Delinquent Debt Processing

050.FFM.L1.02 Delinquent Debt Processing
End-to-End Business Process: 050 Bill-to-Collect
Business Scenario(s) Covered
  • Insufficient Funds on Debtor’s Payment
  • Referral to Treasury
  • Delinquent Collection and Write-off
Business Actor(s)
Finance Office, Federal Entity Selling Goods/Services to the Public; Private Sector Customer
Synopsis
A federal agency good or service was purchased and paid via check. After the good or service was provided, the Customer's check was returned for insufficient funds. An invoice is generated that includes interest and administrative fees. The invoice and receivable are not paid and age sufficiently to refer to Treasury for collection. Because the Customer is no longer in business, the delinquent debt is written off.
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. The federal agency selling the goods/services processed the sale and the original check collection through their sales order and fulfillment system.
  9. The terms of the sales order included assessment of administrative fees for returned checks and interest for unpaid invoices.
  10. The payer has been established in the FM system.
FFMSR ID Reference(s) 1.1.2; 1.1.5; 2.2.4; 2.2.5; 2.2.6
Initiating Event

The Customer's check is returned for insufficient funds.

USE CASE 050.FFM.L1.02 DELINQUENT DEBT PROCESSING
Typical Flow of Events
FFM Event Non-FFM Event Input(s) Output(s) / Outcome(s)
1
  1. Receive and process notice of insufficient funds (FFM.060.040 Public Receipt Processing)
  2. Request original sales order and terms of sale if available (FFM.060.020 Public Receivable Set-up and Invoicing)
  • Notice from Treasury
  • Appropriate collection reversal entry created with reference to source information
  • Appropriate receivable adjustment entries created with reference to source information
  • Request for sales order and terms of sale
2

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
3

Provide original sales order and terms of sale (SFM.010.020 Sales Order Processing)
  • Request for sales order and terms of sale
  • Original sales order and terms of sale
4
  1. Receive original sales order and terms of sale if available and establish receivable for penalties, interest, and administrative fees (FFM.060.020 Public Receivable Set-up and Invoicing)
  2. Recognize revenue for penalties, interest, and administrative fees (FFM.040.010 Revenue Processing)
  3. Invoice for original order amount, penalties, interest, and administrative fees (FFM.060.020 Public Receivable Set-up and Invoicing)
  • Original sales order and terms of sale
  • Invoice that includes original order amount, interest, and administrative fees
  • Appropriate receivable entries created with reference to source information
  • Appropriate revenue recognition entries created with reference to source information
5

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
6
  1. Monitor age of receivable and accrue additional interest; generate and send dunning notice for delinquent debt (FFM.070.010 Delinquent Debt Collection)
  2. Recognize revenue for interest (FFM.040.010 Revenue Processing)
  • Aged receivable
  • Terms of sales order
  • Dunning notice
  • Appropriate receivable entry created with reference to source information
  • Appropriate revenue recognition entry created with reference to source information
7

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
8
  1. (In a later accounting period) Monitor age of receivable and accrue additional interest; refer debt to Treasury for collection (FFM.070.010 Delinquent Debt Collection)
  2. Recognize revenue for interest (FFM.040.010 Revenue Processing)
  • Aged receivable
  • Terms of sales order
  • Referral to Treasury for collection
  • Appropriate receivable entry created with reference to source information
  • Appropriate revenue recognition entry created with reference to source information
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

Determine status of debt and request write-off of uncollected amount (SFM.010.020 Sales Order Processing)
  • Debtor information
  • Debtor status information
  • Write-off request
11

Receive request to write-off uncollected amount with debtor status information; write off and close out receivable (FFM.070.020 Delinquent Debt Write-off and Close-out)
  • Aged receivable
  • Write-off request
  • Appropriate receivable entries liquidated 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
13

Generate 1099-C Cancellation of Debt (FFM.070.030 Delinquent Debt Reporting)
  • Debtor status information
  • Write-off request
  • 1099-C Cancellation of Debt

This page was last updated on November 17, 2022.