FIN 2018-11-06 Item 2F - Resolution - 2018 Cancellation of Uncollectable Accounts Receivable

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City of Tukwila Allan Ekberg, Mayor INFORMATIONAL MEMORANDUM TO: Finance Committee FROM: Peggy McCarthy, Finance Director BY: Vicky Carisen, Deputy Director CC: Mayor Ekberg DATE: October 29, 2018 SUBJECT: Cancellation of Accounts Receivable ISSUE Each year a resolution comes before the Council for the cancellation of uncollectable accounts receivable. For 2018, these items include: False Alarms equaling $12,397.35, Miscellaneous Billings equals $435.00 for a grand total of $12,832.35. BACKGROUND The process for tracking accounts receivable is quite thorough. The steps below are followed prior to preparation of the attached write-off resolution. • Invoice is sent to the recipient by the Finance Department payable in 30 days. • If payment is not received within 30 days, the receivable is forwarded to our collection agency, Armada Corp., and placed into pre -collect status. • At this time, Armada sends a Delinquency Notice to debtor notifying them of the past -due status of the receivable and asks them to contact the City to make payment. Payments can still be made directly to the City while in pre -collect status. • Once 30 days has passed in pre -collect status, the receivable then rolls over to active collections. At the onset of active collections, a letter is sent to the debtor notifying them of status change and advising that all payments must now be made through the collection agency. • When in active collections status, debtor is contacted both by phone and letter. A search is made for assets with which the debt could be satisfied. Once the debt has been in active collections for 45 days, it is then reported to the national credit bureaus. • The last process in the collections cycle is the pursuit of legal action. This includes attaching checking accounts, garnishments and lawsuits. • The City will not issue or renew a business license until all outstanding debt owed to the City is paid. • It should be noted that while a debt may be written off our books: it is still active in Armada's collection process. DISCUSSION The proposed amount of the 2018 Cancellation of Accounts Receivable is $12,832.35. This is an annual housekeeping item. FINANCIAL IMPACT The financial impact of cancelling $12,832.35 will be to reduce our accounts receivable balance by this amount. Please note that while we are writing off the accounts receivable for accounting purposes., the accounts are still being actively worked for collection purposes with the exception 91