Debt Recovery Procedure te F13 Partners in Care Version: 7 Page 1 of 8
This is a controlled document. It should not be altered in any way without the express permission of the author or their representative. On receipt of a new version, please destroy all previous versions. Document Information Date of Issue: April 2015 Next Review Date: April 2016 Version: 7 Last Review Date: April 2015 Author: Financial Accountant Directorate: Finance Approval Route Approved By: Date Approved: Finance Director 07/04/2015 Integrated Governance Committee Links or overlaps with other strategies/policies: Losses & Special Payments SBS Debt Management SO s & SFI s Amendment History Issue Status Date Reason for Change Authorised 4 December 2008 Update Re. Care Trust Designation 5 September 2011 Revision & Update 6 March 2013 Revision & Update 7 April 2015 Update Version: 7 Page 2 of 8
1. General 1.1 Granting of credit to individuals should be minimal as a matter of policy. 1.2 Particular care must be taken in granting credit to non-nhs organisations. However, with regard to Social Care Debt, the assessment of need takes precedent over any consideration of the ability to pay. 1.3 For organisations and individuals granted credit, key factors such as price, payment terms and VAT treatment should be agreed prior to service delivery. 1.4 A nominated contact point should be sought for follow-up and general correspondence. 1.5 Payment terms to be explicitly stated all on invoices produced. 2. Debt Managed by Shared Business Services 2.1 Invoice requests and the information on the granting of credit to be provided to NHS Shared Business Services (SBS) by nominated Care Trust staff. 2.2 Specific debtor information data forms and invoice/credit note request forms to be provided by SBS for use by the nominated Trust staff. 2.3 The standard text of periodic statements and/or reminder letters for nonpayment to receive the prior approval of the Director of Finance or his representative. 2.4 An Aged Debt Report, taken from the Trust ledger, to be produced each month by Shared Business Services. 2.5 Representatives of Shared Business Services Debt Management and the Trust will hold discussions each month to consider the profile of outstanding debts, in particular, those giving cause for concern and agree actions to obtain collection. 2.6 All debtors to be sent a monthly statement of account. 2.7 For NHS debtors the following recovery procedures will apply: Contract Debt due by 15 th of the month and generally of a value in excess of 30,000 Debtor will receive a phone call and/or email contact if payment not received by 16 th of the month. Reminder letters will not be issued. telephone and/or email contact will be maintained with debtors and the Trust contact will be kept informed, until the debt becomes 120 days overdue, at which time it will handed back to the Trust to manage. Trust to consider whether to refer debt over 180 days for mediation by the NHS Trust Development Authority. Version: 7 Page 3 of 8
2.8 Other NHS debt a first reminder letter to be issued the day after the invoice becomes due. a second reminder letter to be issued ten days later. telephone contact will be maintained with debtors until payment is received until the debt becomes 120 days overdue, at which time it will handed back to the CT to manage. Trust to consider whether to refer debt over 180 days for mediation by the NHS Trust Development Authority. 2.9 For the majority of n NHS debtors the following recovery procedures will apply: a first reminder letter to be issued the day after the invoice becomes due. a second reminder letter to be issued ten days later. attempts will be made to contact the debtor by phone in the twenty days following the due date. a final demand letter will be issued 20 days after the due date, followed by a further phone call if no response, then further recovery action will be considered. This further action should take place within 40 days of the due date, will be within a framework approved by the Trust and may include the use of a debt recovery agency and/or legal action co-ordinated by SBS. 2.10 SBS will consult Torbay and Southern Devon Health and Care NHS Trust in respect of all debts about to enter the further action class described above. These cases to be considered at the monthly debt review meetings/discussions between the parties. 2.11 The Trust s officer who has routine responsibility for the follow-up of debts will liaise with SBS, especially about debts about to enter the further action class. 3. Social Care Debt 3.1 For Social Care debt, mainly in respect of Residential, Nursing, Domiciliary and Day Care, which is raised on Torbay Council s Financial Information Management System (FIMS) and reported on the Care Trusts ledgers, see Appendix A. 3.2 It is the responsibility of the Trust s Client Finance Team, to collect such debt owed to the Care Trust/Council. 3.3 All debtors to be sent a monthly statement of account every 28 days. 3.4 A Social Care Aged Debt Report is produced each week by the Council allowing analysis of the debtor position and debt management by the Client Finance Team. Version: 7 Page 4 of 8
3.4.1 The aged debt report comprises a number of separate tabs. The areas of debt responsibility are broken down as follows in order establish contact with the debtor and progress debt collection: Aged Debt Tabs Responsible Officer Review Frequency Static Debts Finance Officer Every 8 weeks Legal Charges Finance Officer N/A Legal WIP Finance Officer Every 8 weeks Receiverships Finance Officer Every 8 weeks Debt Collectors Finance Officer Every 4 weeks Instalments Finance Officer Every 4 weeks Solicitors WIP Finance Every 4 weeks Officer/Assistant WIP Finance Assistant Every 4 weeks Credit Balances Finance Officer Every 4 weeks 0 30 days N/A N/A WIP = Work in Progress 3.4.2 Review all clients listed on each of the tabs at the stipulated review frequency. First appearance on list An initial phone call to be made to establish the facts If no response to phone call a first letter will be sent requesting payment or Debtor/Debtor s Representative to contact us within 14 days Second consecutive appearance on list A second letter (sent recorded delivery) will be sent to the Debtor/Debtor s Representative giving them a further 7 days to make payment or make contact with us. In the letter, reference is to be made in relation to referral to the debt collection agency and/or the Council s legal service. If no response has been received by the time of the diary reminder, set up within the debt management system, a review of the client status (to establish they have sufficient capacity to deal with their affairs) takes place in conjunction with Care Management, to see whether the case can be referred to the debt collection agency / Council s legal service. If the client status review suggests that neither approach is applicable, an e-mail will be sent to client s Care Manager (copy to the Social Care Lead) asking for guidance in how to proceed. 3.5 Management will decide whether to refer any debt over 100, which remains outstanding despite efforts to effect collection, to a debt collection agency. A debtor information form will be completed and forwarded to the agency. Debt below this value will be written off. Version: 7 Page 5 of 8
3.6 Management will decide whether to refer debt in excess of 5,000 to the Council s Legal Services Department, when it is apparent that other recovery methods, including debt collection agency, have failed. All other uncollected debt will be written off. 4. Reports 4.1 A quarterly report should be prepared for the Deputy Director of Finance showing the level and age profile of social care debt, together with a calculation of the recommended level of bad debt provision. 4.2 A report should be prepared for the Audit and Assurance Committee showing: the profile of aged debt, any debt which exceeds 25,000, together with an explanation of the debt and, All debts over 2 years old and over 10,000 and an explanation of the debt a schedule of debts written off since the previous report. 5 Write Offs 5.1 Every effort will be made to recover income due to the Care Trust. Where debts become irrecoverable, appropriate write-off authorisation must be obtained by observing the Losses & Special Payments procedure (F26). 5.2 Details of social care debt recommended for write off are maintained by the in-house Client Finance Team. Authority is delegated to Senior Finance staff for the write off of individual debts to 1,000 and to the Deputy Director and Assistant Director of Finance (both to sign) for the write off of debts to 15,000. Write off of debt in excess of 15,000, must have the signature of the Director of Finance as one of the two sign offs and must comply with Section 8, Appendix 2 of the Scheme of Delegation. Signatures should be verified against the Approved Signatory list. 5.3 Write offs must be recorded in the Losses and Special Payments Register and reported to the Audit and Assurance Committee, see paragraph 4.2 above. Debt in excess of 25,000 should also be reported to the Audit and Assurance Committee. 5.4 Where debt is owned by Torbay Council, CT officers have authority to approve write off up to 1,000. Where debt is in excess of 1,000, write off approval must be obtained from the Council s Executive Head of Finance. 5.5 Debt Management at Shared Business Services, or Torbay Council as appropriate, should be informed in writing as soon as a debt is written off. Version: 7 Page 6 of 8
6 Review Date This procedure will be reviewed in April 2016. 7 Distribution Trust Website and computer system Shared Business Services Debt Management Department Torbay Council Executive Head of Finance Torbay Council Clientside Accountant Version: 7 Page 7 of 8
APPENDIX A FLOWCHARTS Social Care Debt Review facts and decide further action Yes Make an initial phone call to establish the facts Was there a response to the phone call? Send a first letter requesting payment or the debtor/their representative to contact us within 14 days Start Review Social Care aged Debtors report Yes Is this the client s first appearance on the report? Consider sending a second letter (recorded delivery) to the debtor/their representative requesting payment within a further 7 days, or for them to make contact with us If the client review states neither approach is applicable, send an email to the client s Care Manager. By the time of the diary reminder, set up a review of the client status (to establish they have sufficient capacity to deal with their affairs) in conjunction with Care Management, to see whether the case can be referred to the debt collection agency/council s legal service Was there a response to the letter? Yes Review facts and decide further action Was there a response to the email? Write debt off Management will decide whether to refer debt to a debt collection agency Yes Review facts and Is debt Yes Is debt over Yes Management will decide whether to refer debt to the Council s Version: 7 decide further Page 8 of 8 over 100? 5,000? Legal Services Department when it is apparent that all other action recovery methods, including debt collection agency have failed