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Accounts Receivable Procedure

Category Finance
Type Procedure
Approved by Chief Financial Officer
Date Procedure Took Effect 16 April 2002
Last Approved Revision 19 November 2012
Sponsor Chief Financial Officer
Responsible Officer Financial Controller
Review Date 19 November 2017


These procedures relate to the processing of Debtors invoices by University Departments and debt management functions performed by Financial Services.


  • Debtor - Monies owed to the University
  • Finance One - University Corporate Financial System
  • Revenue Management Office - Financial Services Division Revenue Management



Sales revenue is derived through either a cash sale or a credit sale. A cash sale results in the collection of cash at the time of the sale. A credit sale results in an invoice being created and given or sent to the purchaser who will then send payment back at a later date. Wherever possible cash sales should be made for the following reasons:

  1. Cash in the bank earns interest income
  2. Credit sales incur costs in creating and distributing invoices and statements
  3. Some credit sales result in non-payment or are very difficult to recover resulting in significant costs being incurred

Cash payments can be made by cheque, EFT-POS and credit card.

Existing Debtor Accounts

In order to make a Credit sale a Debtor Account must be used, if the University has previously allowed credit to the purchaser then an account will exist.

A list of all debtor accounts is available by accessing the Debtor Chart within Finance One.

All Debtors Accounts that have not had any activity for more than 13 months are made status “Inactive” this means no transactions can be put against the account.

To reactivate the account an Application For New AR Form must be completed to ensure the correct details are recorded. Where the transaction is a “one off” and the value is less than five thousand dollars (NZ$5,000) then an appropriate Sundry Debtor Account within Finance One may be used. 

An account number must be entered onto the invoice at the time of the sale.

New Debtor Accounts

All new accounts require a completed Application For New AR Form.

Transactions less than $100 should if possible be processed as a cash sale and not invoiced. This is to reduce the processing cost of these small value transactions.

The Department should investigate the option of establishing a web based sale interface that accepts credit card payments, this is the most cost effective way to process high volume low value transactions. Where a pattern of regular but relatively low value transactions is likely then a new Debtors Account should be established to process these, rather than using a Sundry Debtors account as this aids the collection of outstanding amounts.

To request a Debtor account, Departments are required to complete the Application For New AR Form. This form completed and signed by the Debtor is essential in order to properly manage the collection process, in the event that the debt becomes overdue.

Maintenance of Debtor Accounts

The Revenue Management Office is responsible for the maintenance of the debtors account list. Where no transactions have been entered against a debtor account in the previous nine months the account will be removed from the Debtors list and the procedures for the creation of an account will apply.

Creation of an Invoice

An invoice is required in all circumstances where a cash sale is not made.

Invoices must be created using Finance One.

Credit Notes

Credit Notes are used to cancel invoices either in whole or part (only issue a partial Credit Note if a part payment has been made).

They are not to be used to write off uncollectable debts.

Legitimate uses include the correction of errors in the original invoice, to account for the return of goods or to amend a disputed price. 

Because GST is paid by the University to the IRD as soon as a GST invoice is issued it is important that any credit notes be issued promptly. 

For information about how to create a Credit Note please refer to the Finance One Accounts Receivable Manual.

Debt Collection

The Revenue Management Office manages the collection of debt in the University. For any one debtor numerous departments may issue numerous invoices in any one month.

These invoices along with any payments received will be summarised onto a debtor statement which is printed and posted to the debtor monthly.

The collection action adopted by the Revenue Management Office is based on the length of time an invoice has been outstanding, measured in months since issue.


A Debtor Statement is sent to the debtor at the end of the beginning of the following month. University policy is all invoices on these Statements are to be paid by the 20th of the month following (normal commercial practice).

One Month

The debtor is sent a statement clearly noting “OVERDUE ACCOUNT”.

Two Months

The Debtor Statement (i.e.  60 days overdue) “FINAL NOTICE” statement is sent.

Three Months

At the end of the month when the account is 90 days overdue, a debt collection letter is sent. The letter clearly states that no further credit will be granted and that the debt will be sent for debt collection unless there is a legitimate reason as to why the account should remain unpaid.

No further invoices should be issued to a debtor with invoices outstanding for this period. The Department which issued the invoice is notified that the debt remains unpaid and is asked for their assistance in recovering the debt.

The Department is also advised that the debt will be passed for debt collection and is asked to advise immediately if this course of action is not warranted, if no response is received regarding outstanding invoices, the outstanding amount will be debited back to the Department which will reduce their income.

The account will be passed to the collection agency, the debtor will be liable for all costs associated with collecting the debt.

Write Off of Unrecoverable Debt

Debt cannot be written off without prior approval of the Chief Financial Officer.

Applications for write off should be forwarded to the Revenue Management Office setting out the details of the invoices and the circumstances surrounding the request.

Related Policies, Procedures and Forms

 Financial Services Division Forms Store

Contact for Further Information

For further information, contact the Financial Controller, extn 9247 or email