5.3.1 Calculate Allowance for Uncollectible Receivables

Policy Statement

Implicit in every receivable is a measure of doubt about its collectability. Therefore, an allowance for uncollectible receivables must be calculated and recorded for every unit that has receivables transactions. Units should keep this allowance in mind when building the pricing structure for their goods and services.

Reason for the Policy

Accurate calculation of the allowance for uncollectible receivables.

Applicability of the Policy

All receivables.

Procedure

To calculate the allowance for uncollectible receivables:

1. If the unit is using Banner Accounts Receivable (Banner AR), University Bursar Business Operations calculates each unit's allowance for uncollectible accounts and records it in the unit's Fund in the Banner General Ledger.
2. If the unit does not use Banner AR, calculate an allowance for uncollectible accounts and record it in the Banner General Ledger annually at fiscal year-end. Consult Allowance for Uncollectible Accounts Receivables for detailed information and instructions. If you need additional help, contact University Bursar Business Operations for requirements at BursarCollections@uillinois.edu.