PREVENTING DELINQUENT RECEIVABLES - 8292

Accounts Receivables (ARs) shall be considered delinquent if payment is not received by the due date.  Agencies/departments may also consider the postmark date to determine if an AR is delinquent and shall be subject to collection procedures. Agencies/departments shall develop and implement procedures to adopt best practices to prevent delinquent receivables and ensure that receivables are collected in a timely fashion.  A list of collection best practices are provided below:

1. Impose penalties, late fees, and interest charges as both a preventative and collection tool. The knowledge that agencies/departments can add additional fees may act as a deterrent.
   1. When preparing invoices/billing notices, agencies/departments should identify on the invoice/billing notice potential consequences of not paying timely, such as additional fees that may be incurred. Government Code section 16583.1 of the Accounts Receivable Management Act authorizes agencies/departments to impose a reasonable fee, not to exceed the actual costs, to recover the collection costs on a past due account.
   2. Utilize the agency/department’s statutory authority, if any, to assess penalties, late fees, or interest on past due accounts.
   3. Impose a dishonored check fee. Government Code section 6157 authorizes the state to assess a fee for dishonored checks. Each agency/department determines the fee, not to exceed the actual cost to recover the processing and collection costs. See SAM section 8043.1, Dishonored Check Charge.
2. Obtain upfront payments before goods or services are provided, for example, permit, license, etc.
3. Make payment options as convenient as possible. Allow payments by credit cards and debit cards. Additionally, agencies/departments can utilize online secure electronic payment systems and local 24-hour drop boxes (e.g. USPS, Fed Ex drop box).
4. Use prepayment as an option when the agency/department provides reimbursable services to another agency/department. The terms of the advance payment must be specified in the reimbursable services contract between the agencies/departments. See SAM section 8453.
5. Agencies/departments should verify the driver’s license/identification number exists on a pre-printed check, and whatever possible, verification of payment clearance should occur prior to providing goods or services.