AGENDA MEMORANDUM
Meeting Date: October 13, 2008
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 2007-08, 1,123 uncollectible accounts have been written off, a decrease of 96 accounts from last year’s total of 1,219. This year’s write offs of $373,549.79 represent a decrease of $6,738.73 from the prior year total of $380,288.52. Although there is a decrease, the decrease is not proportionate to the amount written off. Receivable balances increased to $7,764,994.72 from the prior year balance of $7,657,120.45, an increase of $107,874.27 or 1.4%. The percentage of the accounts receivable written off decreased from 4.97% to 4.81% as of August 31, 2008. The increase in receivable balances is mainly attributable to the Electric Fund, Gas, Water and Communications. The amounts currently being written off are summarized as follows:
Write off detail comparison between FY2008 and FY2007:
|
|
|
|
|
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, 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 2007-08, amounts budgeted in the various funds for bad debt expenses were based on the percentage of uncollectible accounts as of September 30, 2007 multiplied by 2006-07estimated revenues. Accordingly, the amount budgeted and expensed to bad debts is based on estimates.
Submission Date and Time: 10/9/2008 3:03 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. _______JB_________
Deputy C.M. ________EFS________ Submitted by: City Manager ___________________ |
Account No. _________________
Project No. ___________________
WF No. ______________________
Budget ______________________
Available _____________________ |