ACCOUNTS RECEIVABLE (AR)
Administrative Rule Adopted by Council
The purpose of this administrative rule is to set minimum standards for the management of accounts receivable, to ensure prompt billing, timely collection, and accurate reporting of accounts, as well as high quality customer service.
Authority for this administrative rule is established in the City Charter and City Code.
This administrative rule applies to all accounts receivable Citywide, whether processed through the City’s central accounting system, through Bureau-specific billing applications, or manually.
All City Bureaus and Offices shall meet or exceed the minimum standards in this administrative rule, except as precluded by federal or state laws and regulations. City Council may approve exceptions to certain requirements in this rule. See FIN 6.04.01 Accounts Receivable Approved Exceptions for approved exceptions to the complete requirements of this policy.
The Bureau of Revenue and Financial Services (BRFS) of the Office of Management and Finance will periodically monitor Bureaus to assess compliance with the minimum standards of this rule. As instances of non-compliance are identified, Bureaus will be required to develop and implement a corrective action plan. BRFS will provide assistance to Bureaus, if requested, to develop this plan. The Controller will report all instances of significant non-compliance to the Chief Financial Officer (CFO) and City Council.
Use of Central Accounting and Alternate Systems
The City’s central accounting system shall serve as the system of record for all financial transactions. City Bureaus shall use the City’s central accounting system for customer account management, billing/invoicing, and collection of accounts receivable unless an alternate system(s) has been authorized by City Council and the CFO.
Alternate Bureau-specific and third-party contractor systems must meet the minimum standards in this rule. In addition, the Bureau shall be responsible for set up and maintenance of customer and account information that meets the standards in this rule, in the respective system.
Customer Identification and Set-Up
A customer account must be established in either the City’s central accounting system or in a Bureau-specific billing system prior to delivery of goods or services or the establishment of a receivable. Customer accounts shall be established and maintained to provide a timely and accurate accounting of debt and related transactions.
To ensure timely and accurate management of accounts, Bureaus must collect the following standard customer information for inclusion in the accounting or billing system, as appropriate:
- Customer name
- Mailing address
- Physical address
- Phone number
- Contact name, if different
- Contact phone number, if different
Bureaus shall provide this standard customer information to BRFS if the account is managed through the City’s central accounting system.
Billing and Invoices
The City shall invoice external customers in a timely fashion to communicate to the customer the amount owed and its purpose. The amount owed, as established in the invoice, must be based on approved price lists, fee schedules, actual cost recovery, signed contracts, or other documented methodology.
Bureaus shall invoice customers for sales or fees no less than monthly within 30 days of providing goods or services or determination of a fee unless contracts, legal requirements, City Code, or other written agreements require an alternate billing schedule.
Though the City does not require a standard invoice format, all invoices must include the following information to ensure application to the correct customer and City account and to facilitate accurate reporting of account status:
- Unique invoice number, assigned sequentially and including a Bureau-specific identifier if tracked in a Bureau-specific accounting system,
- Description of the fees, tax, goods or services provided,
- Date(s) those fees or taxes were assessed, or the goods or services were provided,
- Amount due,
- Payment terms including due date,
- Appeal process (if applicable), and
- City’s standard Meaningful Access Statement (see Meaningful Access Statements for City Bureaus).
If contracts or other written agreements require a specific form of invoice, additional information, or a specific numbering format, invoices shall be prepared in accordance with those agreements as long as the minimum standards of this rule are met.
Receipt of Payment
Bureaus shall accurately and timely record payment of accounts receivable in the appropriate central or Bureau-specific accounting system to ensure the payment is applied to the correct customer and City account.
Bureaus shall follow all associated City policies, rules and procedures to ensure the secure handling of cash and payment card payments. See FIN 6.10 - Cash and FIN 2.17 - Payment Card Industry Compliance.
Collection of Outstanding Accounts
It is in the City’s financial interest to pursue the collection of outstanding accounts. Bureaus shall take early and ongoing actions to encourage voluntary and prompt payment of overdue accounts.
Bureaus shall contact customers whose invoices are past due and shall document such contacts and any other attempts to collect outstanding accounts.
Bureaus shall base collection activities, including potential collection actions and triggers, on documented terms-of-service policies, in accordance with City equity goals and applicable laws and regulations. Bureaus may forego escalating and more costly collection activities when it is determined that such activities would no longer be cost-effective when compared to the amount owed.
Bureaus can pursue a variety of collection actions, as necessary and appropriate to achieve repayment of outstanding accounts. Bureaus shall escalate collection actions if less intensive actions prove unsuccessful at achieving payment. Collection actions include, but are not limited to:
- Customer notifications, late notices or past due invoices.
- Financial penalties (e.g. interest and rebilling fees). Interest in accordance with ORS 82.010 shall be charged on outstanding invoices more than 30 days past due unless interest is prohibited by statute, grants, contracts, ordinance or other written agreements, or an alternate rate is specified by statute, grants, contracts or other written agreements. Additional amounts may be added for a rebill charge in accordance with ORS 30.701(5).
- Suspension of service, as applicable.
- Placement of liens, as applicable.
- Submission of overdue accounts to the City’s contracted third-party collection agency, through the Revenue Division of BRFS who manages the City’s contract.
- Pursuit of remedy through litigation. Upon referral by the Commissioner-in-Charge or the City Council, the City Attorney will evaluate appropriate legal action to collect delinquent accounts more than 180 days past due. In addition to initiating litigation in Circuit Court, delinquent accounts may be referred to collection agencies or Small Claims Court, as allowed by law.
Failure of Bureaus to take collection actions does not waive the City’s right to collect accounts receivable and does not create any rights of action for any account debtors or third parties.
Bureaus may authorize adjustments to accounts receivable to correct errors and to increase the likelihood of repayment. Adjustments may include changes to an account’s due date, payment terms, or source or type of debt. The City shall not make adjustments to the amount owed unless the adjustment is due to an error or omission on the part of the City or an agency acting on its behalf.
Any adjustment to an account receivable shall follow documented Bureau policies and procedures approved by the Bureau Director.
Bureaus may provide for a customer appeal process in which customers may request an adjustment or dispute charges. Where offered, the opportunity to appeal shall be noted in an invoice’s payment terms. The appeal process, as well as the process and criteria for consideration of appeals, shall be documented in Bureau policies and/or procedures. Approval of an appeal is at the discretion of the Bureau Director, based on the established policies and/or procedures.
When repeated collection efforts on an accounts receivable have been unsuccessful, and after an invoice is a year old, Bureaus shall write-off the outstanding balance for accounting purposes. The write-off of such accounts ensures the City’s receivable balances are adjusted based on the likelihood that these outstanding accounts will be paid. The accounting write-off of an account receivable does not legally forgive a customer’s debt to the City and does not preclude a future collection or legal action.
The write-off of uncollectible amounts for an individual customer account must be authorized, in writing, as follows:
- Amounts up to $4,999 – Bureau Director or Bureau Director’s designee
- Amounts from $5,000 to $24,999 – Bureau Director
- Amounts from $25,000 to $249,999 – Bureau Director and CFO and Commissioner-in-Charge of impacted Bureau
- Amounts of $250,000 and above – City Council, with the written recommendation of the Bureau director, CFO and Commissioner-in-Charge of the impacted Bureau
The written write-off authorization must be accompanied by the following documentation:
- summary of unsuccessful collection efforts including direct customer contacts;
- determination that further collection measures would not be cost effective;
- evidence of inability to find the debtor;
- or similar evidence indicating the debtor’s inability to pay.
In addition, the Bureau shall maintain a record of the historical account information, including outstanding debt, in accordance with City record retention schedules.
Subsequent recovery of a previously written-off balance must be recorded in the City’s central accounting system.
The City and its Bureaus shall maintain accurate and timely information about the status of accounts receivable and shall report on the status of accounts on a regular basis.
Regularly, but at least monthly, Bureaus shall:
- Record, update, and maintain receivable balances and related revenues in the City’s general ledger in the City’s central accounting system.
- Ensure Bureau-specific billing systems interface into the City’s general ledger.
- Reconcile subsidiary accounts receivable ledgers and related interface transactions to the City’s general ledger.
Quarterly, at the end of each quarterly accounting period, Bureaus shall:
- Analyze accounts receivable and prepare an aging schedule documenting overdue invoices and accounts. The aging schedules shall include, at a minimum, the name of the customer or account number, the current amount due, a list of outstanding invoices, a classification for each invoice showing the number of days past due, and explanations as to the collection status of accounts more than 90 days past due.
- Submit aging schedules for accounts maintained in the City’s central accounting system or in any alternate bureau-specific system to BRFS for review by the Controller and CFO.
Annually, either at fiscal year-end or on a date established by BRFS, Bureaus shall:
- Record outstanding receivables at fiscal year-end via an accrual journal entry for amounts that have not yet been billed.
- Record an allowance for doubtful accounts journal entry at fiscal year-end to adjust for estimated uncollectible accounts. Bureaus shall base this allowance on an analysis of historical trends and outstanding accounts for which collection is unlikely. Supporting documentation of this analysis shall be included (attached to) the journal entry.
"Accounts Receivable" means money owed to the City for services or merchandise received by the customer on credit, or for the assessment of fines, fees, or taxes. Payment is generally due within 30 days after the service or merchandise has been received. Accounts receivable include all monies owed to the City for fees, goods delivered to, or services performed for other persons or organizations including contracts, grants, and leases. Taxes are generally not a determinable receivable until the taxpayer has self-reported and the filing has been fully processed. For purposes of this rule, these taxes become a receivable when the known tax amount is actually billed by the City. Estimated tax assessments (generally used to prompt the filing of an actual return) are not considered receivables for purposes of this rule.
“Adjustment” means a correction or modification to an accounts receivable to reflect actual facts and conditions, and to increase the likelihood of repayment.
"Allowance for Doubtful Accounts" means an estimate of the dollar amount of accounts receivable that will not be collected. The estimate is based on past experiences and an analysis of current accounts receivable.
“City’s Central Accounting System” means SAP.
“Customer” means an external person, organization, or other entity that received City services or merchandise, was charged a fine or fee, assessed a tax, or who received City funding through grants, loans or other mechanisms.
"Subsidiary Ledger" means a group of accounts with common characteristics used to facilitate the accounting process. The subsidiary ledger contains the details which support an aggregated general ledger control account.
“Write-Off” is an accounting transaction that appropriately adjusts the value of the City’s open accounts receivable that is deemed no longer collectible, in accordance with Generally Accepted Accounting Principles. It is not a legal forgiveness of debt.
Resolution No. 36248, originally adopted by Council September 1, 2004.
Revised by Resolution No. 36435, adopted by Council September 6, 2006.
Revised by Chief Financial Officer August 6, 2020.