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HomeMy WebLinkAboutFCS-17-183 - Uncollectable Utility Account Write-offREPORT TO: Finance and Corporate Services Committee DATE OF MEETING: December 4, 2017 SUBMITTED BY: Joyce Evans, Director of Revenue/Deputy City Treasurer,519- 741-2200 extension 7895 PREPARED BY: Saleh Saleh, Supervisor of Taxation and Cash Management 519- 741-2200 extension 7346 WARD(S) INVOLVED: ALL DATE OF REPORT: September 30, 2017 REPORT NO.: FCS-17-183 SUBJECT: Utilities Account Write-off ___________________________________________________________________________ RECOMMENDATION: That uncollectable Utility Accounts amounting to $313,820 be written off against the Allowance for Doubtful Utility Receivables BACKGROUND: As per council policy I-517 Utility and Miscellaneous Receivable policy, approval from Council is required for accounts to be written-off and sent to an outside collection agency for third party collection efforts. The majority of these invoices relate to usage for Gas and Water.In 2016, the SAP Customer Relationship and Billing module was implemented. The collections module was not turned on until May 2017. The delay in turning on the collections module is best practice during an implementation of this size and was also recommended by the implementation consultants.This has resulted in a higher than normal write-off. The current report represents write-off of utility accounts which have been deemed to be uncollectable up to the end of August 2017. REPORT: Staff are recommending that accounts totalling $313,820 be written off and forwarded to the collection agency.Staff have worked diligently in attempting to collect on these accounts but have not been successful either due to the customer declaring bankruptcy or having no forwarding address. Any tenant deposits previously received on the *** This information is available in accessible formats upon request. *** Please call 519-741-2345 or TTY 1-866-969-9994 for assistance. 2 - 1 uncollectable accounts have been applied to reduce the debt outstanding. A total of 194 customer accounts are being recommended to be written off and transferred to a third party collection agency. The collection procedures staff have undertaken include: Sending customers statements and demand letters. Verbal request by telephone or in person. Negotiating revised payment terms. Applying any deposits held to the outstanding amounts. permitted by the Municipal Act. The cumulative amount of utility write-offs identified in this report equal $313,820 and relate to the years 2016 and 2017. The cumulative write-offs are shown in the table below and the average is well below the targeted upper limit for write-offs set at 0.3% previously approved by Council. A five year summary of write-offs is included in the table below. Utility Accounts Write-off CumulativeTotal $ InvoicedWrite-offs as a Write-offs for the YearYear to Date% of Sales 2017 υ ЎЊͲБЉЍυ ЊЋВͲЊЎЊͲВЉЌЉ͵ЉЍЉЊі 2016 υ ЋЍЋͲЌЊАυ ЊААͲЍЋЊͲЊЎВЉ͵ЊЌЏЏі 2015 υ ЊЉЎͲЍЏЍυ ЊАБͲЎАЏͲАЊЎЉ͵ЉЎВЊі 2014 υ ЊЊЋͲЍЉЋυ ЊААͲЌВЊͲЊЍБЉ͵ЉЏЌЍі 2013 υ ВЊͲАЎЏυ ЊЏБͲЉБЌͲББАЉ͵ЉЎЍЏі Total$ 603,743$ 830,624,8120.0727% ALIGNMENT WITH CITY OF KITCHENER STRATEGIC PLAN: strategic vision through the delivery of core service. 2 - 2 FINANCIAL IMPLICATIONS: The uncollectable accounts will be written off against the Allowance for Doubtful Utility Receivables account. COMMUNITY ENGAGEMENT: This report has been posted to the committee meeting. CONCLUSION: It has been determined that $313,820 of utility accounts are uncollectable and staff are recommending that the accounts be written off to the Allowance for Doubtful Utility Receivable account. The uncollectable account listing will be forwarded to a collection agency, which will use their best efforts to collect these accounts. ACKNOWLEDGED BY: M.Goldrup, Acting Deputy CAO, Finance and Corporate Services. 2 - 3