Budget and Finance Policy and Procedure Office
A Division of The Office of Budget and Finance
A Division of The Office of Budget and Finance
This procedure provides operational guidance for implementing Policy FN02 Billing and Accounts Receivable.
It establishes standardized processes for:
Exhibit A: Policy - Procedure Crosswalk identifies how each section of Policy FN02 Billing and Accounts Receivable is operationalized within this procedure.
These processes support strong internal controls, accurate financial reporting, and compliance with federal, state, and University requirements.
This procedure applies to all University units that generate non-student accounts receivable for goods or services provided to external customers.
Receivables related to sponsored awards are governed by Procedure RA2062 Sponsored Awards Accounts Receivable.
All terms used in this procedure follow the definitions established in Policy FN02 Billing and Accounts Receivable.
In the event of any inconsistency between this procedure and Policy FN02 Billing and Accounts Receivable, the policy governs.
The following roles support the proper billing, collection, recording, and monitoring of non-student accounts receivable. Responsibilities are divided to maintain appropriate segregation of duties, internal control, and financial accountability.
The business unit initiating the transaction is responsible for the operational activities related to the sale of goods or services.
Responsibilities include:
Business units may not independently create invoices or post payments in SIMBA unless specifically authorized.
Central Accounts Receivable manages operational non-student receivables activities including:
Treasury and Controllership teams provide financial oversight by:
Provides governance oversight and is responsible for:
This procedure ensures that accounts receivables arising from non-student and/or non-sponsored award transactions are issued, recorded, monitored, and collected in an accurate and timely manner.
Central Accounts Receivable is authorized to manage non-student receivables and maintain official financial records.
Departments may not independently maintain receivable balances unless approved under an authorized system exclusion.
All non-student receivable activities must be processed through the System for Integrated Management, Budget, and Accounting (SIMBA).
Decentralized billing systems may be used only if:
Approved systems are subject to periodic review.
Before requesting a new customer account, business units must verify whether the customer already exists in SIMBA.
Central Accounts Receivable customer account numbers begin with 7000.
Possible outcomes:
Central Accounts Receivable will:
Central Accounts Receivable will create the customer record and generate invoices if requested.
To update customer information:
Central Accounts Receivable will update the customer record and generate invoices if requested.
Billing must follow the requirements established in Policy FN02 Billing and Accounts Receivable.
Operational controls include:
Invoices must include the elements required by Policy FN02 Billing and Accounts Receivable - Required Invoice Elements.
Central Accounts Receivable verifies invoice completeness before issuance.
Business units selling goods or services must maintain documented rate schedules.
Central Accounts Receivable verifies that billing aligns with approved rate schedules.
When applicable, rate schedules must comply with Policy FN26 Institutional Rates and Fees.
Written agreements are required when transactions involve:
Contracts must be reviewed through Central Procurement - Contracts Management.
Treasury/Accounts Receivable may evaluate customer credit risk in accordance with Policy FN02 Billing and Accounts Receivable prior to extending credit when risk indicators are present.
Credit evaluations are required for:
As part of the credit assessment, Treasury/Accounts Receivable may:
Credit decisions and supporting analysis must be documented and retained in accordance with University records retention requirements.
Business units must coordinate with Treasury/Accounts Receivable before committing to terms that involve extended payment periods or material financial exposure.
Receivable activities must comply with applicable tax laws.
Operational responsibilities include maintaining exemption documentation and coordinating with University tax specialists when required.
The Office of Tax Services, a division of the Office of Budget and Finance are available to assist with tax compliance.
Transactions involving international customers must comply with:
Payments from sanctioned countries are prohibited unless approved by the appropriate University authority.
Payments may be made by:
Cash payments are not accepted for non-student receivables.
All credit card payments must comply with PCI-DSS standards.
Payments must be applied to the appropriate invoice in SIMBA.
ACH and wire payments must be verified using the Incoming Wire Report before posting.
Converge reports will be used to match invoice numbers entered to open invoices for payments made online.
Checks must be processed using Remote Deposit Capture in accordance with:
Supporting documentation must accompany each deposit.
Customers must report invoice discrepancies within 30 days of the invoice date.
Central Accounts Receivable will:
Invoices cannot be edited once posted.
Adjustments must be processed through a credit memos supported by documentation and appropriate approvals.
Credit memo processing must follow segregation-of-duties requirements.
Central Accounts Receivable manages collection activities for overdue invoices.
Collection notices are as follows:
Further collection action may occur when payment remains outstanding.
All collection activities must comply with applicable federal and state laws, including the Fair Debt Collection Practices Act (FDCPA).
When an invoice reaches 90 days past due, Central Accounts Receivable notifies the business area and Financial Planning, Analysis, and Coordination (FPAC) representatives.
The business area must decide whether to:
The business area must provide all supporting documentation to Central Accounts Receivable before referral.
Accounts may be written off after collection efforts are exhausted.
Approval thresholds:
Documentation supporting the write-off decision must be retained.
Central Accounts Receivable maintains an allowance for doubtful accounts consistent with Generally Accepted Accounting Principles (GAAP).
Allowance balances must be reviewed quarterly.
Customer overpayment must be refunded unless applied to future invoices.
Refunds must be issued using the same payment method used for the original transaction, unless restricted by banking or PCI-DSS requirements.
All refunds must be supported by documentation.
Central Accounts Receivable performs ongoing monitoring including:
These activities help ensure financial accuracy and early identification of collection risks.
Operational standards include:
Receivable activities must comply with:
Strong internal controls include:
Suspected fraud must be reported to the Director of Treasury/Accounts Receivable.
Requests to operate decentralized receivable systems must comply with Policy FN02 Billing and Accounts Receivable and be approved by the Director of Treasury/Accounts Receivable and the Associate Vice President for Budget and Finance & Controller.
Approved exclusions are subject to annual review.
Failure to follow this procedure may result in corrective action by the Office of Budget and Finance.
Possible actions include:
Intentional misuse of receivable processes may result in disciplinary action.
Violations of University policy should be reported to the appropriate supervisor, unit manager, Human Resources representative, or the office responsible for the relevant policy or procedure. If these channels are insufficient or unavailable, individuals may submit an anonymous report through the Penn State University Hotline, accessible via the Reporting at Penn State website.
Returned checks must be handled according to Procedure FN2002 Processing Returned Checks.
Central Accounts Receivable collaborates with Internal Auditing and external auditors during financial reviews involving receivable processes.
Receivable records must be retained in accordance with Policy AD35 University Archives and Records Management, and Records Retention Schedules.
Additional questions may be directed to the Office of Records Management.
For questions or additional details, please contact Central Accounts Receivable.
To request changes to this procedure, please contact the Policy and Procedure Office by submitting a Technical Support Request form.
May 28, 2026