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Home My WebLink AboutFIN 2017-10-03 Item 2A - Resolution - Accounts Receivable Write-OffsTO: FROM: BY: City of Tukwila Allan Ekberg, Mayor INFORMATIONAL MEMORANDUM Finance Committee Peggy McCarthy, Finance Director Laurie Anderson, Fiscal Specialist CC: Mayor Ekberg DATE: September 25, 2017 SUBJECT: Cancellation of Accounts Receivable ISSUE Each year a resolution comes before the Council for the cancellation of uncollectible accounts receivable. For 2017, these items include: False Alarms equaling $4,750.00, Miscellaneous Billings equaling $4,224.76 and returned checks equaling $ 30.49 for a grand total of $9005.25. 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. INFORMATIONAL MEMO Page 2 DISCUSSION The proposed amount of the 2017 Cancellation of Accounts Receivable of $9005.25 is $37,675.21 lower than last year's total of $46,680.46. This is attributable to three main factors: • This year we are only writing off one street department invoice in the amount of $498.15. Normally there are multiple street department invoices being written off with much higher dollar amounts. • We are still seeing the positive impact of not issuing or renewing a business license until all past -due debt has been paid to the City. • We are also still seeing a positive impact of having higher false alarm fees. While $25.00 and $50.00 fees were often ignored in the past, since the fees have gone up to $150.00 and $200.00, recipients are paying much more attention to the invoices we send them and timely payments have increased. FINANCIAL IMPACT The financial impact of cancelling $9005.25 will be to reduce our accounts receivable balance by this amount in keeping with Generally Accepted Accounting Principles (GAAP) for writing off 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 a responsible party cannot be identified. 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 Regular Meeting Consent Agenda of October 16, 2017. ATTACHMENTS Draft Resolution with Attachment A. 2 Z:\Council Agenda Items\Finance\10_3 Finance Committee \Info Memo 2017 AR Writeoffs.doc 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 $9,005.25 (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 , 2017. ATTEST/AUTHENTICATED: Christy O'Flaherty, MMC, City Clerk Dennis Robertson, Council President APPROVED AS TO FORM BY: Rachel B. Turpin, City Attorney Filed with the City Clerk: Passed by the City Council: Resolution Number: Attachment A — Past -Due Accounts Receivable and Returned Check Write-offs as of August 31, 2017 W:\Word Processing\Resolutions\Past Due Accts Recv & Write-offs 9-27-17 LA:bjs Page 1 of 1 3 4 Date 05/14/15 12/10/15 12/22/15 12/22/15 05/I4/15 05/14/15 12/22/15 11/25/15 12/08/15 12/10/15 12/10/15 12/22/15 12/22/15 12/22/15 12/22/15 12/31/15 12/31/15 03/01/16 03/01/16 04/04/16 04/04/16 06/22/15 06/22/15 06/22/15 06/22/15 Attachment A- Past Due Accounts Receivable and Returned Check Write-offi as of 8/31 /2017 Customer East African Bazaar Mini Mall East African Bazaar Mini Mall East African Bazaar Mini Mall East African Bazaar Mini Mall NW Asia Trading Co., LLC NW Asia Trading Co., LLC NW Asia Trading Co., LLC Oriza Jewelers Oriza Jewelers Oriza Jewelers Oriza Jewelers Oriza Jewelers Oriza Jewelers Oriza Jewelers Oriza Jewelers Oriza Jewelers Oriza Jewelers Oriza Jewelers Oriza Jewelers Oriza Jewelers Oriza Jewelers South General Store South General Store South General Store South General Store Total False Alarms Fund # Invoice/Ck # Amount For 000 PF -02742 $ 150.00 Police False Alarm 000 PF -02886 $ 200.00 Police False Alarm 000 PF -02930 $ 200.00 Police False Alarm 000 PF -02931 $ 200.00 Police False Alarm 000 PF -02750 $ 150.00 Police False Alarm 000 PF -02751 $ 200.00 Police False Alarm 000 PF -02954 $ 200.00 Police False Alarm 000 PF -02826 $ 150.00 Police False Alarm 000 PF -02865 $ 200.00 Police False Alarm 000 PF -02908 $ 200.00 Police Falx Alarm 000 PF -02909 $ 200.00 Police False Alarm 000 PF -02955 $ 200.00 Police False Alarm 000 PF -02956 $ 200.00 Police False Alarm 000 PF -02957 $ 200.00 Police False Alarm 000 PF -02958 $ 200.00 Police False Alarm 000 PF -03007 $ 200.00 Police False Alarm 000 PF -03008 $ 200.00 Police False Alarm 000 PF -03046 $ I50.00 Police Falx Alarm 000 PF -03047 $ 200.00 Police False Alarm 000 PF -03073 $ 200.00 Police False Alarm 000 PF -03074 $ 200.00 Police False Alarm 000 PF -02768 $ 150.00 Police False Alarm 000 PF -02769 $ 200.00 Police False Alarm 000 PF -02770 $ 200.00 Police False Alarm 000 PF -02771 $ 200.00 Police False Alarm S 4, 750.00 Notes Closed per Business Licensing -unable to locate responsible party Closed per Business Licensing -unable to locate responsible party Closed per Business Licensing -unable to locate responsible party Closed per Business Licensing -unable to locate responsible party To collections 8/19/15- business closed 04/09/15 To collections 8/19/15- business closed 04/09/15 To collections 8/19/15- business closed 03/21/16 "Left Town" July 2016 -unlicensed, unresponsive, in collections "Left Town" July 2016 -unlicensed, unresponsive, in collections "Left Town" July 2016 -unlicensed, unresponsive, in collections "Left Town" July 2016 -unlicensed, unresponsive, in collections "Left Town" July 2016 -unlicensed. unresponsive, in collections "Left Town" July 2016 -unlicensed, unresponsive, in collections "Left Town" July 2016 -unlicensed, unresponsive, in collations "Left Town" July 2016 -unlicensed, unresponsive, in collections "Left Town" July 2016 -unlicensed, unresponsive, in collections "Left Town" July 2016 -unlicensed, unresponsive, in collections "Left Town" July 2016 -unlicensed, unresponsive, in collections "Left Town" July 2016 -unlicensed, unresponsive, in collections "Left Town" July 2016 -unlicensed, unresponsive, in collections "Left Town" July 2016 -unlicensed, unresponsive, in collections Per collections -refuses to pay -unresponsive to letters and phone calls Per collections -refuses to pay -unresponsive to letters and phone calls Per collections -refuses to pay -unresponsive to letters and phone calls Per collections -refuses to pay -unresponsive to letters and phone calls Date 03/10/15 04/26/16 05/07/15 12/31/13 12/31/12 03/11/15 07/09/15 01/11/16 Customer Courtyard at So Station Apts. Courtyard at So Station Apts. East African Bazaar Fidelity National Title Hertz Equipment Rental Jacory Jiles Regalia Jewelers Regalia Jewelers Total Misc. Billings Date Customer 04/08/16 Richard Logo Total Returned Checks Write-off Grand Total iscellaneous Fund # Invoice/Ck # Amount 000 RF -01210 $ 110.00 000 RF -01330 $ 60.00 000 RF -01247 $ 60.00 640 MB -01454 $ 2,934.00 401 MB -01217 $ 417.61 000 MB -01768 $ 498.15 000 RF -01265 $ 60.00 000 RF -01292 $ 85.00 $ 4,224.76 For Fire Re -Inspection Fee Fire Re -Inspection Fee Fire Re -Inspection Fee Lien -Financial Assistance Agreement Water loss & damaged fire hydrant Provide traffic control for accident Fire Re -Inspection Fee Fire Re -Inspection Fce Fund # Invoice/Ck # 411 1169 Returned Amount $ 30.49 $ 30.49 $ 9,005.25 For Greens Fees & Candy Notes To collections 5/18/15- handled by Code Enforcement To collections 8/14/16- handled by Code Enforcement To collections 8/19/15- business dosed per licensing Too old for collections -unable to get response from prior customer To collections 5/23/12 but was working with cutomner to collect To collections 8/19/15- no insurance To collections 9/23/15- business closed 4/19/17 To collections 3/23/16- business closed 4/19/17 Notes Golf was working to collect funds -to collections 9/25/17. Writeoffs- Attachment A 8-31-17 9/26/2017