Applicable FAM Policies: 640 - Forgiveness and Remission

Effective Date: April 1, 2016

Applicability: GNWT Departments and Public Agencies

Government departments and public agencies are responsible for effectively managing accounts receivable. Receivables must be invoiced in a timely manner and must be collected promptly.

Timely collection maximizes what can be achieved with the GNWT’s limited resources and maintains the worth of programs that generate revenues and recoveries. No further recovery action is to be performed, beyond those automatically generated by SAM, when the total owed by a customer is $25 or less. If no additional business is anticipated with this customer, the amount is to be written off.

INTERPRETATION

Authority and Costs of Pursuing Court Action

Only Financial Reporting and Collections, Finance (on behalf of departments), or the Public Agency, is permitted to engage the courts or an outside collection agency. Any court cost or outside collection agency expense must be charged to the appropriation or contribution budget of the department or Public Agency responsible for generating the original receivable. GNWT Departments utilizing the services of the Financial Reporting and Collections Section, Finance may not be charged an administrative fee for the services.

Collection Procedure for Receivables

• Except as described below, an invoice must be prepared, recorded, and delivered to the debtor as soon as a receivable is created and the debtor must be given 30 calendar days from the date of the invoice to return payment to the GNWT or Public Agency. 
• If payment is not received within 30 days of the date of the invoice, the responsible department or Public Agency shall attempt to collect by notifying the debtor in writing that payment is overdue and payable immediately. At this point, the debt has become an overdue receivable.
• If payment is not received during the next 30 days (i.e., within 60 days of the date of the invoice) the responsible department or Public Agency shall attempt to collect again by notifying the debtor by telephone and in writing that payment is now 30 days overdue and payable immediately.
• If payment is not received during the next 30 days (i.e., within 90 days of the date of the invoice) the overdue receivable becomes a delinquent account receivable. The responsible department or Public Agency shall:
  • attempt to collect again by notifying the debtor that payment is now 60 days overdue and payable immediately; and,
  • transfer collection responsibility to the Financial Reporting and Collections Section, Finance, immediately.

• Accounts receivable should transferred immediately to Financial Reporting and Collection immediately:
  •  if the customer requests to negotiate a monthly payment plan.
  • upon receiving confirmation that any debtor has begun bankruptcy or liquidation proceedings.
  • upon receiving confirmation that any debtor is deceased, the responsible department shall obtain supporting documentation and transfer collection responsibility for any receivable, overdue-receivable, or delinquent account receivable owed by that debtor

GNWT Departments Shall Provide to Financial Reporting and Collections:

• Backup documents and correspondence related to a debt owed to the GNWT;
• Documented attempts to collect that have been made, i.e., an undisputed initial invoice has been supplied to the debtor and three subsequent written overdue payment notices have been sent – at 31, 61, and 91 days past the invoice date;
• The actual amount owing is accurate, any partial payment having been deducted; and,
• In the case of a disputed or refused invoice, the debtor’s statements have been considered and a reasonable attempt has been made to agree on the amount owing.

Cheques with Non-Sufficient Funds (NSF)

An administrative charge of twenty-five dollars ($25) shall be applied when a payment is returned due to Non-sufficient Funds (NSF).

Collection Priority Applied by Financial Reporting and Collections

Payments on accounts receivable must be applied in the following descending order of priority:

• Student loans
• General debt, including mortgages and property leases
• Property taxes

Payments received are to be applied first to the oldest invoice in the first priority until the debt in that invoice or category is satisfied.

Collection Through the Canada Customs and Revenue Agency (CRA) Refund Set-Off Program (the Program)

The Program must be used as a last resort, after other appropriate collection methods have been exhausted, e.g.:

1. An outside collection agency has unsuccessfully worked the delinquent account receivable for 275 days or the invoice listed at the agency is more than one year old;
2. The debtor cannot be traced; or,
3. Internal set-off is not possible and legal proceedings are not cost effective or have been unsuccessful.

Collection action via the Program will be taken immediately once other appropriate collection methods have been exhausted. There will be no grace period. The Agency Processing Division of CRA will notify by letter any debtor who has become subject to the Program.

Any payment received outside the Program, after it is accessed, must be submitted as an account adjustment under the Program no later than the Friday following receipt of the payment. If that payment is subsequently stopped due to a bad cheque, a corresponding reversal of the adjustment must be made immediately.

In the event of duplicate payments received for the same debt (i.e., from the debtor directly as well as through the Program), policy and procedural instructions from the Agency Processing Division of CRA must be followed in accordance with the CRA program manuals retained by Financial Reporting and Collections.

All information collected from and sent to the CRA shall be protected utilizing proper security measures i.e., data encryption. Account reconciliation data received from the Agency must be reconciled internally upon receipt.