Debt Recovery Policy
Debt Recovery Policy Mission Statement Promoting high quality education, love, care and forgiveness of others as taught to us by Jesus and our Patron Saints. Aim Responsibilities The Governing Body of the Academy are responsible for determining the content of this policy and the Principal for implementation. Any determination with respect to individual parents will be considered jointly by the Principal and the Finance and Premise Committee. In accordance with Section 74 of the Academy Funding Agreement, the Academy Trust is required to apply financial and other controls which conform to the requirements of both propriety and good financial management. Wherever possible, income due with be collected before or at the time the relevant sale or service is provided. If this is not possible, a debtor s account will be opened. All debts will be recorded and VAT will be charged accordingly. To this end the Governing Body is responsible for ensuring that procedures are in place for the recovery of any outstanding debt. This policy sets out the procedures for debt recovery and for the wire-off of any debt which is deemed irrecoverable. 1. General requirements St Peter and St Paul Catholic Primary Academy will take all reasonable measures to vigorously collect debts as part of its management of public funds. The Academy s debt recovery policy will observe the relevant financial regulations and guidance set out in the Academy s Financial Manual. The Governing Body will not write-off any debt belonging to the Academy which exceeds 1,000. A formal record of any debts written off will be maintained and this will be retained for 7 years. The Academy reserves the right to initiate legal action to recover debts such as County Court action and debt collection processes to recover the outstanding amounts. The Academy will NOT write off any debt belonging to the Local Authority or another party, e.g. debts for Academy meals. If in doubt as to the appropriate action to collect any such debts the Academy will seek advice promptly from officers of the Local Authority. In general payment for all goods and services supplied by the Academy should be collected in advance or at the point of sale or on receipt of an invoice. 2. Acceptable credit period The Governing Body has determined the length of time they deem to as an acceptable credit settlement period as a calendar month following receipt of an invoice. 3. Reporting of outstanding debt levels The Principal will ensure that the level of outstanding debt is regularly monitored. Suitable records will be maintained to detail individual debts and the total value of debt to the Academy in order that it can be determined at any time and reported to the Finance Committee. The Academy Business Manager will review the level of outstanding debts every month to determine whether this level is acceptable and whether action to recover debts is effective.
4. Debt Recovery Procedures 4.1 Where payment from the parent / carer has not been received in advance, or at the point of sale or invoice, the following process should be applied. (a) An invoice should be issued for the full amount in order to officially set up the debt. Where invoices are raised they should state the date by which payment is due. If the debtor is unable to pay an invoice in full by the due date, an instalment arrangement will be offered and payments will be collected by Parentmail2 wherever possible. If there is any dispute about the amount or the period of repayment, advice is to be taken from the London Borough of Bromley Finance Department (LBBFD) Team regarding which payment arrangement to be offered. The LBBFD decision will be final. (b) In all other cases, such as; correspondence with parents, etc. the maximum period that the Academy regards as reasonable before payment is overdue should be clearly stated, for example contributions for a Academy trip should be received by a set date (prior to the trip going ahead) payment for items purchased should be sent to the Academy office by a set date (prior to goods being released) If payment is not forthcoming the process detailed in 4.1(a) should be applied (c) A record of all goods and services will be maintained detailing: type of goods / services supplied; value; date(s) good / services supplied; and; the identity of the debtor, e.g. child, parent, hirer, etc. 5. Verbal and Written Reminders 5.1 Details of all reminders. Whether verbal or in writing, these should be maintained. Where a letter is issued, a copy must be retained on file. 5.2 Initial overdue payment reminder An initial reminder may be informal and can be made either in person (when a parent / carer comes to collect / drop off a child), by telephone, or by Parentmail. In general, the Academy Business Manager will notify the parent / carer. The date of the initial reminder will be recorded. 5.3 Formal reminder A formal reminder letter will be issued one week after the Initial reminder has been sent. 5.4. Failure to respond to reminders / settle a debt At the discretion of the Head Teacher / Academy Business Manager, the debtor may be advised that they will be required to pay in advance for all future supplies or the supply will no longer be available to them. This decision and its basis will be recorded and reported to the Finance and Premises Committee of the Academy Governing Body. 6. Formal Payment Request A formal payment request letter with a Academy Invoice will be issued if there has been no response to the Initial and Formal reminders. All reasonable attempts will be made to recover the debt, and these attempts will been made in a timely manner, i.e. at the time that the debt first became overdue. 7. Negotiation of repayment terms Debtors are expected to settle the amount owed by a single payment as soon possible after receiving the first overdue payment reminder. The Academy will act positively to assist families and will try to help with form completion (e.g. Free Academy Meals
Benefit) and guidance where possible. A sensitive approach to debt recovery will be carried out, taking the following factors into account: Hardship where paying the debt would cause financial hardship. If the debtor is bankrupt. Ill health where our recovery action might cause further ill health. Death - if the debtor has died and there are not sufficient funds from their estate to pay the amount owed. Time where the debt is so large compared to the person s income that it would take an unreasonable length of time to pay it all off. Exceptions Statute barred an invoice is irrecoverable if six years have elapsed from the date of the invoice, date of service or last payment date, whichever is the later. If the debt is acknowledged by the debtor, the six years runs from this date. Multiple debt where someone owes more than one debt to the Academy. In this situation an attempt to agree one repayment plan to include all debts will be established. Moved Address if the debtor has left an address and is not traceable either through internal investigations or using an external debt collector. Debtors are expected to settle the amount owed by a single payment as soon as possible after receiving the initial reminder. If a debtor requests for repayment terms these may be negotiated at the discretion of the Academy Business Manager. A record of all such agreements entered into will be retained. In all cases, a letter will be issued to the debtor confirming the agreed terms for repayment. The settlement period should be the shortest that is judged reasonable. The Academy Business Manager will decide whether any debtor who has been granted extended settlement terms will not be offered any further credit and will, in future, be required to pay in advance. This decision and its basis will be recorded and reported to the Finance and Premises Committee of the Academy Governing Body. 8. Costs of debt recovery Where the Academy incurs material additional costs in recovering a debt then the Academy Business Manager will decide whether to seek to recover such costs from the debtor. The debtor will be formally advised in writing that they will be required to pay the additional costs incurred by the Academy in recovering the debt. This decision and its basis will be recorded and reported to the Finance Committee. 9. Bad debts This debt recovery policy should be cross-referenced to the Academy Finance Scheme. Non payment of debts will be followed up by issuing reminders at the following intervals: first reminder; second reminder; final reminder. The final reminder is sent by recorded delivery and threatens legal action if the account is not settled within 14 days. If, after 10 weeks from the date of account, the account has still not been settled, legal action will be considered by the Finance and Business Director and the Head. In
determining whether to pursue legal action to recover the debt, the Finance and Business Director will consider, inter alia, hardship, ill health, the financial impact on the Academy and on the debtor, and the potential impact of any precedent set. If considered appropriate and legal action is to be pursued, the debtor will be informed in writing. The debtor is informed that they will be liable for costs and that the debt will be subject to statutory interest from the day it became due. If legal action is not pursued, or has been unsuccessful, individual irrecoverable debts may be pursued in accordance with the following procedures: days notice of its intention to write off any debts owed to it to the Secretary of State for Education, as set out in Section 83 of the Academys Funding Agreement. and Audit Committee and reported to the next meeting of the Governing Body. Debts of less than 1,000 may be written off by the Finance and Business Director, and approved by the Head. Write-off of any debt requires the written approval of the Finance Committee up to a maximum of 1000. A record of the write-off, the reason for it, and the approval for it, will be retained for 7 years. 10. Policy Review This policy will be reviewed and approved annually by the Finance Committee and reported to the Full Governing Body.