as well as referral to our legal counsel.

If you have already sent your payment, please provide a copy of the canceled check or check number, amount and date issued. If your records do not agree with ours, or if there are other issues that need to be discussed, please do not hesitate to contact me.

Sincerely,

, Chief Accountant

Office of Sponsored Accounting

70 Lower College Road, Kingston, RI 02881

401.874.

@uri.edu

c:Principal Investigator

Director of Sponsored Research

Assistant Controller

OFFICE OF THE CONTROLLER

110 Carlotti Building

75 Lower College Road

Kingston, RI 02881 USA

p: 401.874.2378

f: 401.874.2589

uri.edu/controller

EXHIBIT 3- Letter 3 – Firm Request

DateTHIRD REQUEST

Agency Name

Agency Address

RE: Award # Invoice #, Invoice date:

Dear

Our records indicate the enclosed invoice(s) regarding the above award as of has not been paid and is past due more than 90 days. You have disregarded our request for payment previously mailed to your office. We must insist on full payment of the enclosed invoice(s) within (10) days from the date of this letter.

We prefer to resolve this letter amicably and therefore ask for your immediate attention to this urgent matter.

Your failure to return payment or contact this office as requested will result in further steps being taken to protect this institution. These measures may include placing services on hold as well as withholding all reports.

Sincerely,

, Chief Accountant

Office of Sponsored Accounting

70 Lower College Road, Kingston, RI 02881

401.874.

@uri.edu

c:Principal Investigator

Dean’s Office

Director of Sponsored Research

Assistant Controller

OFFICE OF THE CONTROLLER

110 Carlotti Building

75 Lower College Road

Kingston, RI 02881 USA

p: 401.874.2378

f: 401.874.2589

uri.edu/controller

EXHIBIT 4- Letter 4 – Referral to Legal Counsel

DateFINAL REQUEST

Agency Name

Agency Address

RE: Award # Invoice #, Invoice date:

Dear

Unfortunately, The University of Rhode Island still has not received your payment for the above invoice(s). You have failed to make payments or payment arrangements as previously requested by this office. Notwithstanding our efforts, your account remains seriously delinquent.

Unless full payment in the amount of $ is received by this office within (10) days from the date of this letter, this matter will be forwarded to our legal counsel for further action or to our collection agency.

Further contract services will be placed on hold immediately and reports on results or progress will be withheld pending resolution of this matter.

We regret the necessity of these measures but your failure to comply to the terms of the contract leaves us no alternative.

We sincerely hope and expect your payment will be forth coming so the award/contract services can continue without interruption.

Sincerely,

Sharon B Bell

University Controller

c:Principal Investigator

Dean’s Office

Director of Sponsored Research

Assistant Controller

VP for Research and Economic Development

VP for Administration and Finance

Office of Legal Counsel

Policy #05-01 Management of Research Receivables1

PROJECT ENDING NOTICE AUTHORIZATION TO INACTIVATE

DEFICIT/UNCOLLECTIBLE NOTICE AUTHORIZATION TO INACTIVATE AND TRANSFER

TO: Email: Telephone:

(Principal Investigator)

TO: Email: Telephone:

(College Business Manager)

FROM: Email: Telephone:

(Grant Accountant)

DATE:

PROJECT: Chartfield No. End Date Sponsoring Agency

PROJECT ENDING NOTICE REMINDER

All encumbrances (payroll and purchasing/accounts payable) must be liquidated and invoices paid for within 30 days after the project end date. If not, it will be necessary to charge the college/department overhead account.
Any Cash and Travel advance balances need to be accounted for, expensed and/or refunded.
If any personnel are still charged to the above project they must be transferred to another funding source.
Please inform any cost centers (Central Mail, Telephone, Copy Center, Computer, etc.) that the project will expire as of the above-mentioned date and if necessary provide alternate projects.
If any other transfers are necessary, they must be made prior to the project end date.
If an extension to the project has been requested, please contact the above grant accountant.
Any reports that the principal investigator is responsible for submitting should be completed in a timely manner.

DEFICIT NOTICE UNCOLLECTIBLE NOTICE

The Total Deficit or Total Uncollectible Balance is $ as of.

AUTHORIZATION TO:Inactivate Transfer Deficit/Uncollectible Inactivate & Transfer Deficit/Uncollectible

I (we) agree that the figures on this project are accurate and final. We authorize the transfer of the deficit/uncollectible expenditures in the amount of $ (total deficit NET of indirect OR total uncollectible balance) to the college’s overhead chartfield string number(s):

______% to ______(and) ______% to ______

FUND DEPT PROGRAM FUND DEPT PROGRAM

(If additional space is needed for chartfield string numbers please write them on the back of this form)

Signature of Principal Investigator: ______Date: ______

For Deficit/Uncollectible Transfers Only:

Signature of College Business Manager: ______Date: ______

If a reply is not received within 30 days from the above date, the project will be inactivated and any deficits/uncollectibles will be charged to the college overhead distribution chartfield string number(s) (please verify that the chartfield string number(s) that you are using have enough funds to cover the deficit/uncollectible). This is necessary since we are required to close the project and submit final fiscal reports within 90 days of the project end date.

If you disagree with our records please contact the above grant accountant to discuss any problems.

If you agree with our records, your project will be inactivated and a final fiscal report sent to the agency, if required.

Please return signed hard copy to the grant accountant at address in the box checked below (do not email):

, Sponsored Projects Review, 70 Lower College Road, Kingston, RI 02881. Thank you.

, GSO Sponsored Projects Review, OSEC BLDG, Room 111, Narragansett, RI 02882. Thank you.

Policy #05-01 Management of Research Receivables1