Business Affairs

SECTION IV

INCOME FUND REIMBURSABLE BILLING AND COLLECTION

  1. Income Fund Reimbursable (IFR) Overview
  2. Contracting to Provide Goods or Services
  3. Billing and Collection Controls
  4. Project Collections
  5. Deposit of Project Collections
  6. Returned Checks
  7. Adjustments to Billed Amounts
  8. Reconciliation
  9. Other Procedures

This section of the manual describes the College's billing and collection procedures for Income Fund Reimbursable (IFR) accounts. IFR accounts rely upon the revenues they generate to fund their operations. It is essential that projects collect all funds due them to prevent a revenue shortfall.

These IFR Billing and Collection procedures provide assurance that bills are controlled and that projects are credited with the proper amount of receivables and collections.

A.    Income Fund Reimbursable (IFR) Overview

SUNY policy provides for the establishment of IFR accounts to be managed within a Special Revenue Fund on each campus. The fund (the total of all accounts) must have a positive cash balance at all times. IFR’s are self-supporting accounts that support activities related to the College’s mission. IFR accounts are deemed self-sufficient when they operate on a break-even or better accrual basis including the costs of assessed indirect overhead expenses. These types of accounts have clear and defined income/expenditure relationships. Each IFR account must generate revenue sufficient to cover costs incurred and be managed to a positive cash position. A number of accounts generate revenue through contracts and other entities. In some cases these contracts require an initial outlay of funds before reimbursement can be requested. For these and other accounts with like circumstances where revenue follows expenditures, an accrual basis can be used to assure a break-even status at fiscal year-end.

Any accounts with serious cash deficit balances will be structured to correct the negative cash conditions through revenue and expenditure projections or allocation decisions within the following fiscal year. This process is further explained under the IFR Deficit Policy.

 

There are three types of Income Fund Reimbursable accounts.

1) General Income Fund Reimbursable (IFR)

2) State University Tuition Reimbursable Account (SUTRA)

3) Dormitory Income Fund Reimbursable (DIFR)

 

Allocation Levels

The self-supporting nature of IFR accounts requires that projections of revenue and expenditure plans be made each fiscal year. The expenditure plans cannot exceed revenue and must specify whether expenses will be for personal service, temporary service, supplies and expense, or equipment. Each fiscal year, the Controller’s Office requests an IFR Spending Plan from the Account Managers via the IFR worksheet. The plans are analyzed and in turn used as the basis to establish the allocation levels.

 

Relationships of Income to Expenditure

The State of New York requires that expenditures in restricted IFR accounts (e.g. Course Fees) be directly related to the purposes for which income was collected. This means that expenditures made from restricted IFR accounts must fall within the stated purpose of the account, must be related to the reason for which revenue was collected and correspond to the approved rate structure. Any violation of this principle may result in penalties to an account and could jeopardize the existence of an account.

 

Expenditures

Expenditures in IFR accounts are made through the same procedures that guide expenditures of State appropriated monies.

 

IFR Assessments

IFR accounts are assessed in two categories: Fringe Benefits and Maintenance & Operations (M&O) Overhead. These assessments are reflected monthly as a reduction to revenue on the SMRT system.

Assessment for fringe benefits is charged on salary expenditures for all full and part time staff charged to IFR accounts. The fringe benefit assessment is not charged on salary expenses for graduate assistants or student assistants.

Assessment for M&O Overhead charged on the revenue received in the IFR account. The rate effective July 1, 2011 is: 15.8%. Overhead assessment is not charged if revenue is received from Federal funds or RF administered grants.

Inquiries about policies and about specific charges should be directed to the Controller’s Office.

 

Management and Control of IFR Operations

The financial stability of IFR accounts is the responsibility of the Account Manager of the IFR account(s) or his/her designee. The Account Manager is directly responsible for managing the IFR accounts. It is the responsibility of the Controller’s Office to maintain the Chart of Accounts (COA) and to work with the Account Managers to close inactive accounts.

Upon verification from the VP area that the account will no longer be required, the Controller’s Office will work with the Account Manager to ensure that the cash balance is zero and any allocation will be remitted back to one of Purchase College’s unallocated accounts.

The Controller’s Office will submit a request to SUNY System Administration in Albany to officially close accounts and remove them from Purchase College’s COA.

 

  1. Contracting to Provide Goods or Services

The Rental Facilities Office will develop a revocable permit for any campus department anticipating agreements for any goods or services to any permitees, individuals or state agencies. Memorandums of Understanding (MOU) will be issued when other State agencies are receiving the goods and services. Revenue contracts will be issued for agreements with individuals and other non-State organizations.

The agreement should identify the performance expectations of the parties and specify when and how the account is to be paid.

The proposed agreement, initialed by the account manager/ project director should be submitted to the CFO for review and signature.

Purchasing will forward the agreement to the State Comptroller for review and approval, if necessary.

No goods or services should be provided by the College before the agreement (Revocable Permit/Contract) is approved by the Chief Financial Officer.

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  1. Billing and Collection Controls  

The College’s General Cash Collection Policy can be found at https://www.purchase.edu/Departments/BusinessOffice/internal%20control/generalinternalcontrolpolicies.aspx

The following billing and collection controls provide for a minimal level of internal control that should be in place over College revenue-generating operations. Additional controls may be required by the College Controller. No cash collection activity should be implemented without the review and approval of the College Controller.

1. Billings


The following process should be followed when billing a client for goods or services:


a) When a person or organization receives goods or services, and is going to pay for them at a future date, it is important that the receivable be recorded on the College's records. A College IFR invoice establishes the receivable and should be issued each time an individual or organization does not pay for the goods and services at the time of delivery.


b) It is good business practice for account managers to issue IFR invoices and distribute copies as follows:

Original - to Customer

Copy - to retain for project records

Copy - to College Accountant


c) The invoice specifies that all payments must be sent directly to the Business Office by the client. This directive should not be changed by the project director without the prior approval of the College Controller.


The College Accountant's Office maintains the College's official IFR accounts receivable records and maintains open bills awaiting payment. Ensuring that all goods and services are accurately and promptly billed and that all invoices are properly paid or otherwise adjusted is the responsibility of the project director/account manager.

Experience has shown that timely follow-up on outstanding invoices greatly enhances the collection process. Project directors are primarily responsible for collecting the amounts billed and for the necessary follow-up on outstanding invoices.

When an invoice is not paid within a reasonable time, normally thirty to sixty days, the following actions should be taken by the project director/account manager.

(1) Issue dunning letter(s) requesting immediate payment; retain copies of these letters; and; send a copy to the College Accountant.

(2) No further service should be given to a client who has a past due invoice.

2. Charging Another IFR Account

The expenditure transfer process is the appropriate means to charge another IFR account within the College. This process will transfer expenditures equaling the amount charged from the account providing the good or service to the account receiving the good or service. Transferring the expense from the servicing account automatically adjusts any related overhead charges.

Requests for expense transfers should be forwarded via e-mail or hard copy to the Budget Office and must have approval of the Account Manager for the account receiving the transfer.

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  1. Project Collections

 

For project collections, refer to the General Cash/Collections Policy on the link below

https://www.purchase.edu/Departments/BusinessOffice/internal%20control/generalinternalcontrolpolicies.aspx

For certain programs, it is more practical to collect funds at the time of service rather than issue an invoice. In these cases, specific approval is granted by the Business Office for the program to collect revenues directly. Departments must gain approval from the Business Office prior to collecting revenues.


When collections are made at the time a good or service is provided, the following basic controls must be in place:

1. Cash, checks, or money orders are acceptable forms of payment.
 • All checks or money orders must be made payable to Purchase College. Adequate detail regarding the account number and/or purpose of the payment should be clearly depicted as well.

2. A cash register receipt or press-numbered receipt should be issued for each transaction, regardless of the form of payment.
 • If a press numbered receipt system is used, a receipt should be completed for each payment received. The receipts, receipt numbers, and transaction sequences should be maintained and controlled by the account manager. The receipt forms should be duplicate:
 • Original copy given to the client/customer
 • One copy retained by the project as a record of daily transactions.
 • New York State Laws require that receipts and/or cash register journals be retained for seven years.

3. Collections should be balanced daily to the total of the receipts issued. If possible, the reconciliation of collected funds should be done by someone other than the person responsible for collections.

4. All collections must be hand-carried immediately to the Student Accounts office for deposit.

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  1. Deposit of Collections

 

For deposit of collections, refer to the General Cash/Collections Policy on the link below

https://www.purchase.edu/Departments/BusinessOffice/internal%20control/generalinternalcontrolpolicies.aspx

 

1. All funds received should be safely stored until they are deposited with the Student Accounts office. Funds should be stored in a safe or locked drawer and the area should be accessible by designated personnel only.


2. Collections should be deposited intact, that is to say in the form received, on a daily basis. Deposits may be made less frequently during slow periods, but in no case less than once a week.


3. A signed listing of the items (checks and cash) included in the deposit should accompany the collections in a sealed envelope or other protective container when submitted to the Student Accounts office.

 

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F.    Returned Checks

At times, a check submitted by a person or organization is returned unpaid by the bank, due to insufficient funds. Repayments for returned checks should be made by certified check, money order, or cash. If the repayment is made by personal check, it should be returned to the sender.

The following is the returned check process:

When a check is returned as uncollectible, a new invoice must be issued to the customer for the amount of the original invoice balance plus a bad check fee of $20. The invoice is distributed in the same manner that the project director distributed the original invoice.

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  1. Adjustments to Billed Amounts

Once an invoice has been issued, the person or organization becomes liable to New York State for that accounts receivable. The College has the responsibility to ensure the invoice is collected on time. At times, however, it is necessary to adjust an outstanding invoice. Such an adjustment can only be made through close communication between the IFR project manager and the Controller.

Adjustments to invoices will only be allowed when related to the situation at the time the original invoice was issued. Adjustments should not be used to reduce invoices, to address collection issues, or to offset amounts the project may owe to the person or organization.

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H.    Reconciliation

Each IFR account manager can access the monthly (variance) report available on the ‘Business Affairs’ website. Special reports regarding revenue transactions are available to IFR account managers to aid them in administering their account(s). Account activity can also be monitored through the SMRT system. Project records should match the official records of the College on the SMRT system.

Any discrepancies should be resolved with the Controller.

I.      Other Procedures

       1. All revenues and expenditures should be processed through campus approved accounts. Separate bank accounts cannot be maintained.

 
2. Unauthorized petty cash accounts/funds should not be established by the project for any reason. All expenditures must be made from approved accounts.

        3. Unannounced reviews of an IFR account's operation may be done at the discretion of College administration.

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