Accounts Receivable: Unused Credits

Credits can appear on customer accounts for various reasons, often stemming from payment discrepancies or adjustments in transactions. These include:

1. Overpayment or Duplicate Payments: Customers may overpay due to entry errors or accidentally duplicate payments for previously paid invoices.
2. Discounts and Returns: Credits can result from discounts applied after an invoice is sent or when customers return goods after already paying their invoice.
3. Prepayments for Future Services: In some cases, departments may strategically request prepayments (deposits) from customers with a history of delinquent payments. These prepayments are considered credit balances on the customer's account and are applied to future invoices.

Responsibilities and Procedures

• The department must provide statements or documentation to inform customers about any credits on their account.
• Customers are responsible for reviewing statements and requesting any invoices and credits they are missing in their records.
• The customer should deduct credits from future payments of invoices or request a refund of them if no future invoices are pending.

Abandoned Credits and Reporting

• If credits greater than $25 remain unused for 3 to 5 years, they are considered abandoned.
• Nebraska State Statutes 69-1302-1310 require holders of abandoned property (tangible and intangible) to submit the property to the State of Nebraska’s Unclaimed Property Division when the property exceeds the dormancy period. At UNL, "holders of abandoned property" refers to departments that possess property belonging to another business entity or person.
• Reporting is due to the State of Nebraska by November 1 for the fiscal year ending the preceding June 30.
• The Bursar reports to the State. However, the department bears full responsibility for providing all information to the Bursar in a timely manner.

Based on the type of credit, the credit will either have a 3-year or a 5-year dormancy period before it is considered abandoned.

3 Years

• Credit memo – A credit memo, also known as a negative invoice, is issued by UNL (as the seller) to a buyer to reduce the amount owed for a previous invoice. It represents a reversal of charges previously billed to the customer.  A credit memo usually results from amount owed error, price adjustment, return or damaged product.

5 Years

• Payment for goods & services – Payment is received, but no goods or service was delivered. For example, customer was set up as a prepayment account and made the payment, but never ordered any goods/services.
• Customer Overpayment – Payment is received for a previously paid invoice (duplicate payment) or customer made an entry error resulting in overpayment of the invoice.
• Unidentified remittance – Payment is received but department is unable to identify which invoices or credit memos to apply.
• Credit Balance – Customer account is in overall credit balance, meaning the total amount of credits on the customer's account exceeds the total amount of debits resulting in a credit/negative balance. The balance has not been refunded to customer.
• Unrefunded overcharges – Customer is overcharged, possibly due to duplicate billing or billing error, and has not received any goods or services.
• Refunds Due - Amount due to customer for unsatisfactory service or unfulfilled goods or services.

Aug 1 – 15: Department Mails Notification Letter

For each item of unclaimed property above $25, the department must send a notification letter to the last known address of the owner. The notification letter must be mailed between August 1 and August 15. With an abundance of caution, this notification process meets the State of Nebraska's due diligence requirement described in the "Nebraska Unclaimed Property Holder Reporting Handbook."

Use this letter template letter template for both dormancy periods:

• 3 Year - Credit memos
• 5 Year - Other credit items

Notification Letter Requirements

• Use the letter template. Replace text in red with the appropriate information.
• Letters must be dated and mailed between Aug 1 – 15.
• Indicate deadline date for responding. The date is 60 days from the date of the letter.
• If available, include documentation with the letter that substantiates each credit amount.
• Before mailing, retain a copy of the letter and documentation for department records.

Oct 15 – 25: Department Responds to Notification Responses/Nonresponses; Reports to Accounting

The department must maintain all documentation of responses and non-responses in their departmental records.

Respondents – If a customer responds, then the department works with the customer to resolve the issue, e.g., issue a refund check or customer agrees to deduct on next payment, etc.  The amount should not be reported to Accounting and won't be sent to the State of Nebraska.

Nonrespondents – If a customer does not respond or the letter is returned as undeliverable, the department must:

1. Complete the Abandoned Property Schedule, which is an Excel spreadsheet formatted for uniform reporting of abandoned property to the State of Nebraska. Each credit/transaction must be entered as an individual line on the Schedule. Please don't modify the spreadsheet's formatting in any way as it will disrupt the reporting process.
2. No later than October 25th, the department must submit the completed Abandoned Property Schedule to Accounting, accounting@unl.edu.

How to Complete the Abandoned Property Schedule

Column fields marked below with an asterisk (*) are REQUIRED. Column fields that are not marked with an asterisk must be completed ONLY IF known. On the Abandoned Property Schedule spreadsheet, required fields are highlighted yellow.

Nov 1: Report Due to State of Nebraska

1. On November 1, the Bursar sends the Abandoned Property Schedule to State of Nebraska Unclaimed Property Division.
2. Accounting makes entries to record the transfer to the State.
3. If customers contact the department regarding items reported to the State, the department should direct them to the State of Nebraska Unclaimed Property Division website at NebraskaLostCash.nebraska.gov to claim their property.