Designing Write-Off Controls
Set up a matrix using the collection classes you designed when you were designing your collection procedures ( Designing Your Collection Procedures ).
Account's Collection Class Contract's Write-Off Debt Class |
Residential | Commercial/Industrial |
Normal Write Off | ||
N/A |
Each cell should have a "write-off control" that defines what to do when the system detects finaled debt that hasn't been paid. This is true even of the "N/A" write-off debt class. Why? Because you may want the system to write-down these stopped contract's when they have a small balance. For example, if you have a write-off contract that subsequently receives a partial payment that leaves a small amount owing, you probably want the system to generate a write-down adjustment (so that the write-off contract will close). We'll initially fill in the matrix for the "N/A' write-off debt class.
Account's Collection Class Contract's Write-Off Debt Class |
Residential | Commercial/Industrial |
Normal Write Off | ||
N/A |
Attempt to reduce the contract's balance to zero using the following methods: Synchronize current balance with payoff balance. If the debt is < $10 and > $-1, write down the debt using a write-down adjustment. |
Attempt to reduce the contract's balance to zero using the following methods: Synchronize current balance with payoff balance. If the debt is < $10 and > $-1, write down the debt using a write-down adjustment. |
For each cell that isn't designated as N/A, you need to answer the following questions:
- Are you allowed to transfer debt to other non-closed contracts linked to the account? If so, you need to define the algorithm used to do such. Refer to Setting Up Write-off Control for more information about this algorithm.
- Are you allowed to write-down small amounts of debt (or small credits)? If so, you need to define the algorithm used to do such. Refer to Setting Up Write-off Control for more information about this algorithm.
- Should you refund credit balances with a check? If so, you need to define the algorithm to do such. Refer to Setting Up Write-off Control for more information about this algorithm.
- If debt remains after doing the above, how do you write it off (e.g., do you first refer the debt to a collection agency and only write it off after waiting 30 days)?
We'll fill in the above matrix with our assumptions:
Account's Collection Class Contract's Write-Off Debt Class |
Residential | Commercial/Industrial |
Normal Write-Off |
Attempt to reduce the contract's balance to zero using the following methods: Attempt to transfer debt to another active contract linked to the account. If the debt is < $10 and > $-1, write down the debt using a write-down adjustment. If the debt is <= $-1, create an A/P adjustment to refund the credit to the customer. If debt remains: Highest priority: If customer has a non-cash deposit, create the non-cash deposit write-off process. Otherwise, create the default write-off process for residential debt. |
Attempt to reduce the contract's balance to zero using the following methods: Attempt to transfer debt to another active contract linked to the account. If the debt / credit is < $10 and > $-10, write down the debt using a write-down adjustment. If the debt / credit is <= $-10, create an A/P adjustment to refund the credit to the customer. If debt remains: Highest priority: If customer has a non-cash deposit, create the non-cash deposit write-off process. Otherwise, create the default write-off process for commercial debt. |
N/A |
Attempt to reduce the contract's balance to zero using the following methods: Synchronize current balance with payoff balance. If the debt is < $10 and > $-1, write down the debt using a write-down adjustment. Because this debt class isn't eligible for further write-off processing, criteria used to process debt are not necessary. |
Attempt to reduce the contract's balance to zero using the following methods: Synchronize current balance with payoff balance. If the debt is < $10 and > $-1, write down the debt using a write-down adjustment. Because this debt class isn't eligible for further write-off processing, criteria used to process debt are not necessary. |
We can now use the information in the above matrix to design the necessary Write Off Process Templates and Write Off Event Types.