AR/AP Netting

050.FFM.L2.01 AR/AP Netting
End-to-End Business Process: 050 Bill-to-Collect
Business Scenario(s) Covered
  • AR/AP Netting
Business Actor(s)
Finance Office; Program Office; Private Sector Entity (PSE)
Synopsis
Funds (e.g., fees) from ongoing PSE activities are periodically billed by the agency. Payments are submitted by the PSE using a Treasury-provided electronic payment system, and collection information is provided to the agency Program Office. An overpayment is made on the first periodic bill. A payable reflecting a refund due to the PSE is established and held. The bill for the subsequent period is prepared. The bill is reduced by the payable (refund) to cover the overpayment and a revised bill is prepared and sent by the Finance Office.
Assumptions and Dependencies
  1. There may or may not be automated (near/real-time or batch) interfaces between functional areas/functions/activities or between provider solutions/systems.
  2. There is no presumption as to which activities are executed by which actor, or which activities are automated, semi-automated, or manual.
  3. Supporting information for general ledger transactions includes sub-ledger entries when sub-ledgers are used.
  4. Appropriate attributes (e.g., object class and project) are included as part of the accounting string.
  5. Relationships between use cases are described in the Framework for Federal Financial Management Use Cases found in the related overview document.
  6. All predecessor activities required to trigger the Initiating Event have been completed.
  7. Funds availability checks are performed against appropriations/fund accounts for obligating funds, and against obligations for disbursing funds in accordance with OMB A-11, Section 150.2.
  8. An order or award for the services provided to the PSE were established under a previous Request-to-Procure process.
  9. The agency authority to collect and spend the fees has been established under a previous Budget Formulation-to-Execution process.
  10. The fee agreement with the PSE, permitting application of credits and payment offsets in the billing process, has been established.
  11. The overpayment is less that the “next” periodic payment amount.
FFMSR ID Reference(s) 1.1.2; 1.1.5; 2.2.1; 2.2.2
Initiating Event

The first billing date for PSE fees arrives.

USE CASE 050.FFM.L2.01 AR/AP NETTING
Typical Flow of Events
FFM Event Non-FFM Event Input(s) Output(s) / Outcome(s)
1
  1. Determine fees due from PSE activity for first periodic bill
  2. Request processing of first periodic bill information (Program Mission Activity)
  • PSE activity information
  • First periodic bill information
  • Request for processing of first periodic bill information
2
  1. Receive and process request for processing of first periodic bill information (FFM.060.040 Public Receipt Processing)
  2. Establish receivable (FFM.060.040 Public Receipt Processing)
  3. Recognize revenue (FFM.040.010 Revenue Processing)
  4. Generate and send first periodic bill (FFM.060.040 Public Receipt Processing)
  • First periodic bill information
  • Request for processing of first periodic bill information
  • Appropriate receivable entry created with reference to source information
  • Appropriate revenue recognition entry created with reference to source information
  • First periodic bill sent
3

Post appropriate budgetary, proprietary, and/or memorandum entries to the general ledger (GL) (FFM.090.020 General Ledger Posting)
  • GL entries
  • Appropriate GL accounts updated
4
  1. Receive first periodic collection and deposit information, which reflects an overpayment
  2. Request processing of first periodic collection and deposit information
  3. Determine and validate overpayment amount and request establishing and holding a payable for a refund due to PSE (Program Mission Activity)
  • First periodic collection and deposit information, reflecting an overpayment
  • Periodic collection and deposit information
  • Request for processing of first periodic collection and deposit information
  • Validated refund amount information
  • Request to establish and hold a payable for a refund due
5
  1. Receive and process first periodic collection and deposit information (FFM.060.040 Public Receipt Processing)
  2. Apply portion of collection to liquidate billed receivable balance (FFM.030.070 Payment Processing – Commercial Payments)
  3. Receive and process request for establishing and holding a payable for refund due to PSE (FFM.030.070 Payment Processing – Commercial Payments)
  • Periodic collection and deposit information
  • Request for processing of first periodic collection and deposit information
  • Validated refund amount information
  • Request to establish and hold a payable for a refund due
  • Appropriate collection and deposit entries created with reference to source information
  • Appropriate billed receivable liquidation entry created with reference to source information
  • Appropriate payable entry created with reference to source information
6

Post appropriate budgetary, proprietary, and/or memorandum entries to the general ledger (GL) (FFM.090.020 General Ledger Posting)
  • GL entries
  • Appropriate GL accounts updated
7
  1. Determine fees due from PSE activity for subsequent periodic bill
  2. Request processing of subsequent periodic bill information (Program Mission Activity)
  • PSE activity information
  • Agreement with PSE
  • Subsequent bill information
  • Request for processing of subsequent periodic bill information
8
  1. Receive and process request for processing of subsequent periodic bill information (FFM.060.040 Public Receipt Processing)
  2. Net the receivable for the subsequent periodic bill and the payable for the overpayment of the first periodic bill (FFM.060.040 Public Receipt Processing)
  3. Recognize revenue (FFM.040.010 Revenue Processing)
  4. Generate and send adjusted subsequent periodic bill (FFM.060.040 Public Receipt Processing)
  • Subsequent bill information
  • Request for processing of subsequent periodic bill information
  • Appropriate receivable entry created with reference to source information
  • Appropriate receivable adjustment entry created with reference to source information
  • Appropriate earned revenue entry created with reference to source information
  • Appropriate payable entry liquidated with reference to source information
  • Adjusted subsequent periodic bill sent
9

Post appropriate budgetary, proprietary, and/or memorandum entries to the general ledger (GL) (FFM.090.020 General Ledger Posting)
  • GL entries
  • Appropriate GL accounts updated
10
  1. Receive subsequent periodic collection and deposit information
  2. Request processing of subsequent periodic collection and deposit information (Program Mission Activity)
  • Subsequent periodic collection and deposit information
  • Subsequent periodic collection and deposit information
  • Request for processing of subsequent periodic collection and deposit information
11

Receive and process request for processing of subsequent periodic collection and deposit information (FFM.060.040 Public Receipt Processing)
  • Subsequent periodic collection and deposit information
  • Request for processing of subsequent periodic collection and deposit information
  • Appropriate collection and deposit entries created with reference to source information
12

Post appropriate budgetary, proprietary, and/or memorandum entries to the general ledger (GL) (FFM.090.020 General Ledger Posting)
  • GL entries
  • Appropriate GL accounts updated

This page was last updated on November 17, 2022.