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Introduction

GFEBS Debt Management

 

Click the boxes to display additional terms that you will need to know in order to understand the Debt Management process.

Penalties

 

Penalties are charges on delinquent debt to discourage delinquencies and encourage early payment of the debt in full. The rate to be assessed is set by the law at no more than six percent per year and is assessed on the portion of a debt remaining delinquent for more than 90 days. The charges will accrue and be assessed from the date of delinquency.

Dunning Activities

 

This is the process of sending demand letters at day 31 and day 61 to debtors in order to remind them of debts that have become delinquent and require prompt payment. The Dunning process is the continuation of the due process of the debtor.

Allowance for Doubtful Accounts

 

The allowance for doubtful accounts is the potential accounts receivables losses.  It recognizes it is unlikely to recover or collect on all delinquent debts, and the estimated uncollectible amount constitutes a “bad debt expense” to the government.

Write-Off Process

 

An accounting action that results in the reporting of the debt or receivable as having no value on the financial statements report. Write-off has two classification statuses: Currently Not Collectible (CNC) or Closed Out.  

Currently Not Collectible (CNC)

 

Currently Not Collectible (CNC) is a write-off status of debts when the net debt value is equal to zero. The debt collection tools move from active to passive action but the accounts receivable are eligible for further collection activities.