Consideration and Approval of Non-sufficient Funds (NSF) Check Write-Offs: Delinquent and uncollectible accounts for Fiscal Year 2017.

 

Council regularly reviews and approves any customer write off as part of generally accepted business practices.  This standard business practice includes the write-off of uncollectible checks.  City staff has exhausted collection efforts on the eligible accounts and will no longer actively collect on them.  Where possible, the amount owed has been applied against any credit of the debtor and any additional outstanding amounts may be collected in the future.

Each year, the City reserves funds, anticipating that there will be uncollectible accounts. The reserves are computed at the end of each fiscal year to project the potential write-off for the upcoming year.  These are based on a calculation utilizing aged accounts, current year write-offs, as well as the consideration of anomalies and anticipated changes in procedures impacting collections.

In FY 2017, the amount reserved for Municipal Services, Miscellaneous Accounts Receivables, and Sales Tax approximated $345,000. To-date, staff has recommended write-offs for Municipal Services and Miscellaneous Accounts Receivables for FY17 in the amount of $81,849.88,  The $7,374.54 for non-sufficient funds reflects .02% of the total reserved amount.

 None.

 Team Flagstaff Strategic Plan - 2017:
Strategic priority #3: Foster a resilient and economically prosperous city
1. Enhance the organization’s fiscal stability and resourcefulness.
2. Deliver outstanding services through a healthy environment, resources and infrastructure.
5. Continue to enhance community outreach and engagement.

 None.

1. Authorize the write-off of uncollectible non-sufficient fund checks.
2. Do not authorize the write-offs of uncollectible non-sufficient fund checks and continue collection efforts.

Before any account is eligible for write-off, staff must initiate collection efforts on each check after it is returned by the bank. When collection efforts are exhausted, the check is eligible for a write- off. If possible, any amounts due are applied to the customer's credit. If placed on the customer’s credit, the amount owed remains active for 7 years after the delinquency date. Application against the credit of the debtor may lead to the recovery of some of the delinquent amounts in the future. This often occurs when customers apply for credit via other avenues (i.e., mortgages, car loans, apartment rentals, etc.).

For FY 17, the City is writing off Insufficient Fund (NSF) Checks for the first time in five years.  Many of the checks have undergone exhaustive research efforts by staff to locate the originator and/or apply the amounts owed to other municipal services accounts.  As the remaining NSF dollar amounts and overall volume are typically small, the write-offs have not occurred on an annual basis.  Instead, NSF check write-offs occur on an "as needed" basis.
 

Write-Off Year	Number of Write-Off Accounts	Amount of Write Off Dollars
FY12	83	$4,566.55
FY17	53	$7,374.54

In FY 2017, the amount reserved for Municipal Services, Miscellaneous Accounts Receivables, and Sales Tax approximated $345,000.  To-date, staff has recommended write-offs for Municipal Services and Miscellaneous Accounts Receivables for FY17 in the amount of $81,849.88, .  The $7,374.54 for non-sufficient funds reflects .02% of the total reserved amount.

Staff, using billing statements, letters, and telephone calls, has worked the write-off checks. When customers fail to make payments, they are denied access to future City services and, when possible, the amount owed is reported to a credit agency.

 None.

It is sound financial management practice to reduce assets to reflect their true valuation. Failure to write-off accounts deemed uncollectible overstates the asset value of the City.

 Inform.