220-03
BAD DEBT

POLICY & PROCEDURE

Subject:

BAD DEBT

Index: FINANCE

Number:    220-03

Effective Date

11/01/2002

Supersedes

1/24/2000

Page

1 of 2

Staff Contact

V. Runkle

Approved By

Mayor Jesse Tanner

1.0 PURPOSE:

To establish a policy for handling the collection of bad debt.

2.0 ORGANIZATIONS AFFECTED:

All departments/divisions.

3.0 REFERENCES:

RCW 19.16.500, RCW 62A.3-515

Policy & Procedure 220-02, Accounts Receivable.

Policy & Procedure 220-04, Handling and Collection of Returned Items.

Agreement between the City of Renton and the City’s designated collection agent.

4.0 POLICY:

4.1    The Finance Department is responsible for formulating, implementing, and conducting the City’s collection efforts.

4.2    It is a policy of the City that when accounts are determined to be uncollectible by the Finance Department, these accounts will be referred to the City’s designated collection agent.

4.3    This policy does not include City interdepartmental billings, nor the Renton Municipal Court activities.

5.0 DEFINITIONS:

5.1    Debt: For the purpose of this policy, debt is defined as money due the City for any reason.

5.2    Bad Debt: Bad debt is defined as money owed to the City, which has not been paid, due to non-response of the debtor or because negotiable items (i.e., check, money order, etc.) were not honored (by the bank, credit union, etc.) for any reason.

5.3    Customer: Any person, any organization, any business receiving any service or doing business with the City of Renton.

5.4    Uncollectible: Refers to funds due to the City of Renton, on which the City has attempted to collect, but has been unsuccessful.

5.5    Collection Agent: A collection agent is a licensed, bonded collection authority that has been retained to collect funds for the City.

6.0 POLICY:

6.1    All monies due the City will be considered a fair and owing debt to the City.

6.2    All customers owing the City money, which has not been paid within thirty-five (35) days of the original due date, will be sent a statement of the past due amount.

6.3    All customers that have not paid within sixty (60) days of the original due date will be sent a statement of the past due amount.

6.4    All customers that have not paid within ninety (90) days of the original due date will be sent a Final Notice with a fifteen (15) day response deadline. If the customer does not respond within fifteen (15) days, a Finance Department employee will send the information on the debt to the City’s designated collection agent.

6.5    If the City’s designated collection agent has not been able to collect the debt, after one year the City will proceed with preparing to write-off the debt as outlined in Section 7.0.

6.6    All debt, which has been sent to the City’s designated collection agent, is subject to collection fees and interest as prescribed by RCW 62A.3-515, and RCW 19.16.500.

7.0 PROCEDURE:

7.1    The Finance Department is responsible for notifying customers of past due amounts owed the City. Finance shall send notification as outlined in Section 6.0 of this Policy and Procedure.

7.2    When the City has followed each step outlined in Section 6.0 to collect past due money, and has failed; a Finance Department employee will organize all documentation on the debt (i.e.: original invoice/backup, uncollectible negotiable items, etc.) and send the documentation to the City’s designated collection agent.

7.3    For a period of one year, the City’s designated collection agent will attempt to collect the monies due the City. If the collection agent fails to collect the debt during one year, a Finance Department employee will prepare a list (see paragraphs 7.4 and 7.5) of the customers who owe the City funds deemed uncollectible, and submit that list to the Finance & Information Services Administrator. The list will include: 1) customer name, 2) original date of invoice/bad check, 3) dollar amount due, 4) to which department the money is due, and 5) for what the customer owes.

7.4    All accounts owing the City over $100.00 will be compiled into one list (as outlined in paragraph 7.3) and written off at the discretion of the Finance Committee.

7.5    All accounts owing the City under $100.01 will be complied into one list (as outlined in paragraph 7.3) and written off at the discretion of the Finance & Information Services Administrator.