FIN-005: Extension and Collection of Credit

Date: 07/19/2016 Status: Final
Last Revised: 07/10/2019
Policy Type: University
Oversight Executive: Vice President and Chief Financial Officer
Applies To:

Academic Division and the College at Wise.

Reason for Policy:

This policy describes how credit may be extended to students, faculty, staff, and other customers of the University and, once credit is established, how the receivable is to be collected. This policy and associated procedures are designed to minimize the number and amount of past due (delinquent) accounts receivable and the write-off of uncollectible balances.

Definition of Terms in Statement:
  • Accounts Receivable:

    Monies owed to the University that have not yet been received. This includes, but is not limited to, tuition and fees, student loans, notes receivable, amounts owed for goods or services provided, signing bonus repayments, grants and contracts, cash advances, library fines, parking and transportation fees, moving allowance repayments, and payroll overpayments.

  • Allowance for Doubtful Accounts:

    Management’s estimate of the amount of gross receivables that will become uncollectible.

  • Billing Department:

    A department, division, school, or other unit that has been authorized to extend credit for the sale of goods and services, or that is responsible for the collection of accounts receivable.

  • Central Accounts Receivable (Central AR):

    A unit within Financial Reporting and Operations that has the primary responsibility for generating invoices and dunning notices and managing other collection efforts of accounts receivable processed through the Oracle Accounts Receivable module (OAR), other than sponsored programs accounts receivable managed by the Office of Sponsored Programs.

  • Past Due (Delinquent) Accounts Receivables:

    Receivables for which payment has not been received by the payment due date.

  • Recovery:

    Amounts collected on accounts that were previously written off the accounting records of the University.

  • Student Financial Services (SFS):

    The University department with the responsibility for billing, management, collection and reporting of student receivables. SFS is also responsible to act as the University’s agent for receivables assigned to collection agencies or credit reporting bureaus.

  • Write-off:

    A transaction that removes from the University’s financial accounting records a receivable that management has determined to be uncollectible. Writing off the receivable does not relieve the debt; it remains owed to the University but is no longer reported in the University’s accounting system as a receivable.

  • Write-off Committee:

    The Write-off Committee meets on a quarterly basis to review receivable balances proposed for write-off by billing departments, Central Accounts Receivable, and Student Financial Services (SFS) to ensure that due diligence procedures have been completed. The Write-off Committee approves or disapproves write-offs based on the facts and circumstances of each account. The Write-off Committee is comprised of the Assistant Vice President for Financial Operations or designee, the Assistant Vice President for Student Financial Services or designee, and other appointed Finance and SFS staff.

Policy Statement:

Financial Reporting and Operations and Student Financial Services (SFS) have responsibility for the management, reporting, and collection of University accounts receivable (except for gift pledge receivables which are managed through University Advancement, and sponsored programs receivables which are managed through the Office of Sponsored Programs (OSP)). As a state agency, the University applies the Commonwealth of Virginia's policies, standards, and limitations to all accounts receivable transactions, regardless of the source of funds. The University's procedures are based on the Commonwealth Accounting Policies and Procedures (CAPP) Manual, which is published by the Virginia Department of Accounts (DOA) to provide guidance on the application of accounting policies, procedures and systems pursuant to Section 2.2-803 of the Code of Virginia.

The following requirements are designed to minimize past due (delinquent) accounts receivable and the write-off of uncollectible balances:

  1. Authorization:
    Whenever possible and practical, billing departments should require payment at or before the time goods or services are provided to students, faculty, staff or other customers. However, University departments can be authorized to extend credit to faculty, staff, students, and other customers for the goods and services they provide. Prior to extending credit to faculty, staff, students, or other customers, University departments must obtain approval from the Financial Reporting and Operations in accordance with the University’s credit and collections procedures. By extending credit, the billing department is assuming the risk of nonpayment by the customer and will absorb the cost of any uncollected revenues or bad debt expense.

  2. Credit and Collection:
    Any University department that is authorized to issue credit and handles collection of accounts receivable must follow applicable laws and regulations related to credit and collections including, but not limited to:

    Billing departments authorized to grant credit or establish an account receivable must assure that such transactions are necessary, reasonable, and directly related to the goals and missions of the University. Billing departments must take all appropriate and cost effective actions to aggressively collect accounts receivable including, but not limited to:

    • Place a hold on official grade transcripts for current and former student debtors;
    • Place a block on registration for individuals with outstanding obligations who attempt to enroll as students;
    • Delay or withhold services when not in conflict with Federal or State laws;
    • Inform/notify credit reporting bureaus;
    • Place debts with private collection agencies;
    • Obtain garnishments, liens, and judgments; and
    • Utilize administrative offset (Virginia Set-Off Debt Collection Program).
  1. Accounts Receivable Systems:
    In general, all receivables should be processed through the Oracle Accounts Receivable module (OAR) or through Workday as a payroll deduction). Payroll deduction is the default method of collection from current employees and terminated employees prior to issuance of final paycheck or leave pay out. Repayments collected through payroll will be deducted from the next available check. If the repayment from the next available check would create a financial hardship, and there is no indication of fraud, the Director of Payroll Services, or delegate, may establish a repayment plan not to exceed 60 days.

    Prior approval by Financial Reporting and Operations is required to utilize a system other than OAR or Workday. Approval to utilize a different system is typically granted only to large, complex departments with business processes that require specialized applications or functionality not provided by OAR or Workday. These systems must meet the minimum requirements as stated in the University’s credit and collections procedures and have adequate control and security processes in place.

    Billing departments that do not utilize OAR or Workday to bill customers and manage accounts receivable are responsible for all due diligence efforts to collect monies owed to the University and for referring uncollectible accounts to Payroll Services, Central AR or SFS. Based on the aging of the debt, Central AR and SFS will forward uncollected debts to the Virginia Set-Off Debt Collection Program. Billing departments are also responsible for referring accounts to Payroll Services, Central AR or SFS for further collection action in accordance with the University’s credit and collection procedures. SFS forwards accounts to collection agencies/credit reporting bureaus. Additionally, on a quarterly basis, these departments must provide to Central AR the information necessary for the accrual and reporting of the accounts receivable balances in the University’s accounting records.

  2. Allowance for Doubtful Accounts:
    In keeping with generally accepted accounting principles, management should establish an allowance for doubtful accounts to reflect the amount of receivables that management estimates will become uncollectible. Financial Reporting and Operations is responsible for establishing the allowance for doubtful accounts, but billing departments are required to provide information, as requested by Central AR and SFS, to establish a reasonable estimate of uncollectible balances.

  3. Write-off of Uncollectible Accounts:
    Accounts should be written off the University’s financial accounting records when all collection actions have been completed, in accordance with the University’s credit and collection procedures, and management determines the receivable to be uncollectible. On a quarterly basis, Central AR, SFS, and billing departments not utilizing OAR or Workday will recommend write-offs to the Write-off Committee. Billing departments must develop documentation to support write-offs and make it available to Central AR and auditors. The Write-off Committee will approve or disapprove write-offs based on the facts and circumstances of each account.

    Upon approval by the Write-off Committee, the write-offs should be processed in the applicable accounts receivable system, and no longer recognized as collectible for financial reporting purposes. However, the legal obligation to pay the debt remains, and the University will process and record the recovery of any previous write-offs, should they occur. As an agency of the Commonwealth of Virginia, only the Office of the Attorney General has the authority to discharge a debt owed to the University.

  4. Reporting of Accounts Receivable:
    As an agency of the Commonwealth of Virginia, the University is required to report accounts receivable information to the DOA on a quarterly basis. Billing departments not utilizing OAR or Workday, as well as OSP and SFS, are required to provide Central AR with the information needed to complete institutional level accounts receivable reporting.

    Upon request, SFS submits to the DOA a copy of the Fiscal Operations Report and Application to Participate (FISAP) in Campus-Based Program funding. The FISAP is transmitted to the Federal government annually to report on the status of Campus-Based Programs administered by the University.

    On an annual basis, Financial Reporting and Operations will submit a report to the University’s Board of Visitors of uncollectible balances approved for write-off by the Write-off Committee.

  5. Compliance with Policy:
    Failure to comply with the requirements of this policy may result in disciplinary action up to and including termination or expulsion in accordance with relevant University policies.

    Questions about this policy should be directed to Financial Reporting and Operations or Student Financial Services.


Credit and Collection Procedure
Payroll Overpayments
Repayment of Moving Allowances and Signing Bonuses: Submit the department’s request to initiate collection via email to and include the total amount to be collected.

Related Information:

BOV Signatory Authority Policy (June 15, 2001)
Commonwealth Accounting Policies and Procedures (CAPP) Manual Topic 20505
Fair Credit Reporting Act
Fair Debt Collection Practices Act
Virginia Debt Collection Act
Student Collections

Major Category: Finance and Business Operations
Next Scheduled Review: 07/10/2022
Approved by, Date: Policy Review Committee, 07/19/2016
Revision History: Updated 7/10/19; 7/11/18; Code reference 10/27/16.
Supersedes (previous policy): V.B.2, Credit and Collection