Debt Management Procedures

Transcription

1 Debt Management Procedures Status Date of Version 25 August 2011 Responsibility for Policy Gary Henderson Responsibility for Implementation Alison Stewart EQIA outcomes review Policy Review Date 25 August

2 Procedure Statement Forth Valley College is committed to reducing the probability of bad debts arising by ensuring that a robust debt management procedure is adhered to by all relevant staff and is applied to all company and student sales transactions. 2 Responsibility for the Implementation The Head of Financial Services is responsible for managing this procedure, and the Senior Management Team of the College is responsible for ensuring that College management and staff adheres to the procedure. Appropriate members of Finance staff and relevant College staff are responsible for the effective operation of the procedures. 3 Who is this procedure aimed at? The purpose of this document is to communicate to staff, students and organisations the College s strategy for the avoidance of bad debts arising, in meeting the College s financial obligations. This procedure sets out the framework within which debt management will be administered within the College. 4 Related Policies 5 Scope Financial Regulations This procedure applies to all staff, students and organisations with any involvement in the sales/fee income process. The College operates a policy whereby organisations are required to pay for a course in advance of it commencing, or at an agreed interval as if authorised by the Head of Finance. Commercial contracts with organisations will define the payment terms to be applied to that contract. Students are required to pay or make arrangement, through an instalment plan, to pay their course fees at the time of registration, unless agreed otherwise by the Head of Finance or the Principal. The College operates an Instalment Plan, which can be applied to: full time students if they, at the time of registration have difficulty meeting the full cost of fees; students who have not received at the date of registration a letter from SAAS agreeing to pay their fees; certain students paying for part time or evening courses students who fall into arrears with their payment. The Instalment Plan is not intended to be applied to companies however, in exceptional circumstances, this can be considered and approval sought from the Head of Financial Services. This policy also incorporates the procedure for recovery of Bursary over-payments 2

3 6 Procedures In general, debt management and debt collection are two key activities that facilitate the effective recovery of debt owed to the College which reduces the probability of bad debts occurring. The College has three main categories of debtors: organisations, students and bursary overpayments. Organisations This relates to sales transactions with commercial firms. The College has a legal recourse against commercial firms and can therefore take legal action as a last resort, with a reasonable chance of success. To avoid this situation, organisations are required to pay in advance of the course starting and within thirty days for other commercial services. Students Students fall into the three following categories HE full time HE Students who are not funded by SAAS have to pay or make arrangement to pay their course fees at the time of registration. For students applying to SAAS to pay their fees for them, until SAAS have notified the College that they will be paying the student s fees, the student has to make payments as per the College s instalment plan. Course materials Certain students are required to pay for course materials so that they can partake in the course. Payment for the materials can be made in one payment or can be split over two to four payments as long as payment is made in full before the course commences. Part time and evening courses For students who are undertaking part-time or evening courses payment must be made in full before registration or they can pay by instalments as per the part time and evening enrolment instalment plan. Non-payment of fees will result in the student being considered for withdrawal from their course of study. Bursary overpayments Bursary debt is defined as where a bursary student withdraws from their course, and upon re-assessment by Student Finance of their benefit entitlement an overpayment is calculated. 3

4 7 Debt Collection Organisations For debtors who are not paying in advance, they will be issued with a College invoice. This invoice will clearly state the details of the service provided, their reference number (if applicable), price of service, and methods of payment. As standard practice, all invoiced companies are given thirty days in which to settle their debt. If payment is not made within the due date a reminder/statement will be sent, which will be followed shortly after by a final reminder advising that the debt will be passed to the debt collection agency and a late payment compensation amount will be calculated as per the late payment of commercial debts (interest) Act 1998 and added to the outstanding balance. In addition, if the company s employees are still undertaking study at College, the students will be withdrawn and certification (if applicable) will be held until full payment is made. The right to compensation is as per the table below Size of the unpaid debt Amount to be paid to the creditor Up to ,000-9, ,000 and above 100 Self funding students These students pay for their fees or equipment in advance or over instalments. If a student misses a payment they will be sent letter one which states that payment should be paid in full and contact the finance department within fourteen days; if payment is not received then the debt may be passed to a DCA: an administration fee would be added; and they may be withdrawn from their studies When the student contacts finance department they will be asked to: pay the failed instalment in full either by debit or credit card; or part pay the failed instalment with the remainder spread over the remaining instalments. In addition at all stages a report will be sent to each head of department detailing their students whose payments have failed. If a student misses a second instalment at a later stage then they will be sent letter one which states as above, but they will not be allowed to spread the missed payment over the remaining months and must pay in full the failed instalment. If two consecutive instalments are missed then the student will receive letter two which states 4

5 that payment in full will be required to be made within fourteen days and that all subsequent payments should be honoured; failure to pay for the failed instalment will result in the debt being passed to the DCA for the outstanding amount; an administration fee will be added to the amount passed; and the student will be withdrawn, or not allowed to sit any exams, or receive certification. If payment is not received the Heads of Department will be notified to withdraw the student. The College has a legal right to claim the recovery of debt from a student through court proceedings, however prior to taking this action, the College will maintain dialogue, but for students who refuse to pay, the College can withdraw the student remove the student s access to the College s computer system; withhold certification; pass the debt to the DCA Bursary overpayments For these ex-students, they will be issued with a College invoice, which will clearly state the methods of payment, the reason and value of the overpayment. The exstudents are given thirty days in which to settle their debt. In the circumstances of library books or bursary materials the student can return the items for a full or partial credit, (to be determined by the department). If payment is not received a first / final reminder is sent out, which advises them that the debt will be passed to the debt collection agency and that an administration fee of ten percent will be added, to the outstanding balance if payment is not received within fourteen days. In addition, they may also be contacted by telephone advising that the debt is due for payment and asking for full or part payment by credit / debit card. Debt collection agencies After debtors have been referred to the College s debt collection agency, the agency can carry out the following to recover the debt: telephone calls; letters; doorstep collection; wage arrestment bank arrestment threat of legal action; and legal action. In the case of wage and bank arrestment s these will be approved in advance by the Head of Financial Services. For any cases that the DCA believe that legal action will be the only further option open to them, prior approval by the Head of Financial Services would be required before proceeding with legal action. 5

6 General In the circumstances where there is a query on an invoice, the process will stop, and the debtor will be asked to make a payment on account. The query will be dealt with and a credit note if appropriate will be issued. The process will then re-commence if there is an amount outstanding. Where the College agrees to an apparently genuine intention to pay by an instalment plan, the recovery process will be put on hold. If the intention is not honoured, or only partly honoured, the process will immediately be restarted at the point where it was left off. Companies and Students who fail to pay their debts prior to referral to the College debt collectors will be blacklisted for future applications to study at the College, and/or use the facilities until their debt is paid in full and payment is made in advance for further study etc. 8 Withdrawal appeals procedure If the Department believes that there are extenuating circumstances why a student should not be withdrawn they should present this to an appeals panel consisting of the Depute Principal, Associate Principal HR and Student Services and the Head of Finance. 9 Review of Procedure This procedure should be reviewed every three years or whenever changes affect it. 6