University System of New Hampshire
Financial and Administrative Procedures

BILLING FOR GOODS SOLD OR SERVICES RENDERED
Procedure 10-002
Issued By: Controller
Issued Date: 03/01/00

A. SUMMARY OF ADMINISTRATIVE PROCEDURE

1. Authority and responsibility for sales on credit. All sales of goods or services by USNH departments are to be made only upon receipt of cash (i.e., no sales are allowed to be made on credit) unless written approval in advance is received from the campus Chief Financial Officer (CFO). Departments with CFO approval to make credit sales must follow the policies and procedures of the UNH Credit and Collections department (unless specifically exempted in writing by the campus CFO) relative to extension of credit, invoice and statement generation and frequency, aging analysis, delinquent account follow-up, and write-off of uncollectible accounts. All accounts receivable resulting from amounts owed by students, governments, employees, contractees, grantees, and other customers must be reconciled to CUFS by the responsible account manager on a monthly basis.

B. DETAILED OPERATING PROCEDURES

1. When is revenue recorded? Revenue should be recorded when an exchange has taken place and the earning process is complete. An exchange has taken place when ownership of the goods is transferred to the buyer or when services for the buyer have been fully performed. The earnings process is complete when (a.) all necessary costs to produce the revenue have been incurred and recorded and, (b.) collection of the sales price is reasonably assured by receipt of money or by a promise to pay money at some future date.

   1. If all necessary costs to produce the revenue have not yet been incurred, the amount of the cash or promise to pay (i.e., accounts or notes receivable) is recorded as deferred revenue, either in a special CUFS 3*** fund or in a special balance sheet account 24** (deferred revenue) or 25** (deposits).

   2. The collection of the sales price is generally considered to be reasonably assured when an invoice is sent to a customer or when cash is received from a customer, whichever comes first.

   In accordance with the accrual basis of accounting, revenue is recorded when it is earned, without regard to the time of receipt. (The cash basis of accounting, which is not generally applicable to USNH operations, calls for recording revenue only when cash is received.)

2. Accounting for credit sales transactions. Sales invoices are generally recorded in CUFS via an approved campus form (the Charge Sale Invoice Form at UNH, Miscellaneous Charge Form at KSC, and Miscellaneous Deposit Form (MISP) at PSC) immediately upon forwarding the sales invoice to the customer, in accordance with the policies and procedures of the UNH Credit and Collections department. The appropriate CUFS revenue source code is credited and a CUFS fund - balance sheet account is debited. The balance sheet must be in the 13** range and the fund will be determined by the USNH Controller's Office. When the cash is eventually received from the customer, the 13** balance sheet account is credited.

3. Accounting for uncollectible accounts and billing errors. If accounts receivable must eventually be written off due to uncollectibility, this is an expense which must be recorded in an appropriate expense object code, not a reduction of revenue. Uncollectible accounts are always recorded as a charge to an expense object code. However, if an error was made billing the student or customer too much for which a subsequent corrected billing entry is made, then this is recorded as a reduction of revenue.