HomeMy WebLinkAboutFS 2012-10-02 Item 2A - Resolution - Cancellation of Past Due Accounts Receivable / Returned Check Write-OffsCity of Tukwila
Jim Haggerton, Mayor
INFORMATIONAL MEMORANDUM
FROM:
BY:
DATE:
SUBJECT
Mayor Haggerton
Finance and Safety Committee
Peggy McCarthy, Finance Director
Laurie Anderson, Fiscal Specialist
September 30, 2012
Cancellation of Accounts Receivable
ISSUE
Each year a resolution comes before the Council for the cancellation of uncollectible accounts
receivable. For 2012, these items include: False Alarms equaling $25.00, Miscellaneous Billings
equaling $8,423.64 and NSF checks equaling $329.25 in the total amount of $8,777.89.
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, a second notice is sent specifying due
date, after which, the receivable will be forwarded to the collection agency.
The collection agency sends a series of three letters for the original amount due,
with the final letter advising that legal action will be taken if payment is not made. If
there is no response from debtor to the letter series, the debt is then reported to
the national credit bureaus.
After the debtor is given a final opportunity to dispute the claim, the collection
agency then pursues legal action. This includes attaching checking accounts,
garnishments, lawsuits and other legal methods.
Note: Effective September 1, 2012 the City has changed collection agencies from
Evergreen Professional Recoveries to Armada Corp. This change will bring about a
Web- based, more efficient and streamlined collections process saving the City
both time and money. Another advantage to using Armada is that the City will
receive weekly payments of amounts collected, rather than payment on a monthly
basis as in the past.
DISCUSSION
The proposed amount of the 2012 cancellation of Accounts Receivable is significantly lower
than in prior years. This is attributable to two main factors:
Our new TMC regarding business licensing allows us to withhold a business
license until such time any debt owed by the licensee to the City has been paid. As
such, debtors who had not responded to our requests for payment are now paying
their debts in order to have their business license issued.
There were only two Street Department billing cancellations for 2012 (compared to
8 in 2011). One billing was an unknown hit and run ($3,372.70). The other,
($4470.94), reflects the balance due after a $10,000.00 payment by debtor's
insurance company. These two billings together comprise 89% of this year's
cancellations.
INFORMATIONAL MEMO
Page 2
FINANCIAL IMPACT
The financial impact of cancelling $8,777.89 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.
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 15, 2012
Regular Meeting.
ATTACHMENTS
Draft Resolution with Attachment A.
2 WA2012 Info Memos- Council\AccountsReceivable.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
$8,777.89 (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 2012.
ATTEST /AUTH ENTICATED:
Christy O'Flaherty, MMC, City Clerk Verna Seal, Council President
APPROVED AS TO FORM BY:
Shelley M. Kerslake, 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 September 30, 2012
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attachment a past due accounts receivable and returned check write-offs