Penalties, Interest and Collections

050.FFM.L1.01 Penalties, Interest, and Collections
End-to-End Business Process: 050 Bill-to-Collect
Business Scenario(s) Covered
  • Individual Receivables
  • Disputes
  • Collectable by Agency
  • Credit Memo
  • Penalties, Interest, and Administrative Fees
  • Non-Treasury Deposits
Business Actor(s)
Finance Office; Customer (non-government)
Synopsis
A private sector entity (Customer) is billed by a federal agency for goods or services provided by the agency. The quality of some of the goods is disputed and the disputed goods are returned. The invoice is not paid on time causing penalties, interest, and administrative fees to be incurred and a dunning notice to be sent. The dispute is resolved by issuing a credit memo to the Customer and waiving the penalties. The balance due plus interest on the undisputed goods is paid.
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 has already recorded the sales order for the goods in their ordering system and the goods have been shipped.
  9. The invoice is generated from an external system and electronically sent to the FM system, and the invoice date is the date it is sent.
  10. The federal agency does not refund the administrative fees.
  11. The customer finds some of the goods acceptable, but pays for none and does not issue a dispute until after receipt of a dunning notice.
  12. The federal agency is executing the deposit activities.
FFMSR ID Reference(s) 1.1.2; 1.1.5; 2.2.4; 2.2.5; 2.2.6
Initiating Event

Goods are ordered from a federal government agency.

USE CASE 050.FFM.L1.01 PENALTIES, INTEREST, AND COLLECTIONS
Typical Flow of Events
FFM Event Non-FFM Event Input(s) Output(s) / Outcome(s)
1

Receive sales order for goods (SFM.010.010 Sales Order Intake)
  • Sales order
  • Payer information
2

Establish non-federal payer information (FFM.060.010 Payer Set-up and Maintenance)
  • Payer information
  • Established FM system payer
3

Release for sales order fulfillment, track status, and generate sales order invoice (SFM.010.020 Sales Order Processing)
  • Sales order
  • Invoice
4
  1. Receive and process invoice, and set up public receivable (FFM.060.020 Public Receivable Set-up and Invoicing)
  2. Recognize earned revenue (FFM.040.010 Revenue Processing)
  • Invoice
  • Appropriate receivable entry created with reference to source information
  • Appropriate revenue recognition entry 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
  2. Accrue penalties, interest, and administrative fees
  3. Generate and send dunning notice for delinquent debt (FFM.070.010 Delinquent Debt Collection)
  • Aged receivable
  • Terms of sales order
  • Administrative fees information
  • Dunning notice
  • Debt status and notice of customer rights
  • Appropriate receivable entries created with reference to source information
  • Appropriate revenue recognition entries created with reference to source information
  • Receivable balance and accrued penalties and interest information provided to sales order management
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

Produce and provide public receivable report (FFM.060.050 Public Receivable and Collection Reporting)
  • Status of the receivable
  • Receivable and collection status information (including receivable balance and accrued penalties and interest)
9
  1. Receive return of disputed goods and record invoice dispute for quality of goods provided against original sales order
  2. Resolve dispute by waiving penalties, adjusting interest, and generating an adjusted invoice (SFM.010.020 Sales Order Processing)
  • Dispute information
  • Returned goods
  • Receivable and collection status information (including receivable balance and accrued penalties and interest)
  • Dispute record associated with original sales order
  • Adjusted invoice
  • Request for credit memo
10
  1. Create and apply credit memo against initial receivable, waive penalties, adjust interest, and adjust receivable (FFM.060.030 Public Receivable Credit Memo and Adjustment Processing)
  2. Adjust revenue per credit memo (FFM.040.010 Revenue Processing)
  • Request for credit memo
  • Adjusted invoice
  • Credit Memo
  • Appropriate receivable adjustment entries created with reference to source information
  • Appropriate revenue adjustment entries created with reference to source information
11

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
12

Receive and process collection referencing established principal and interest receivables, and deposit (FFM.060.040 Public Receipt Processing)
  • Collection received
  • Appropriate collection and deposit entries created with reference to source information
  • Appropriate receivable adjustment entry created with reference to source information
13

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.