...
| Table of Contents |
|---|
About Bad Debt (Write Off)
Bad debt represents accounts receivables the institution no longer expects to collect. Institutions "write off" this amount as expected revenue. This article specifically covers bad debt as it relates to student charges (e.g. tuition not expected to be paid.)
Depending on the institution's accounting practices, there are two methods to account for bad debt in Campus Cafe: an offset transaction or an Old Account Code notation.
|
About bad debt (write off)
Your institution may not collect all the charges it bills students because the student simply never pays, defaults on a payment plan or dies. When you no longer expect to receive payment, you’ll “write off” the amount as expected revenue.
Campus Cafe provides two ways to account for bad debt. Consult with an accountant on the option that aligns with your institution’s accounting practices.
The offset transaction option removes the accounts receivable from the student’s ledger and charges the debt to a bad debit general ledger account.
The old account code notation keeps the accounts receivable on the student’s ledger but tells Campus Cafe not to expect it to be paid.
Prerequisites
If using the offset transaction option, create a transaction code for bad debit that ties to your general bad debt ledger account.
Required permissions
Module | Number | Description |
|---|---|---|
Student Financials | 48, 51 | Use an offset transaction to write off debt |
Student Financials | 48 | Use an account code notation to write off debt (or remove code) |
System Admin | 113 | Create old account codes |
Offset transaction
An offset transaction zeros the student's balance and is typically charged to the bad debt general ledger account. If this method is employedused, the student's balance will be zero, Campus Cafe reports will show the student with a zero balance and the bad debt amount will not appear as an accounts receivable. Reports that sum by transaction code may be utilized to identify write off totals.
If a student with bad debt recorded using this method later makes a payment, the offset transaction will need to be reversed to apply the payment. If not, the student will appear to have a negative balance and be due a refund.
Prerequisite
Before applying an offset transaction create a transaction code (Student Financials > Transaction Codes) to capture all outstanding student balances not expected to be collected.
Apply Transaction Code
Navigate to the student
Navigate to Main Menu > Go to the student’s profile.
Go to Person Selected > A/R-Ledger Card.
Click Add Bill Batch.
In the Transaction Code box select that code corresponding to bad debt.
In the Billing Amount box enter the non-collectable balance as a negative number.
In the Billing Semester box optionally choose a semester.
Optionally enter a Billing Description. For example, noncollectable due to student bankruptcy
Campus Cafe automatically fills the Batch Member with your username. This transaction will be placed in this batch for posting. To place the transaction in an alternative batch, enter the batch name.
Click Save.
The transaction appears in Bill Batch bill batch for posting to the student's ledger
...
.
Old account code notation
An Old Account Code notation indicates to the system Campus Cafe the balance is not isn’t expected to be collected but preserves the student's balance. Select Campus Cafe reports, including the Accounts and Receivable Trial Balance and the AR Trial Balance - Summary report, will allow the exclusion of students with an old account notation and/or segregate students with the code.Institutions may define multiple Old Account Codes (e.g. collections firm A, collections firm B, write off day program, write off evening program, etc.)
If a student with an Old Account Code notation makes a payment, the student's outstanding balance will decrease by that amount. The school's business processes will determine whether the Old Account Code notation remains or is removed.
Prerequisite
Before applying an Old Account Code establish Old Account Codes using STParm SMODCD (Admin > STParm Maintenance).
Apply Old Account Code
...
Navigate to the student
...
Create old account code
Once you create an old account code, you can apply it to multiple students.
You can create multiple old account codes (e.g. collections firm A, collections firm B, write off day program, write off evening program, etc.) to match your institution’s business processes.
Go to Admin > STParm.
In Parameter Code enter SMODCD.
In Parameter Value enter a letter or number as a short description of the code. For example a C for sent to collections.
Click Add.
In Description enter a short name for the notation. For example Collections.
In Long Description enter a long name for the notation. For example Sent to Collections.
Click Save.
Go to Admin > Refresh Data Cache.
Apply old account code to student
Go to the student’s profile.
Go to Person Selected > A/R-Ledger Card.
In the Old Account Code drop down select the desired code.
In the Date Acct Became Old enter select the date the account became non-collectable
. The date you select will depend on your institution’s accounting practices. It may be so many days after the original bill, the end of a fiscal year or other defined date.
Click Update Old Code.
Remove old account code from student
If a student pays their outstanding debt, you may wish to remove the old account notation.
Go to the student’s profile.
Go to Person Selected > A/R-Ledger Card.
In Old Account Code select --choose one--.
In Date Acct Became Old delete the date.
Click Update Old Code.