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Business and Financial Policies and Procedures

5.1 Managing Receivables

Policy Statement

All units must comply with all state, University of Illinois System, and accounting requirements for receivables. Banner AR facilitates this compliance. Therefore, all units must record their receivables in Banner AR or request and receive an exemption from OBFS. Units that do not use Banner AR must comply with these requirements and provide data to the OBFS units that report the system's receivables.

Reason for the Policy

The system is subject to and complies with state regulations including; Illinois State Collection Act of 1986, Statewide Accounting Management System (SAMS), and the Uniform Disposition of Unclaimed Property Act (Illinois Compiled Statutes, Chapter 765, Act ILCS 1025). These acts mandate that the system must:

  • Assess monthly late payment charges on delinquent receivables balances.
  • Perform and track collection activities on all accounts with a balance of $25 or more that are 30-days past due (and, for SAR, when the student is no longer enrolled).
  • Place receivable balances of $1,000 or more with the Illinois Comptroller's State Offset System when they are more than 90 days past due. The Offset System deducts the amount owed from Illinois wages, tax refunds, lottery winnings, and other state payments.
  • Obtain permission from the State Attorney General's Office in order to write off uncollectible receivables over $1,000.
  • Submit Quarterly Accounts Receivables Reports to the State Office of the Comptroller. These reports must include the beginning quarterly accounts receivable balances, changes to the balances during the quarter, delinquent amounts and how long they have been delinquent (aging amounts), estimated uncollectible balances, write-off totals with details, and information about collection activity.
  • Submit the system's Annual Financial Report to the State of Illinois governor's Office and the Office of the Auditor General. This report must include all receivable balances at year end.
  • Return all credit balances of $10 or more to the customer. Credit balances not returned to the customer must be transferred to the Unclaimed Property Fund and returned to the State of Illinois after 7 years. If an individual presents documentation of a credit balance and requests a refund check after the balance has been transferred to unclaimed property, forward to University Payables and University Accounting and Financial Reporting the individual's name, address, and refund amount.

Applicability of the Policy

This policy applies to all receivables operations.

System Requirements

In addition to state regulations, the system requires the following:

  • Ensure separation of duties and responsibilities to meet auditing requirements as outlined in 9 Audits, Internal Control, and Business System Security.
  • Encumber SAR with past due balances over $200 by placing financial holds immediately before advance registration.
  • Review all accounts receivable transactions each month for accuracy. This review confirms that customers who are expected to owe the system for goods or services have been charged the appropriate amount and that no customers have been charged in error.
  • If unable to bring accounts current after completing internal due diligence, place accounts with a third-party collection agency that will perform due diligence and:
    • Evaluate the cost effectiveness of litigation and make recommendation to the system.
    • Close and return all uncollected accounts to the system within one year.
  • Record all accounts receivable to the Banner General Ledger and reconcile to your records monthly. Identify and resolve all differences.

Accounting Principles

The system complies with generally accepted accounting principles (GAAP) as established by the Governmental Accounting Standards Board (GASB) for state and local government entities. These require the system to:

  • Accrue accounts receivable at fiscal year-end.
  • Estimate an allowance for uncollectible receivables and record in the general ledger.

Other Policies and Procedures

5.5 Request an Exemption from Using Banner AR
9 Audits, Internal Control, and Business System Security
Definition of Illinois State Offset System in 4.1 Unit Activities for Payroll Processing - Payroll Deductions
10.1.2 Implement Internal Controls for Handling Cash and/or Checks
5.4.2 Collect Delinquent Accounts Receivable

Additional Resources

Illinois State Collection Act of 1986
Statewide Accounting Management System (SAMS)
Uniform Disposition of Unclaimed Property Act (Illinois Compiled Statutes, Chapter 765, Act ILCS 1025)
Reconcile AR Transactions Ledgers to Accounts Receivable
General Ledger Reports

Last Updated: May 23, 2019 | Approved: Senior Associate Vice President for Business and Finance | Effective: March 2010

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