10 - 002 Billing for Goods Sold or Services Rendered

a. SUMMARY OF ADMINISTRATIVE PROCEDURE

This statement defines who has authority to make sales on credit, what rules must be followed, and the responsibility for reconciliations and proper accounting in Banner. This statement DOES NOT apply to tuition billings generated each semester by the campus cashier/bursar.

Authority and responsibility for sales on credit. All sales of goods or services by USNH departments are to be made only upon receipt of cash (i.e., no sales are allowed to be made on credit) unless written approval in advance is received from the campus Chief Financial Officer (CFO). Departments with CFO approval to make credit sales must follow the policies and procedures of the campus Credit and Collections department (unless specifically exempted in writing by the campus CFO) relative to extension of credit, invoice and statement generation and frequency, aging analysis, delinquent account follow-up, and write-off of noncollectable accounts. All accounts receivable resulting from amounts owed by students, governments, employees, contractees, grantees, and other customers must be reconciled to Banner by the responsible account manager on a monthly basis.

b. DETAILED OPERATING PROCEDURES

1. When is revenue recorded? Revenue should be recorded when an exchange has taken place and the earning process is complete. An exchange has taken place when ownership of the goods is transferred to the buyer or when services for the buyer have been fully performed. The earnings process is complete when (a.) all necessary costs to produce the revenue have been incurred and recorded and, (b.) collection of the sales price is reasonably assured by receipt of money or by a promise to pay money at some future date.

a. If all necessary costs to produce the revenue have not yet been incurred, the amount of the cash received is recorded as deferred revenue, in special balance sheet account 212* (deferred revenue and deposits).

b. The collection of the sales price is generally considered to be reasonably assured when an invoice is sent to a customer or when cash is received from a customer, whichever comes first.  In accordance with the accrual basis of accounting, revenue is recorded when it is earned, without regard to the time of receipt. (The cash basis of accounting, which is not generally applicable to USNH operations, calls for recording revenue only when cash is received.)

2. Accounting for credit sales transactions. Sales invoices are generally recorded in Banner via an approved campus form (the Charge Sale Invoice Form at UNH, Miscellaneous Charge Form at KSC, and Miscellaneous Deposit Form (MISP) at PSU) immediately upon forwarding the sales invoice to the customer, in accordance with the policies and procedures of the campus Credit and Collections department. The applicable Banner account code is credited (see Procedure 02-040 Banner Revenue Account Code Table, definitions and listings) using a suitable JE* rule code the applicable balance sheet receivable (in the 112* account code range) using an appropriate fund. When the cash is received from the customer, the 112* balance sheet account is credited using a proper CR* rule code.

3. Accounting for uncollectible accounts and billing errors. If accounts receivable must eventually be written off as uncollectible, this is an expense which must be recorded in an suitable expense account code, not as a reduction of revenue. Uncollectible accounts are always recorded as a charge to an expense account code. However, if an error was made billing the student or customer too much for which a subsequent corrected billing entry is made, then this is properly recorded as a reduction of revenue.