SECTION
3
POLICY NUMBER
306
REVISED DATE
04/06/15
Page 1 of 9
County of Riverside
OFFICE OF THE AUDITOR-CONTROLLER
STANDARD PRACTICE MANUAL
PURPOSE: To establish standard guidelines for County departments, agencies, and special districts
for the internal control, collection and write-off of accounts receivable. Write-off policies and
procedures contained herein must comply with applicable accounting requirements for federal, state
and other regulatory agencies and all Generally Accepted Accounting Principles (GAAP). In addition,
the policy must also comply with the California government code, and all related rules and
regulations.
SCOPE: Applies to all County departments, agencies, special districts, and authorities that are
governed by Riverside County Board of Supervisors, and/or which maintain funds in the County
Treasury.
POLICY: The Riverside County Auditor-Controller (ACO) has established policies and procedures in
compliance with California Government Code (GC) Section 25257 for the collection and write-off of
uncollectible accounts receivable by all County departments maintaining an accounts receivable.
These procedures recognize that certain amounts of bad debt will occur when accounts receivables,
are established. Furthermore, in the case of certain accounts receivable, it is in the best interests of
the County to write off such accounts receivable rather than pursue collection efforts.
PROCEDURE: The ACO recommends that departments collect payment at the time goods or services
are provided. If a customer is more than 30 days past due on their accounts receivable, the collection
process must begin. Security roles have been assigned to departmental staff and ACO staff (central)
by the Riverside County Information Technology, Enterprise Solutions Division to ensure proper
authorization of duties. The responsibilities of the roles are outlined below.
SUBJECT:
ACCOUNTS RECEIVABLE COLLECTIONS AND
WRITE-OFF POLICY
SECTION:
3
CATEGORY: ACCOUNTS RECEIVABLE
POLICY NUMBER:
306
REVISED DATE:
04/06/15
APPROVED BY:
SECTION
3
POLICY NUMBER
306
REVISED DATE
04/06/15
Page 2 of 9
DEPARTMENT’S RESPONSIBILITIES
Departments are responsible for recording accounts receivables timely and accurately, as well as
collecting receivables timely, and reviewing the control to ensure timely collections. Departments
are responsible for utilizing the following written policies and procedures to ensure that past due
receivables are followed-up promptly and in a cost effective manner for the department.
1) If the County extends credit, due to not immediately receiving payment upfront for a good or
service, the following information must be provided on a credit application or contract:
Customer’s Full Name
Home and Office Address
Telephone numbers for home, place of employment, and a cell phone
Customer Driver’s License number
Federal Employer Identification Number (FEIN) for businesses
Social Security Number for individuals or sole proprietorships
Terms of payment must be specified
Customers must agree to pay any and all costs of collections, such as court costs and
attorney fees, if legal action becomes necessary.
The customer will then sign and date the credit application form or contract.
See purchasing guidelines, if necessary, contracts must be approved by the Board of
Supervisors prior to receipt of goods or services.
2) A system-generated invoice for goods and services should be billed at the time the goods are
provided or services rendered. If a customer is not billed immediately, an invoice must be
rendered at least 30 days before the first payment is due. Invoices shall include the date on
which the invoice was prepared, and shall be mailed, or delivered on the same date stated on
the invoice.
3) Terms of payment for all debts to the County shall be net 30 from the invoice date. Because
normal County business is conducted Monday through Friday, due dates that occur on a
Saturday or Sunday, shall be advanced to the following Monday. Due dates that occur on a
holiday shall be advanced to the next business day.
4) All accounts receivable activities will be monitored using an accounts receivable aging report.
At the end of each month, the department must run the aging report. This report must be
reconciled to the Accounts Receivable Module and the General Ledger Module. The department
will also use this report to work past-due and delinquent accounts.
5) It is the department’s responsibility to routinely notify customers when payment is due, and to
expeditiously pursue all past-due and delinquent receivables. Accounts with unpaid balances 1
to 90 days past the due date are considered past due. Departments should identify on the
billing invoice the potential consequences of not paying timely, such as late fees and interest
charges.
6) These late fees and interest charges will begin accruing on all accounts receivables not paid
within 30 days of the invoice due date. GC 16583.1 states that a reasonable fee can be imposed
as long as it does not exceed the actual costs to recover collection costs on a past due account.
SECTION
3
POLICY NUMBER
306
REVISED DATE
04/06/15
Page 3 of 9
7) The department is to send a follow up statement once a month to all past due accounts. The
statement should show the following information:
Beginning Balance
Amounts charged during the month
Payments on accounts during the month
Ending Balance
Due Date
Invoice Date
8) If the County has received a partial payment, the department will credit the accounts
receivable for the amount received. It is the responsibility of the department to contact the
customer and make arrangements for the remaining balance of the payment. A follow-up letter
should then be sent, confirming the arrangement that was agreed upon.
9) All contacts with the customer should be noted in a collection log.
10) If the customer submits a written dispute of the debt, the originating department will have 30
days to evaluate the validity of the dispute. The department then has 30 days to reach a
decision. A response letter is sent to the customer notifying them of the decision. The
department will either agree with the customer or continue with debt collection.
11) Accounts with unpaid balances of greater than 90 days past due are considered delinquent and
are subject to collection procedures. Departments are prohibited from providing any additional
goods or services to that customer until full payment has been made.
EMPLOYEE ACCOUNTS RECEIVABLE
1) GC Section 19838 requires reimbursement of overpayments made to employees. These
overpayments can arise from salary and travel advances or payroll warrants issued.
Departments will notify employees (in writing) timely, but no later than 30 days after the
overpayment is identified, and provide them an opportunity to respond. Departments cannot
take action to recoup an overpayment unless the action is initiated within three years from the
date of the overpayment.
2) Departments should develop procedures to ensure prompt collections of employee receivable
that include, but are not limited to the following:
a. Payroll Receivable – When overpayments arise from payroll warrants issued, the
departments establishes a payroll receivable for the employee. The amount of the
overpayment is collected either through payroll deduction or through collection agency.
Departments are encouraged to use payroll deduction, when possible, to assist in
prompt collection and to avoid subsequent manual income tax reporting.
b. Separating Employees – Review outstanding payroll receivables and collect any
outstanding amounts from employees prior to their separation from the department. If
the employee transfers from one department to another, notification must be sent to the
ACO Payroll department notifying them of their outstanding receivable. If the
separating employee is leaving the county, the balance of the receivable is withheld from
their final payroll check.
c. Perform periodic review of payroll receivable reports, at least monthly, to ensure there is
ongoing collection activity.
SECTION
3
POLICY NUMBER
306
REVISED DATE
04/06/15
Page 4 of 9
COLLECTION PROCEDURES
1) Collection procedures are not required on accounts with a remaining balance of less than
$100. Collection procedures will include intensive efforts to recover amounts owed, however it
must be cost effective. The effort expended to collect the debt must be in proportion to the
amount of revenue due to the county.
2) At 30 days, when an account becomes delinquent, the department shall mail the first Dunning
Letter, in which immediate payment is demanded and the assessment of interest charges is
explained. All Dunning Letters and communications with debtors must follow the provisions of
the Fair Debt Collection Practices Act, which prohibits abusive debt collection practices, limits
communications with debtors, and prohibits harassment or abuse.
3) If no response is received after the first Dunning Letter, the first telephone contact should be
made within 45 days of the due date of the receivable.
4) At 60 days past due, the customer is mailed a second Dunning Letter. This explains that if the
invoice is not paid within the next 30 days, the invoice will be turned over to the Auditor-
Controller’s office. At that time the ACO will decide if the receivable should be turned over to a
Collection Agency for further review and action.
5) A second telephone contact should be made within 75 days of the due date of the receivable.
6) If payment has not been received within the next 30 days, as noted on the second dunning
letter, a Final Demand Letter is sent. This notifies them that their account is seriously
delinquent and more extensive collection efforts will begin immediately. The Final Demand
Letter must be sent out certified mail with return receipt.
7) Within 30 days from the Final Demand Letter, if the department has not received a response
and all reasonable attempts to collect payment have failed, a transfer form to be completed and
sent to the Auditor-Controller’s Office. The department must mark this customer as “inactive”
in the PeopleSoft system, and record a journal entry to record this account as a “bad debt
expense.”
8) Any account under $1,000 is deemed uncollectible, and may be written-off by the Billing
Supervisor, after collection efforts have failed. Department Heads have the authority to write-off
accounts under $5,000. Any account over $5,000 will require approval from the Board of
Supervisors prior to be written-off.
Referral of Accounts to a Collection Agency
120 Days Past Due
Timeline for Collection of Accounts Receivable
Second Dunning Invoice/Statement or Collection Notice with Dunning Message No. 2
Final Dunning Invoice/Statement or Demand Letter with Dunning Message No. 3
Collection Step
Latest Day for
Completion
Services Rendered, Goods Delivered, Fees Due, etc.
Day 0
Receivable is Recorded, Initial Invoice or Statement is Mailed
Day 15
First Dunning Invoice/Statement with Dunning Message No. 1
30 Days Past Due
First Telephone Contact
45 Days Past Due
60 Days Past Due
Second Telephone Contact
75 Days Past Due
90 Days Past Due
SECTION
3
POLICY NUMBER
306
REVISED DATE
04/06/15
Page 5 of 9
AUDITOR-CONTROLLER’S ROLES
1) The Auditor-Controller’s Office may request accounts be written off, if the billing and collection
procedures detailed in this policy have been exhausted. The following criteria may justify a
write-off:
a. Neither the debtor nor the debtor’s assets can be located, due to a wrong address, lack
of social security number and/or driver’s license.
b. The debtor does not and will not for the foreseeable future, own nor have the right to
own assets from which the County could reasonably collect the debt.
c. The debt is disputed and the County has insufficient documentation to pursue
collection efforts.
d. The debtor’s estate is subject to a pending bankruptcy proceeding and it is reasonable
to conclude that the debt will be discharged and the County will receive none or an
insubstantial share of the asset of the bankruptcy estate.
e. The debtor is deceased and there are no assets in the debtor’s estate from which the
County could collect the debt.
f. It is not in the public interest to pursue collection of debt.
g. It is reasonably estimated that the cost of collecting the debt would be equal or exceed
the amount of the debt.
2) Other criteria to be considered include the type of debt, how long the debt has been
outstanding, and the debtor’s status. If these conditions have been met, and the account is
over $1,000, then the account can be forwarded to a collection agency for further action. The
account will still be considered written off and any payments received would simply reduce the
bad debt expense that was recorded.
3) The ACO will create a Form 11 annually to the Board of Supervisor’s within 120 days after the
close of the fiscal year and include the following information:
a. Gross accounts receivable amount at the end of the fiscal year.
b. Detail of all receivable written off though out the fiscal year.
c. Current receivables (amounts due more than 12 months from the report date).
d. Long-term receivable (amounts due more than 12 months from the report date).
e. Past-due receivables (1 to 90 days past due).
f. Delinquent receivables (over 90 days past due).
This report will also include a listing of all accounts that have been referred to a collection agency
and / or the District Attorney’s Office and the status of each one.
SECTION
3
POLICY NUMBER
306
REVISED DATE
04/06/15
Page 6 of 9
COLLECTION AGENCY ROLES
1) Once an account has been referred to a collection agency, the department will submit to the
Auditor-Controller’s Office, all supporting documentation, including a copy of the invoice(s),
collection letters, and collection log. At this state of the collection the departmental efforts to
collect the money should cease. Double collection efforts may be considered as harassment of
the debtor. The department will refer all subsequent customer contacts to the collection
agency.
2) Per California Government Code 16585(a) a city, county, or city and county may sell or transfer
part or all of its accounts receivable to a private debt collector or private persons or entities,
provided the city, county, or city and county notifies the debtor in writing at the address of
record that the alleged accounts receivable debt will be turned over for private collection unless
the debt is paid, or appealed within a time period, as determined by the city, county, or city
and county providing the notice.
DISTRICT ATTORNEY OFFICE ROLES
1) If an account has gone through the County collections process and a collection agency without
successful resolution, the District Attorney’s office may intervene and file a lawsuit, seeking a
judgment against the debtor. If a judgment is obtained, Riverside County may proceed with all
available legal remedies for collection on that debt. Judgments granted to the County remain
in effect for eight years.
2) If the determination is made to write-off the accounts, without going thru a collection agency,
the receivable is transferred back to the ACO so that a Form 11 can be prepared asking the
Board of Supervisors approval to write-off the account. The Board of Supervisors will have the
authority to release any debt due to the County per California Government Code Section 25259
which says the “Board of Supervisors may make an order discharging the department, officer,
or employee from further accountability and direct the County Auditor-Controller to adjust any
charge against said department, officer or employee in a like amount.”
RECORDS MANAGEMENT ROLES
All records related the actual receivable and collections efforts must be maintained in accordance
with the County general records retention schedule. Whatever department does the final write off
to the receivable will be the department of record.
SECURITY ROLES
In order to perform the functions discussed above, at least one of these roles must be requested:
A Collection Processor is able to write-off an account that is under $1000.
A Department Collection Processor is able to write-off accounts under $5000.
An ACO Collection Processor can approve any write-offs over $5000 that has received Board
of Supervisor Approval.
** Please note that an individual CANNOT be both a Collection processor and a Department
Collection approver. They must choose one or the other.
SECTION
3
POLICY NUMBER
306
REVISED DATE
04/06/15
Page 7 of 9
SAMPLE DUNNING LETTERS
Dunning Letter # 1:
Payment Reminder
Date
Name
Address
City, State, Zip
Subject: Past Due Invoice Number _____________
Dear Name:
Our records show that your present balance of $___________ is past due. Please make arrangements
for payment on or before (date). Interest will be added at 1 ½ percent per month (18 percent per
annum) on the unpaid balance.
If you are unable to send your remittance by return mail, please write or call us immediately to make
arrangement necessary to clear this balance. Your prompt attention will be greatly appreciated. Our
office is open 8:00 am to 5:00 pm Monday thru Friday.
Should you have any questions or concerns regarding this matter, please feel free to contact me at
(951) 955-XXXX.
Thank You,
Name
Position
County of Riverside
Enclosures
COUNTY OF RIVERSIDE
OFFICE OF THE
AUDITOR-CONTROLLER
County Administrative Center
4080 Lemon Street, 11
th
Floor
P.O. Box 1326
Riverside, CA 92502-1326
(951) 955-3800
Fax (951) 955-3802
Paul Angulo, CPA, M.A.
County Auditor-Controller
Frankie Ezzat, MPA
Assistant Auditor-Controller
SECTION
3
POLICY NUMBER
306
REVISED DATE
04/06/15
Page 8 of 9
Dunning Letter # 2:
Second Notice
Date
Name
Address
City, State, Zip
Subject: Past Due Invoice Number _____________
Dear Name:
According to our records, your current balance is $___________. Of this amount $_________ is more
than 30 days past due. As you know, our normal terms require payment within 30 days after then
invoice is sent to you. Please pay the amount due by (date). Interest will be added at 1 ½ percent per
month (18 percent per annum) on the unpaid balance.
If there is some error, or you are unable to pay the amount due immediately, please contact us so that
we can correct the situation or make suitable arrangements for prompt payment of this outstanding
obligation. Immediate payment or payment arrangement is required to avoid costly collection or legal
action. Our office is open 8:00 am to 5:00 pm Monday thru Friday. The county may take legal action
to clear the debt.
Should you have any questions or concerns regarding this matter, please feel free to contact me at
(951) 955-XXXX.
Thank you for your attention to this Request.
Name
Position
County of Riverside
Enclosures
COUNTY OF RIVERSIDE
OFFICE OF THE
AUDITOR-CONTROLLER
County Administrative Center
4080 Lemon Street, 11
th
Floor
P.O. Box 1326
Riverside, CA 92502-1326
(951) 955-3800
Fax (951) 955-3802
Paul Angulo, CPA, M.A.
County Auditor-Controller
Frankie Ezzat, MPA
Assistant Auditor-Controller
SECTION
3
POLICY NUMBER
306
REVISED DATE
04/06/15
Page 9 of 9
Dunning Letter # 3:
Final Demand Notice
Date
Name
Address
City, State, Zip
Subject: Past Due Invoice Number _____________
Payment Due Date:
Total Amount Due:
Dear Name:
Despite our efforts to resolve your past due account, you have not responded to numerous attempts
to contact you. You have until (DATE) to either submit payment in full for the past due amount or to
contact the XXXXXXXX Department to make payment arrangement to reconcile this obligation. If you
fail to do so by (DATE), Riverside County shall initiate steps as necessary to enforce collection.
In order to avoid this unpleasant action and further damage to your credit report, please pay the past
due amount of $ _______________ by (DATE). This is the last notice you will receive before action is
taken.
If the outstanding balance is referred to a collection agency, additional fees (currently 54.00% of the
balance) will be added to the unpaid balance in addition to the 5% late fee already include.
Your prompt attention to this matter is requested. Our office is open 8:00 am to 5:00 pm Monday thru
Thursdays. If you have any questions or concerns regarding this matter, please feel free to contact me
at (951) 955-XXXX.
Thank you for your attention to this Request.
Name
Position
County of Riverside
Enclosure
COUNTY OF RIVERSIDE
OFFICE OF THE
AUDITOR-CONTROLLER
County Administrative Center
4080 Lemon Street, 11
th
Floor
P.O. Box 1326
Riverside, CA 92502-1326
(951) 955-3800
Fax (951) 955-3802
Paul Angulo, CPA, M.A.
County Auditor-Controller
Frankie Ezzat, MPA
Assistant Auditor-Controller
