Bad-debt provision
This is a contingency that must be accounted for by all businesses that extend credit to customers as there is always a risk that payment will not be collected.
Once the Accounts Receivable module closes after each month end, the Credit Control team extracts data of all open debts from CUFS. From this the bad debt provision is calculated using the parameters detailed below:
| Days past due | Percentage balance due |
|---|---|
| 60 - 182 days past due | 25% of the balance due |
| 183 - 364 days past due | 50% of the balance due |
| 365 + days past due | 100% of the balance due |
The bad debt provision is a reversing journal. After the provision is calculated at month end, the prior month’s provision will reverse, and an updated provision is posted.
Contact the Credit Control Team to request a 100% provision of the balance due where any individual debt, no matter its age, is considered at significant or immediate risk of non-payment. This would include, but not be limited to, any businesses that go into administration or liquidation, or any persons becoming bankrupt.
The resulting bad debt provision is then posted to the original sale’s cost centre and source of funds using a transaction code of FJNA. A report containing full details of this provision is then emailed to the School finance team, for dissemination to each institution where required.
Latest version 17 April 2024.