The collection of income (and any subsequent debts) is the responsibility of the institution raising the sales invoice. The Financial Regulations state, “With the exception of research grant claims, institutions are responsible for debt collection in respect of invoices issued to third parties. Advice must be sought from the Director of Finance where legal action to recover monies is considered.” 10
The procedures detailed in this section outline best practice in relation to the collection of overdue debts from external customers (debtors). Institutions should take a structured, recorded, and pro-active approach to collection as soon as an invoice is raised.
On this page:
- Debt Monitoring
- Debt collection approaches
- Agreeing proposed payment plans
- Interest and fees
- Legal action
Debt Monitoring
Credit control is an important process that establishes controls both pre- and post-sale to ensure the timely recovery of income owed to the University. The objective is to optimise cashflow and minimise the risks of non-settlement, which become significantly greater as debts become overdue.
Collectively all outstanding invoices form your aged debt. This shows you how much money you are owed by customers, and how old the invoices are.
The following tasks need to be performed monthly:
- review of current and overdue debts
- update and return the institution debt statement provided by Credit Control at the start of each month. This provides a listing of all overdue debts and their ageing. Institutions must review the listing and provide the requested information
There must be a locally administered document to record and monitor your actions which will aid monthly debt reporting and assist with prioritising collection activities.
Debt collection approaches
A collections strategy that is appropriate to your institution and customers must be developed and recorded for all your debts. The credit risk sections covered in Pre-sales can be used as a guide, specifically types of customers and types of activities. Other factors to consider when deciding the priority of any collection could include invoice value, days overdue and whether there are any known payment issues.
Successful debt collection is prioritised, polite, and persistent. The following chart should be used as a guide, but institutions can extend or reduce the suggested time frame, if necessary.
To view a bigger version of this timetable, please see: High level debt collection timetable
Agreeing proposed payment plans
Customers who do not, or cannot, make full payment by the due date may request an extension to the agreed credit terms. The most common proposal is to make payment by instalments. You should discuss the situation with the customer and request supporting information to assess if their request is fair and reasonable to accept. You should state clear payment dates, amounts to be paid and have the customer agree to this in writing; by email is acceptable.
Contact the Credit Control team for guidance. Institutions must seek approval of all proposed payment plans from their Head.
Institutions should not agree to accept payment in instalments at the time of billing for goods or services already provided without first consulting the Credit Control team.
Interest and fees
The University’s STCs and the Late Payment of Commercial Debts (Interest) Act 1998 allow us to charge interest and fees on overdue debt.
In deciding whether to charge interest, consider the relationship with the customer and the reason for non-payment. Please contact Credit Control Team to discuss further.
Legal action
Any decision to take legal action should only be made as a last resort having fully considered the appropriateness, reputational and cost implications to your institution and the University.
To initiate any court action, you must first refer to the Director of Finance11 and Legal Services12, who will advise on the next course of action.
If proceeding with court action, there is a risk that the court awards against the University, which would lead to further costs.
10 Financial Regulations 2012, Income and Expenditure, 12.2
12Financial Regulations 2012, Corporate Requirements, 22.1
Latest version 17 April 2024