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HomeMy WebLinkAboutFIN-19-062 - Uncollectable Utility Receivable Accounts Write-offREPORT TO: Community & InfrastrctureServices Committee DATE OF MEETING:August 12, 2019 SUBMITTED BY: Saleh Saleh,Director of Revenue, 519-741-2200 extension 7346 PREPARED BY: Marcy Ignor,Supervisor of Customer Service and Collections,519-741- 2200extension 7460 WARD (S) INVOLVED:ALL DATE OF REPORT:July 3, 2019 REPORT NO.: FIN-19-062 SUBJECT: Uncollectable Utility Receivable AccountsWrite-off ___________________________________________________________________________ RECOMMENDATION: That uncollectable Utility Accounts amounting to $166,590be written off against the Allowance for Doubtful Utility Receivables BACKGROUND: As per council policy FIN-FEE-517Utility 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. Utilities receivable represent invoices generally billed through the City’s SAP CR&B billing System. The majority of these invoices relate to usage for Gas and Water. The current report represents write-off of utility accounts which have been deemed to be uncollectable up to the end of June 30, 2019. REPORT: Staff are recommending that accounts totalling $166,590be 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 theuncollectable accounts have been applied to reduce the debt outstanding. A total of 339customer accounts are being recommended to be written off and transferred to a third partycollection agency. The collection procedures staff have undertaken include: Sending customers statements and demand letters. Verbal request by telephone or in person. *** This information is available in accessible formats upon request. *** Please call 519-741-2345 or TTY 1-866-969-9994for assistance. 10 - 1 Negotiating revised payment terms. Applying any deposits held to the outstanding amounts. Transferring uncollectable items to the customer’s property tax account where permitted by the Municipal Act. The cumulative amount of utility write-offs identified in this report equal $166,590and relate to the years 2017, 2018 and 2019. 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 2019$ 38,951$ 106,828,139 0.0365% 2018$ 227,557$ 211,483,209 0.1076% 2017$ 205,338$ 200,367,149 0.1025% 2016$ 282,841$ 177,421,159 0.1594% 2015$ 105,464$ 178,576,715 0.0591% Total$860,151$874,676,3710.0983% ALIGNMENT WITH CITY OF KITCHENER STRATEGIC PLAN: The recommendation of this report supports the achievement of the city’s strategic vision through the delivery of core service. FINANCIAL IMPLICATIONS: The uncollectable accounts will be written off against the Allowance for Doubtful Utility Receivables account. 10 - 2 COMMUNITY ENGAGEMENT: INFORM – This report has been posted to the City’s website with the agenda in advance of the council / committee meeting. CONCLUSION: It has been determined that $166,590of 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: Jonathan Lautenbach, Chief Financial Officer, Financial Services 10 - 3