AGENDA MEMORANDUM

 

 

Meeting Date:           October 12, 2009

 

From:                          Jerry Boop, Finance Director, CPA, CGFO

 

Subject:                      Accounts Receivable Write Offs

 

 

Staff Recommendation:

No action is required.  This memo serves as formal notification to the City Commission pursuant to internal policy.  This has no impact on the operating (income) statement.  It simply reclassifies a portion of the accounts receivable on the balance sheet as uncollectible.

 

Analysis:

Internal policy requires that the Finance Director annually write off, at the end of each fiscal year, the amount of accounts receivable determined to be uncollectible.  Uncollectible is defined as an account that is unpaid 120 days after the customer’s service has been terminated.  This policy does not prevent the City of Leesburg, from maintaining records on terminated accounts and subsequently collecting these amounts, should the customer attempt to renew service with the City.  Furthermore, when an account is written off pursuant to this policy, it has no impact on any pending or yet to be initiated collection efforts.  It has been the longstanding policy of the City that accounts are not written off until they remain in “C” (collection agency) status for one year.

 

During fiscal year 2008-09, 1,259 uncollectible accounts have been written off, an increase of 136 accounts from last year’s total of 1,123. This year’s write offs of $437,240.04 represent an increase of $63,690.25 from the prior year total of $373,549.79.  The increase is not proportionate to the amount written off.  Receivable balances increased to $8,542,023.47 from the prior year balance of $7,764,994.72, an increase of $777,028.78 or 10%, while the amount written off increased 17% from prior year.  The percentage of the accounts receivable written off increased from 4.81% to 5.12% as of August 31, 2009. The increase in receivable balances is mainly attributable to the Electric Fund, and General Fund. The amounts currently being written off are summarized as follows:

 

 

 

 

 

 

 

 

 

 

 

 

 

Write off detail comparison between FY2009 and FY2008:

 

 

 

 

 

 

 

 

Accounts Receivable

 

 

 

 

Amount

 

Balance as of

 

Percentage

Fund

 

Written off

 

August 31, 2008

 

Written off

General

 

2,938.07

 

30,204.81

 

9.73

Stormwater

 

5,382.68

 

93,739.27

 

5.74

Electric

 

255,156.41

 

5,861,138.49

 

4.52

Gas

 

21,183.22

 

658,820.92

 

3.22

Water

 

27,393.18

 

354,821.36

 

7.72

Wastewater

 

38,465.39

 

447,309.62

 

8.60

Communications

 

28.70

 

55,031.38

 

.05

Solid Waste

 

23,002.14

 

263,928.87

 

8.72

 

 

 

 

 

 

 

TOTAL

 

373,549.79

 

7,764,994.72

 

4.81

 

 

 

 

 

 

 

 

 

 

 

 

 

Accounts Receivable

 

 

 

 

Amount

 

Balance as of

 

Percentage

Fund

 

Written off

 

August 31, 2009

 

Written off

General

 

12,431.29

 

399,667.86

 

3.11

Stormwater

 

8,238.77

 

105,149.68

 

7.84

Electric

 

260,593.77

 

6,550,917.10

 

3.98

Gas

 

22,189.08

 

304,657.69

 

7.28

Water

 

32,364.37

 

360,955.87

 

8.97

Wastewater

 

54,097.42

 

480,269.29

 

11.26

Communications

 

24,145.81

 

60,573.59

 

39.86

Solid Waste

 

23,179.53

 

279,940.49

 

8.43

Health Ins. Fund

 

0

 

4,891.90

 

0

TOTAL

 

437,240.04

 

8,542,023.47

 

5.12

 

 

 

 

 

 

 

 

 

 

 

Fiscal Impact

 

The City annually appropriates funds for bad debt expense based on the prior year’s collection history.  Accordingly, the amount budgeted and expensed to bad debts is based on estimates.

 

 

Options:

1.  No Action.

2.  Such alternative action as the Commission may deem appropriate

 

 

Fiscal Impact

None

 

Submission Date and Time:    10/9/2009 11:36 AM____

 

Department: _Finance_____________

Prepared by:  _Jerry Boop____________                     

Attachments:         Yes____   No ______

Advertised:   ____Not Required ______                     

Dates:   __________________________                     

Attorney Review :       Yes___  No ____

                                                

_________________________________           

Revised 6/10/04

 

Reviewed by: Dept. Head __JB____

 

Finance  Dept. _____JB___________                                     

                              

Deputy C.M. ___________________                                                                         

Submitted by:

City Manager ___________________

 

Account No. _________________

 

Project No. ___________________

 

WF No. ______________________

 

Budget  ______________________

 

Available _____________________