AGENDA MEMORANDUM

 

 

Meeting Date:           October 8, 2007

 

From:                          Jerry Boop, Interim Finance Director

 

Subject:                      Accounts Receivable Write-Offs

 

 

Staff Recommendation:

No action is required.  This memo serves as formal notification to the 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, (the City) 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 2006-07, 1,219 uncollectible accounts have been written off, which is an increase of 521 accounts from last years total of 698. This year’s write offs of $380,288.52 represent an increase of $186,863.40 from the prior year total of $193,425.12. Part of the increase is attributable to accounts which should have been written off prior to the 2004-05 fiscal year totaling $57,104.62.  Receivable balances decreased to $7,657,120.45 from the prior year balance of $8,253,631.98, a decrease of  $596,511.53 or 7.23%.  The percentage of the accounts receivable written off increased from 2.34% to 4.97% as of August 31, 2007. The decrease in receivable balances is mainly attributable to the General Fund, Gas, Water and Wastewater.  The amounts currently being written off are summarized as follows:

 

 

 

 

 

 

 

 

 

 

 

 

 

Accounts Receivable

 

 

 

 

Amount

 

Balance as of

 

Percentage

Fund

 

Written off

 

August 31, 2007

 

Written off

General

 

1,773.03

 

600,279.89

 

.300

Stormwater

 

4,379.28

 

73,532.21

 

5.96

Electric

 

247,016.37

 

5,465,219.99

 

4.52

Gas

 

33,411.27

 

378,365.27

 

8.83

Water

 

29,242.86

 

326,402.37

 

8.96

Wastewater

 

41,965.44

 

518,459.79

 

8.09

Communications

 

218.21

 

78,587.80

 

.280

Solid Waste

 

22,282.06

 

216,273.13

 

10.30

 

 

 

 

 

 

 

TOTAL

 

380,288.52

 

7,657,120.45

 

4.97

 

 

 

 

 

 

 

 

 

 

 

 

Fiscal Impact

 

The City annually appropriates funds for bad debt expense based on the prior year’s collection history.  For fiscal year 2006-07, amounts budgeted in the various funds for bad debt expense were based on the percentage of uncollectible accounts as of September 30, 2006 multiplied by 2005-06 estimated revenues.  Accordingly, the amount budgeted and expensed to bad debts is based on estimates.

 

 

Submission Date and Time:    10/5/2007 4:44 PM10/3/2007 1:58 PM____

 

Department: ______________________

Prepared by:  ______________________                     

Attachments:         Yes____   No ______

Advertised:   ____Not Required ______                     

Dates:   __________________________                     

Attorney Review :       Yes___  No ____

                                                

_________________________________           

Revised 6/10/04

 

Reviewed by: Dept. Head ________

 

Finance  Dept. __________________                                     

                              

Deputy C.M. ___________________                                                                         

Submitted by:

City Manager ___________________

 

Account No. _________________

 

Project No. ___________________

 

WF No. ______________________

 

Budget  ______________________

 

Available _____________________