Receivable Collection from Third Party Debtor

050.FFM.L3.02 Receivable Collection from Third Party Debtor
End-to-End Business Process: 050 Bill-to-Collect
Business Scenario(s) Covered
  • Receivables Allocated Among Multiple Payers
  • Third Party Payers as Responsible Debtors
  • Installment Agreement
Business Actor(s)
Finance Office; Program Office; Private Sector Entities (PSEs)
Synopsis
A service (e.g., site cleanup) is performed by the government that must be reimbursed by multiple PSEs who are subsidiaries of a parent PSE. The costs of the service are allocated among the subsidiary PSEs and bills are generated. The payment for the services performed is not received from one of the subsidiary PSEs, causing penalties, interest, and administrative fees to accrue. A parent PSE is billed as the third party responsible debtor. As part of the collection effort, an installment agreement is established between the government and the parent PSE. The first installment agreement payment is received from the parent PSE.
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 agreements between the PSEs and the agency have been established and prescribe the terms of reimbursement.
  9. The Program Office determines penalties, interest, and administrative fees.
  10. The subsidiary and parent PSEs have already been established as payers in the financial system.
  11. Collections are deposited through a Treasury-managed service.
  12. Late payment expense processing is offset by penalties, interest, and administrative fees collections which are deposited in the agency’s account.
FFMSR ID Reference(s) 1.1.2; 1.1.3; 1.1.5; 2.2.4; 2.2.5; 2.2.6
Initiating Event

The government performs services (e.g., site cleanup) to be reimbursed by PSEs.

USE CASE 050.FFM.L3.02 RECEIVABLE COLLECTION FROM THIRD PARTY DEBTOR
Typical Flow of Events
FFM Event Non-FFM Event Input(s) Output(s) / Outcome(s)
1
  1. Determine cost allocation among multiple subsidiary PSEs
  2. Request establishment of receivables in accordance with the allocation (Program Mission Activity)
  • Cost of government services
  • PSE agreements
  • Billing information allocated among subsidiary PSEs
  • Request for establishment of receivables in accordance with the allocation
2
  1. Receive and process request for establishment of receivables in accordance with the allocation and set-up receivables (FFM.060.020 Public Receivable Set-up and Invoicing)
  2. Recognize earned revenue (FFM.040.010 Revenue Processing)
  3. Generate and send bills to subsidiary PSEs (FFM.060.020 Public Receivable Set-up and Invoicing)
  • Billing information allocated among subsidiary PSEs
  • Request for establishment of receivables in accordance with the allocation
  • Appropriate receivable entries created with reference to source information
  • Appropriate revenue recognition entries created with reference to source information
  • Generated and sent bills
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 collection and deposit information for all but one subsidiary PSE
  2. Request processing of collection and deposit information for all but one subsidiary PSE (Program Mission Activity)
  • Collection and deposit information received for all but one subsidiary PSE
  • Request for processing of collection and deposit information for all but one subsidiary PSE
5
  1. Receive and process request for processing of collection and deposit information for all but one subsidiary PSE (FFM.060.040 - Public Receipt Processing)
  2. Generate aged receivable report (FFM.070.030 Delinquent Debt Reporting)
  • Request for processing of collection and deposit information for all but one subsidiary PSE
  • Appropriate collection and deposit entries created with reference to source information
  • Aged receivables report
6
  1. Monitor age of receivables and determine penalties, interest, and administrative fees for late collection
  2. Request dunning notice for unpaid balance, penalties, interest, and administrative fees for third party responsible debtor (Program Mission Activity)
  • Aged receivables report
  • PSE agreements
  • Unpaid balance, penalties, interest, and administrative fees
  • Request for dunning notice for unpaid balance, penalties, interest, and administrative fees for third party responsible debtor
7
  1. Receive and process request for dunning notice for unpaid balance, penalties, interest, and administrative fees for third party responsible debtor (FFM.070.010 Delinquent Debt Collection)
  2. Adjust revenue for unpaid receivable (reduce unpaid balance for subsidiary PSE and create entry for third party responsible debtor) (FFM.040.010 Revenue Processing)
  3. Generate and send dunning notice to third party responsible debtor (FFM.060.020 Public Receivable Set-up and Invoicing)
  • Request for dunning notice for unpaid balance, penalties, interest, and administrative fees for third party responsible debtor
  • Appropriate receivable entry created with reference to source information
  • Appropriate revenue adjustment (from unpaid portion of original bill to subsidiary PSE) entry created with reference to source information
  • Appropriate revenue recognition, for unpaid balance, penalties, interest, and administrative fees (to be paid by third party responsible debtor), entry created with reference to source information
  • Generated dunning notice to third party responsible debtor
8

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
9

Receive request for installment agreement from third party responsible debtor (Program Mission Activity)
  • Installment agreement request by third party responsible debtor
  • Installment agreement and terms
  • Request to establish installment agreement with third party responsible debtor
10

Receive and process request to establish installment agreement with third party responsible debtor (FFM.070.010 Delinquent Debt Collection)
  • Installment agreement and terms
  • Request to establish installment agreement with third party responsible debtor
  • Appropriate updated receivable entries created per installment agreement with reference to source information
  • Appropriate revenue recognition entries created per installment agreement 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
  1. Receive installment collection and deposit information
  2. Request processing of installment collection and deposit information (Program Mission Activity)
  • Installment collection and deposit information received
  • Request for processing of installment collection and deposit information
13
  1. Receive and process installment collection and deposit information
  2. Adjust receivable (FFM.060.040 Public Receipt Processing)
  • Request for processing of installment collection and deposit information
  • Appropriate collection and deposit entries created with reference to source information
  • Appropriate receivable adjustment entry created with reference to source information
14

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.