MANAGING YOUR RECEIVABLES

1. MANAGING YOUR RECEIVABLES Peggy Finnigan Jessup Madonna University

2. MADONNA UNIVERSITY

3. ABOUT MADONNA UNIVERSITY • Approx. 4,600 Students • Average Age of Students : 36 years of age • Private Institution • Primarily a commuter school: Only about 110 residential students • Students do not have to admitted to register for courses

4. ABOUT ME • 27 years at Madonna University • Prior to computers • Peg board receipting • Only full time employee in the department with of about 2,500 students • Manually invoiced students • Individual student files: invoices, notes, copy of registrations • Shoe box for a cash box • A subsidiary ledger was manually created on huge green accounting paper

5. In the beginning, 1979….. • Office Hours were 8 am to 7 pm Monday –Friday • 1 full time employee: ME • 1 part time employee who worked from 8 – 12 She manually prepared the invoices • 2 High School Students who worked from 3 – 7 each evening • 1 MU student who worked 3 days from 3 - 7

6. Collections in the beginning, • Prior to 1978, the sisters were kind hearted and listened with an empathic ear about why a student couldn’t pay • Sad stories were written down on the invoice and filed away never to be read again. • Student with sad stories were permitted to enroll and complete more terms without making payment • More & More promises to pay were made • Eventually, the university was in the red and financially struggling. • In 1978, the first lay person was hired as VP of Business & Finance and served on the Administrative Council with four other Nuns..

7. As the New VP of Business & Finance, review student files, (oh, wait there were no student files) • He recognized what needed to be done and made his recommendations: 1.) No more sad stories 2.) No enrollment for student’s if their past due was not paid in full. 3.) Limited number of staff employed RECOMMENDED: A COLLECITON PROCESS

8. New Collection Process Identified • Instead of 1/3 over a period of three months being, students would remit ½ prior to the start of the term or full payment prior to the start of the term. • The balance of tuition would be due the 6th week after the start of term • A Letter would be sent to each student who had a balance that was not remitted by the final term due date.

9. THE LETTER STATED: • Final, tuition for winter term was due: • A 5% late fee up to a max of $50 has been added to the account. • The new amount is now _______. • If payment is remitted to the university by _______ ( a two week date was provided) • Reminder, your account will be sent to a collection agency for more extensive collection efforts if payment is not remitted by the due date. • If you are wishing to make arrangements, please contact Student Accounts. • A reminder that no transcript or future enrollments will be permitted.

10. NO PAYMENT REMITTED, AS PROMISED, OTHER EFFORTS WERE TAKEN • The university negotiated with a collection agency for a series of 5 letters COST: $5.95 PER SET OF LETTERS • Letters sent every two weeks on collection agency letterhead • These series of letters are affective. The letter provide an opportunity for students to respond with all of their issues, other wise know as “I did not complete because of…. • This gives the institution an opportunity to adjust accounts prior to going to the more extensive collection agency at a % of the amount owed.

11. As the 9th week of letter writing approached, • A list of students who had not made arrangements or remitted payments are prepared and copies of contracts and contact information gathered for a more one on one collection agency.

12. In the Year 2007, • The same process is still used today with the exception of the number of letters included in the letter writing series: Only a set of THREE letters at the current cost of $6 are sent over a 6 week period. Experience indicated that If students are going to respond, it is in response to the first three letters. • Using 6 weeks instead of 10 weeks, gets the account to extensive collections faster.

13. Calendar of Activity for the Fall Term: September to December • Enrollment begins in March for the Fall Term after the final payment of winter • Since our Spring/Summer enrollment and due dates are after this March date, students may now owe for Spring/Summer & are registered for the upcoming Fall term. • June 25th Letters are sent to students and given an 8/1st due date to remit the past due amount for Spring/Summer or their Fall courses are cancelled. • In June of 2006, 373 students were sent these letters and only 46 students were dropped.

14. Tuition for Fall Term is due August 20th • August 23rd : Courses are cancelled for students who did not remit payment by the due date. • October 20th : Final Fall payment is due • November 5th : 544 Late Letters with the collection warning is sent out by • November 19th 313 Students were sent to the letter writing agency • January 11th: 67 Students were sent to the more extensive collection agency • A listing of these students and amounts are sent to Madonna University’s Administrative Council.

15. AUDIT OF 2006 • ADUIT COMMENTS THAT APPEARED IN THE MADONNA’S UNIVERSITY’S FINAL REPORT WHEN THE ANNUAL REPROT INDICATES THAT THE BAD DEBT WAS LESS THAN 1% OF THE TOTAL REVENUE FOR THE YEAR. • “ We recommend that current policies and procedures continue to be enforced. In our experience, bad debt is usually some where between 4 to 5% of the total revenue for most colleges & universities. Great Job.”

16. FINAL COMMENTS Administrative Support is critical. I always tell my administration that I am teaching appropriate money responsibility just as the student’s degree information is taught in the classroom. Consistency is very important for both the students and your staff. Follow through with written statements in your letter.