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Home My WebLink AboutFS 2014-10-07 Item 2B - Resolution - Cancellation of Past Due Accounts ReceivableTO: City of Tukwila Jim Haggerton, Mayor INFORMATIONAL MEMORANDUM Mayor Haggerton Finance and Safety Committee FROM: Peggy McCarthy, Finance Director BY: Laurie Anderson, Fiscal Specialist DATE: September 30, 2014 SUBJECT: Cancellation of Accounts Receivable ISSUE Each year a resolution comes before the Council for the cancellation of uncollectible accounts receivable. For 2014, these items include: False Alarms equaling $200.00, Miscellaneous Billings equaling $35,931.12 and NSF checks equaling $109.50 for a total amount of $36,240.62. 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 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 in 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 have 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. • While in active collections status, the 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 collections process. 11 12 INFORMATIONAL MEMO Page 2 DISCUSSION The proposed amount of the 2014 cancellation of Accounts Receivable of $36,240.62 is higher than last year's total of $29,644.47. This is attributable to three main factors: • One of the requested write-offs is for $8,188.10. The original amount of this invoice, which is for damages to a brick wall and masonry art at 14800 TIB, was $19,019.84. However, the party involved had a limited amount of insurance. In settlement, the City was paid $10,831.74 thus leaving $8,188.10 to be written off. We are unable to pursue this further as insurance has paid what was available. • Another of our requested write-offs is for an invoice for damages to a street light. It was damaged by a hit and run driver and, as such, we do not know whom to bill. The invoice total is $1,853.46. • The parties involved in five of the street department invoices being proposed for write-off had no insurance. One involved a vehicular homicide. The total of these invoices is $25,714.56. • The total of the receivables referenced above is $35,756.12 which is 98.6% of the write-off total. • At times, we do receive payment for receivables that have been written off. A street department invoice for $6,006.80 written off in 2013, was paid in 2014. Originally, this receivable was an Info Only/Hit and Run billing. However, unexpectedly, Geico Insurance contacted us and we were then able to secure payment to the City. • During the 2013 write-off process, a question was asked regarding how a party can contact the City about these receivables. The phone number for the Finance Department is on all invoices sent out. FINANCIAL IMPACT The financial impact of cancelling $36,240.62 will be to reduce our accounts receivable balance by this amount in keeping with Generally Accepted Accounting Principles (GAAP) for the writing off of bad debt. 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 of those accounts where we cannot identify the responsible party. Accounts covered by bankruptcy law cannot be pursued. RECOMMENDATION The Council is being asked to approve the annual resolution authorizing the cancellation of Accounts Receivable and to forward this item to the Consent Agenda of the October 20, 2014 Regular Meeting. ATTACHMENTS Draft Resolution with Attachment A. W:I2014 Info Memos-CouncillAccountsReceivable.doc G7 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF TUKWILA, WASHINGTON, ORDERING THE CANCELLATION OF PAST DUE ACCOUNTS RECEIVABLE AND RETURNED CHECK WRITE -OFFS. WHEREAS, certain receivables and checks have been deemed uncollectible after efforts by both the City and a collection agency have been unsuccessful; and WHEREAS, the City will continue to pursue these receivables when practical; NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF TUKWILA, WASHINGTON, HEREBY RESOLVES AS FOLLOWS: Miscellaneous Accounts Receivable and Returned Checks. The total of $36,240.62 (per Attachment A) is deemed uncollectible. PASSED BY THE CITY COUNCIL OF THE CITY OF TUKWILA, WASHINGTON, at a Regular Meeting thereof this day of , 2014. ATTEST /AUTHENTICATED: Christy O'Flaherty, MMC, City Clerk De'Sean Quinn, Council President APPROVED AS TO FORM BY: Filed with the City Clerk: Passed by the City Council: Resolution Number: Rachel Turpin, City Attorney Attachment A — Past -Due Accounts Receivable and Returned Check Write -offs as of August 31, 2014 W: \Word Processing \Resolutions \Past Due Accts Recv & Write -offs 9 -30 -14 LA:bjs Page 1 of 1 13 14 Date 08/30/12 10/08/12 10/19/12 10/19/12 10/19/12 12/09/11 06/18/12 12/05/11 Attachment A- Past Due Accounts Receivable and Returned Check Write-offs as of 8/31 /2014 Customer Badar Halaal Foods Corporation Badar Halaal Foods Corporation Badar Halaal Foods Corporation Badar Halaal Foods Corporation Badar Halaal Foods Corporation Bank of America Cheryl Johnson Matrix Transportation Total False Alarms False Alarms Fund # Amount 000 25.00 000 25.00 000 25.00 000 25.00 000 25.00 000 25.00 000 25.00 000 25.00 200.00 Invoice /Ck # PF -01939 PF -01964 PF -01992 PF -02029 PF -02029 PF -01806 PF -01932 PF -01757 For Police False Alarm Police False Alarm Police False Alarm Police False Alarm Police False Alarm Police False Alarm Police FaLsc Alarm Police False Alarm Notes To collections 1/22/13 - Per DoR- company closed on 6/30/12. To collections 1/22/13 - Per DoR- company closed on 6/30/12. To collections 1/22/13 - Per DoR- company closed on 6/30/12. To collections 1/22/13 - Per DoR- company closed on 6/30/12. To collections 1/22/13 - Per DoR- company closed on 6/30/12. B of A moved out -not their bill -bldg vacant To collections 9/24/14. No further response from customer Verified that there has been no such company at this address. Date 12/31/11 12/31/13 10/11/12 03/05/12 04/27/12 07/31/13 03/15/12 12/31/13 03/15/12 08/24/12 Date 11/10/12 06/01/13 Customer Clara Contreras Info Only- Hit and Run Juba Computers Daniel Martinez Samuel Raymundo Ridge Spring Child Care Tiyona Russ Titan Insurance /Dat Le Hugo Vaca - Valencia Wilton Crest Apartments Total Misc. Billings Customer Jamila A. Coleman Maiesha Barquet Total Returned Checks Write-off Grand Total Miscellaneous Fund # Invoice /Ck # Amount For 000 MB -00954 $ 1,949.97 knocked down streetlight pole 000 MB -01444 $ 1,853.46 repairs to streetlight pole 000 RF -00864 $ 85.00 Fire re- inspection fee 000 MB -01005 $ 14,016.70 damaged streetlight & foundation 000 MB -01037 $ 5,367.62 jersey barrier repairs 000 RF -01028 $ 60.00 Fire re- inspection fee 000 MB -01006 $ 443.38 damaged trees in accident 000 MB -01437 $ 8,188.10 damaged brick wall & masonry art 000 MB -01008 $ 3,906.89 damaged streetlight pole & luminaire 000 RF -00844 $ 60.00 Fire re- inspection fee S 35, 931.12 Returned Checks Fund # Invoice /Ck # 000 1051 $ 630 204 $ Amount 77.00 32.50 109.50 $ 36,240.62 For Youth Athletics -TCC Swim Lessons -MPD Notes Moved -no insurance- To EPR 4/23/12 (old collection agency) Unknown driver- unable to bill responsible party To Armada 1/25/13- Company closed 3/25/13 per licen To EPR 5/4/12- No insurance or assets No insurance- vehicular homicide involved- to Armada 1/2/14 Not billed to right party- in meantime right party moved away To Armada 3/6/13- No insurance Had limited insurance -this was portion left after pymt to City No insurance -to Armada 1/2/14 No response- notified Kathy Stetson -To Armada 6/6/13. Notes To Armada Corp 8/13/13. To Armada Corp 8/13/13. EPR= Evergreen Professional Recoveries; our old collection agency. Armada Corp has been our collection agency since mid -2012. Write -offs 08 31 14.xlsx 10/1/2014