Procurement Documents Resulting From a Requisition | KCTCS

Administrative Procedures

Collection of Accounts Receivable

Procedure Number: 5.7.4-P

Current Effective Date: 12/11/2020

Original Effective Date: 10/01/2008

Revision Dates: 02/01/2013, 07/01/2018, 12/11/2020

Revision Number: 3

Revision Summary:

Responsible Official: Assistant Vice President of Financial Services


1. Purpose

KCTCS has a fiduciary responsibility for proper and timely invoicing and payment collection for services rendered.  Payments from students and customers are expected in a timely fashion.

2. Scope

The college business office must ensure generally accepted accounting practices (GAAP) are followed by periodic monitoring and review of aged accounts and unit billing practices.

3. Billing and Invoicing


Billing and collection of accounts receivable are the responsibility of the college’s business office. 

  1. This function may be delegated as deemed appropriate to the specific unit providing the service, i.e., college’s business and industry/community and economic development office. 
  2. All student receivables resulting from assessment of tuition and fees for which the student receives academic credit must be invoiced through the PeopleSoft Student Financials Module, including third party billings. 
  3. Refer to Section 7.3 for information related to Third Party billing. 
  4. Billing for non-credit offerings not applicable to the PeopleSoft Student Financials Module must be billed using the Accounts Receivable/billing Module of PeopleSoft Financials.


Proper invoicing includes:

  1. Timely billing of services rendered with appropriate documentation as to the date the invoice is forwarded, e.g., prior to the last day to add/drop the class for a student receivable and 10 working days for all other receivables.
    1. Note: To reduce potential issue with student invoicing (student claiming they never received an invoice) it is recommended that the student be given a printed invoice at the time of their completed registration.
    2. This is in addition to the electronic invoice the student receives.
  2. The initial invoice is to include:
    1. Full explanation of services rendered
    2. Due date
    3. Remittance address (including online payment instructions)
    4. College contact person
    5. Complete college return address
    6. Telephone number
    7. Acceptable forms of payment (cash, check or credit card)
      1. Note: Cash payments must be made in person and a receipt issued.
      2. The invoice notice may be an electronic emailed invoice.
  3. Follow-up invoices are to include a statement that payment is expected in a timely fashion (by the published college due date) and delinquencies are subject to collection referral with collection fees in addition to the amount currently owed.

4. Aged Accounts


Accounts are considered past due if payment is not received by the college’s published due date or a third party payment agreement is not in effect transferring (or deferring) payment to another party. 

  1. Outstanding account receivables must be reviewed in a timely manner by the college business office, including re-review of outstanding accounts for clerical errors and payments received, but not posted.
  2. When accounts reach a past due status, the following steps are to be followed in the pursuit of collection.
    1. Accounts thirty (30) days past due – “Second Notice” will be sent. Included will be a reminder of payment terms, as well as a statement of KCTCS business process to refer delinquent accounts to the Commonwealth of Kentucky, Finance Cabinet – Department of Revenue per KRS 45.239(4) and KRS 45.241 et. seq., which authorizes collection of fees in addition to the amount currently, owed.  Reference to the first notice being sent via email is encouraged as a reminder of KCTCS’ electronic invoicing.
    2. Accounts sixty (60) days or older – “Final Notice” will be sent. Included will be notification that the account is in the process of being referred to the Commonwealth of Kentucky, Finance Cabinet – Department of Revenue per KRS 45.239(4) and KRS 45.241 et. seq. for collection unless payment or arrangement of payment is made within 10 days of the letter.  Further, once the account is referred, it will be subject to collection fees in addition to the amount currently owed.  See Section 7.4.XX for sample letter alerting of potential referral for collection.
  3. Note: Colleges must follow proper billing procedures and timelines for all past due notices.
    1. Failure to follow procedure may subject the college to legal action. 
    2. Specifically, all student or customer accounts referred to Commonwealth of Kentucky, Finance Cabinet – Department of Revenue per KRS 45.239(4) and KRS 45.241 et. seq. must have given appropriate notification to the student or customer and have included a statement of the student or customer’s liability for payment of accompanying collection fees. 
    3. Inclusion of the potential collection actions such as possible tax refund offsets, liens, or seizure of property is highly recommended for “Final Notice” letters.
  4. For externally contracted tuition and fee payment plans where accounts have been remitted to the college in past due status, the college should follow normal collection procedures based on the age of the past due account. 
    1. For example, the college receives a listing of accounts that are past due. 
    2. Payments have not been made as per the tuition and fee payment agreement. 
    3. The past due account would be included in the “Aged Accounts Schedule” based on the initial date of the unsuccessful attempt to draft payment.
  5. Note: In the situation where a student’s account is delinquent after the last planned payment is due, consideration should be given to cancel the payment plan, notify the student of cancellation and that remaining payment(s) should be directly remitted to the college. 
    1. Collection efforts for payment plan accounts that are delinquent should be coordinated with the external vendor to avoid confusion and duplicate effort for everyone involved.
    2. See Section 7.4.XX, Delinquent Letter Notification – Samples (Payment Plan Letter) for suggested college delinquent notice.

5. Financial Bankruptcy


Bankruptcy filings for students fall into two categories:  Chapter 7 and Chapter 13 of Title 11. 

  1. Chapter 7 is complete forgiveness of any debt. 
    1. Under Chapter 7, KCTCS cannot collect any amount, nor can KCTCS impair (adverse action) the student /customer’s ability to enroll or obtain services from a KCTCS college. 
    2. Where the college has received notice of Chapter 7 by the U.S. Bankruptcy Court for a student, the delivering college should Quick Post (in Student Financials) the Chapter 7 Item Type (61XXXX10050) and clear the student’s account of all outstanding balances. 
    3. The home campus receiving the notice will need to notify other colleges affected and remove any appropriate service indicators.
  2. Chapter 13 approves reorganization of debt.
    1. A student or customer approved for Chapter 13 bankruptcy is also protected against adverse action and cannot be prohibited from enrolling or receiving services. 
    2. Such parties are still responsible for the debt, but the court establishes the payment schedule. 
    3. When a college receives notification of Chapter 13 protection, the college can file a petition with the court for consideration of debt payment. 
    4. The court determines payment order for all creditors. 
    5. The college may also choose to write off the debt. 
    6. Depending on the amount, it may be administratively cost effective to write off the debt versus the time and effort of filing a petition with the court.
      1. If filing a petition with the court for consideration of debt payment, the college would work with the court appointed trustee to setup a payment plan. 
      2. Once a payment plan is established, the college can place a payment plan indicator (PYP) within PeopleSoft Student Financials to indicate payments are being received from bankruptcy court with an approved Chapter 13. 
      3. The PYP indicator keeps the student from being referred to collections and keeps the financial hold restriction turned off. 
      4. This enables the balance due to show as payments are posted.
    7. If a payment plan is not established by the court, but the college has received notification of Chapter 13 approval, the delivering college should Quick Post (in Student Financials) the Chapter 13 Item Type 61XXXXX10055 and clear the student’s account of all outstanding balances in order to prohibit any accidental adverse action from happening. 
      1. The home campus receiving the notice will need to notify other colleges affected and remove any indicators as appropriate. 
      2. This procedure is applicable only to the student’s ability to enroll or receive services when financial bankruptcy is involved.  It does not relieve or eliminate any other restrictions on enrollment for academic or any other reason established by the college. 
      3. Note: Students may file for bankruptcy; however, this alone does not relieve the student from the incurred obligation.  A notice of discharge of the debt from the court is required.  Hence, the college may choose to place a financial hold on the student’s account as a means to avoid referring to collections, but wait for the bankruptcy notification before placing the Quick Post for bankruptcy in Student Financials.
  3. Bankruptcy for corporations with which KCTCS has rendered services (i.e., training) should be addressed on an individual basis.  Please contact the KCTCS Office of Financial Services.

6. Use of the Department of Revenue for Collection


Per KRS 45.239(4) and KRS 45.241 et. seq., the Finance Cabinet – Department of Revenue is authorized to collect debt owed the Commonwealth of Kentucky, of which KCTCS is a subunit, and has entered into an agreement to collect overdue KCTCS accounts receivable. 

  1. All preliminary steps noted in Section 2 (Aged Accounts) are to be followed prior to a student or customer being referred to collections. 
  2. Note: Once an account is referred to the Department of Revenue, a college shall not directly negotiate payment with the student. 
  3. In limited instance, the length of term for payment, not to exceed two years, may be negotiated and is to be coordinated through communication with the Department of Revenue.


Further, it is recommended that the college place an “NSS” (no self-service) or “DOR” (Department of Revenue) service indicator on any accounts that are posted as “ready for collections.” 

  1. While there is a process established to upload referrals to the Department of Revenue, the can be timing delays. 
  2. Placing the indicator may help avoid any timing discrepancy.

7. Allowing Previous Bad Credit Additional Credit


  1. No extension of credit for services is to be given to any student or customer that has been referred to collections. 
    1. All referred accounts must be satisfied or in process of payment in full prior to the student or customer being allowed to received additional services. 
  2. No student or customer is permitted to participate in a payment plan if an account has been referred for collection. 
    1. The college has discretion to request “cash” payment (US currency, check, or credit card) when a student or corporation is seeking re-enrollment or other services after having an unpaid balance that resulted in the college having to write off the debt. 
    2. If payment is made by check, the college also has discretion see that the check has cleared before providing requested services.

8. Re-Admittance and/or Release of Credentials


Any student or customer, who is delinquent in their financial obligations to a KCTCS college, shall not be allowed to register for future terms, receive transcripts, transfer credits to another institution, graduate, or receive college services. 

  1. The college, which holds the receivable, is responsible for placing a hold on the student’s record(s) within the PeopleSoft student administration module.  See Section 7.


The decision to have a Title IV student financial aid hold placed on a student’s account is the responsibility of the college’s student financial aid office with all other financial holds the responsibility of the college’s business office. 

  1. Operating procedures for forwarding information to the local college business office for delinquencies such as library fines, parking violations, etc. are a local college decision. 
  2. Given varying conditions, length of time, and amounts, colleges may, at their discretion choose to waive any or all delinquencies and subsequently release any holds on the student’s record.
    1. In such instances, written documentation should be retained for audit purposes and a waiver applied. 
    2. Administrative withdrawals or altering of student records are not approved methods for addressing delinquent accounts. 
      1. If administrative withdrawal is used, extreme caution should be exercised as the posting of an administrative withdrawal has the effect of changing history in PeopleSoft. 
      2. It is recommended the college dean of students in conjunction with the dean of business approve the administrative withdrawal retaining documentation of the posting for future reference and audit purposes. 
    3. If referred for collection and the college chooses to waive the delinquency, the college must notify the Department of Revenue prior to waiving the delinquent charges to avoid possible collection issues. 
      1. The college assumes the responsibility for collection fees and service charges assessed by the collector, with the exception of an account submitted in error. 
      2. This includes payment for any fees or charges due the collector that were not collected because the college accepted payment for an amount less than the total sum required to make both the college and the Department of Revenue whole.

9. Complaints, Disputes and the Resolution Process Prior to Referral to a Collection Agency


Prior to referral for collections, each college shall designate a contact and process for complaints and/or disputes. 

  1. The process should include:
    1. college contact
    2. telephone number
    3. address to forward written complaints. 
  2. Complaints/disputes are to be handled in a timely manner with response time 14 days or less.
  3. Written notification of resolution to the complaint/dispute should follow as necessary.
    1. Example:  Complaint resolution is a negotiated length of term for payment. 
    2. Note:  Amount of outstanding delinquency cannot be reduced. 
    3. Terms of verbal agreement of any meeting should be sent in writing to the complaining party with file copy retained.

10. Minimum Amounts Referred to a Collection Agency


The minimum amount to be referred to the Department of Revenue is $100.00.

11. Deposit of Collected Delinquent Accounts


Funds received for delinquent accounts shall be deposited to the appropriate chart field depending on stage of delinquency. 

  1. Referred accounts shall be paid directly to the Department of Revenue with the Department of Revenue making payment to KCTCS. 
  2. To avoid issue with collection charges, it is strongly recommended that the college not directly accept payments from the student or customer once the account has been referred.


When a student or customer presents a payment directly to the college, use extreme caution. 

  1. In this instance, cash payments for referred accounts made directly to the college are to be deposited in the clearing account 21010 and not directly posted to the student’s or customer’s account. 
  2. The complete chart string is:

Business Unit













The college must notify the Department of Revenue of the payment (phone call with follow-up email or other auditable documentation). 

  1. The college must issue a manual receipt reflecting payment amount and must complete a check request to the Department of Revenue for the full amount of the payment within 14 days of receipt. 
  2. It is the responsibility of the Department of Revenue to remit to the college the student or customer’s payment and to notify the college that the account, including collection fees, is satisfied.


All check payments for referred accounts are to be made payable to the Commonwealth of Kentucky – Department of Revenue (and not the college). 

  1. The preferred method is for the college not to accept the payment, but rather to have the student remit directly to the Department of Revenue. 
    1. If the college accepts the check, it should be forwarded directly to the Department of Revenue (not deposited into the college account). 
  2. An acknowledgement receipt is to be issued to the student or customer and retained for audit purposes. 
  3. Under no circumstances is the college to issue any statement as to whether the account is satisfied. 
    1. The acknowledgement receipt is verification the college accepted a payment from the student or customer for a prescribed dollar amount. 
    2. In no way should it acknowledge that the delinquent account is satisfied. 
    3. Note: Credit card payments are not be accepted for referred accounts.
  4. Kentucky Department of Revenue’s contact information:

        Kentucky Department of Revenue

        Finance and Administration Cabinet

        200 Fair Oaks Lane

        Frankfort, KY  40602

        Phone:  502.564.4921 ext. 5368


Deposits for delinquent accounts fall into two categories:  Student Receivables and Non Student Receivables:

  1. Accounts less than one year old – Student receivable payments are posted to student accounts as usual. Customer (noncredit) accounts are posted to the Accounts Receivable/billing Module of PeopleSoft as usual.  Adjustments will be made during the write off process to reverse bad debt expense entries.
  2. Accounts greater than one year old which have previously been written off where the account balance is no longer visible on the student account – These payments require two entries:
    1. Reverse the student write-off from the account.
    2. Complete a Student Post or payment via Cashiering to student account.
  3. Please see the Student Accounts Receivable Write-Off Process.  Full documentation is located on the KCTCS intranet under Financial Services > Student Financials > Write Off Expense Process. 
  4. Questions regarding student accounts receivable should be referred to the KCTCS Student Administration Help Desk. 


Questions concerning non-student customer accounts receivables should be directed to the local college business office. 

  1. Full documentation for the Accounts Receivable process using the AR/Billing Module is located on the KCTCS Intranet under > Business Services > Business Procedures > 5.3.8-P Accounts Receivable.

12. Processing of Payments Received for Department of Revenue


In order to have the Kentucky Department of Revenue (DOR) act as the college’s collection agent, a number of security related forms for DOR’s enterprise collections must be completed. 

  1. Copies of the security forms may be obtained by contacting KCTCS Financial Services – Student Financials.


Each employee needing access to DOR’s enterprise collections system must complete all the security forms separately except the Security Form for Entering Debt and KY-OSCAR Access Form.

  1. For these two forms, personnel need only complete one form per college listing all individuals requiring access. 
  2. Each security form has specific procedures. 
  3. The security forms are intended to give KCTCS employees at various campuses access to enter debt, if necessary, via the web, and access to the collection system for inquiry purposes. 
  4. Each college must have at least one person registered to enter delinquent accounts in order to participate in DOR’s enterprise collections program.


In addition, each individual will need to complete an updated SA1 PeopleSoft Users Request form.

  1. On this form, please request the security role of Collections and return these forms to KCTCS Student Administration Administrator. 
  2. Upon completion, please remit forms as a total package to KCTCS Financial Services – Student Financials. 
  3. Once given access in PeopleSoft, you may enter students for collections. 
    1. There is no need to wait for Kentucky Department of Revenue security access.


Instructions for entering debt into PeopleSoft Financials are located on KCTCS Intranet > Financial Services > Student Financials > Training Materials > Student Financials > SF_11_Write_Offs_And_Collections.


Questions regarding DOR collections should be directed to KCTCS Financial Services – Student Financials.


13. Delinquent Letter Notice – Examples

Example of Second Notice




«Capital_First_Name» «Capital_Last_Name»  URGENT NOTICE
«Capital_City», «St»«Home_Postal»

Dear «Prefix». «Primary_Last_Name»:

Our records indicate your account is more than 30 days past due. The balance of $«Text_bal» is from «Notes» term and is due immediately. For your convenience you may pay by American Express, VISA, MasterCard, or Discover on line at’s or in person at the Cashier’s Office on any KCTCS college campus. If you prefer, you may mail your full payment in the form of a personal check or money order to:

XXXX Community and Technical College
Attn: Business Office
101 Payment Way
Easystreet, KY 40399

To help expedite the posting of your payment it is imperative you include your Student ID on your check or money order, your ID is «Emplid».

Under Kentucky law, you have the right to dispute this bill. If you wish to request a dispute conference with a KCTCS Hearing Officer, within fourteen (14) days of this notice you must send a written explanation to the college address listed on this statement.

Your written explanation should include the following:

  1. The reason why you dispute this bill:
  2. A copy of any relevant documents which support your explanation. Please keep a copy of any documents sent for your own records;
  3. Your account number and current contact information (home address, telephone number and email address);
  4. Whether you wish to appear at the hearing in person or telephonically;

If you have not paid your bill in full, or disputed this bill within 14 days of the date of this notice, your account will be subject to referral to the Commonwealth of Kentucky, Department of Revenue for collections pursuant Kentucky Revised Statutes (KRS) 45.237, 45.238, and 45.241, which will result in collection fees in addition to the amount you currently owe. This may result in wage garnishments, bank levies, tax refund seizures or other collections actions.

Thank you for your prompt attention to this matter.

College Contact Person, and Title

Example of Final Notice




«Capital_First_Name» «Capital_Last_Name»

«Capital_Address» «Capital_City», «St» «Home_Postal»

Dear «Prefix» «Primary_Last_Name»:

Our records indicate that «Primary_First_Name» «Primary_Last_Name», «EMPLID» has an account balance that is ninety (90) days past due in the amount of $«Text_Bal» for the «Term_Owes» term.

Kentucky Revised Statue (KRS) 45.241 authorizes the Kentucky Department of Revenue (DOR) to collect delinquent debt owed the Kentucky Community and Technical College System (KCTCS) and its colleges. Our procedure is to refer accounts greater than ninety (90) days past due to DOR for collections. To avoid this action, payment arrangements must be made within ten (10) days of this billing statement.

The collection actions available to the DOR, Division of Collections include:

  • Any tax refund or other monies that may be due from the Commonwealth may be offset to your outstanding debt.
  • Seizure may be made on all property, both real and personal. This includes, but is not limited to, the attachment of any funds held by a bank on behalf, any wages paid to you by your employer, and the seizure and sale of any real estate you may own.
  • A Notice of State Lien may be filed with your County Clerk. This lien will encumber all real and personal property. It should be understood that the filing of a lien may be reflected in credit records maintained by various credit bureaus.
  • 25% cost of collection fee will be added to the total debt amount.

Once an account has been referred for collections it is our practice not to intervene with collection proceedings. To avoid these collection actions, please pay the “past due” balance by «New_Due_Date». Cash payments must be made in person. Checks and/or money orders should be made payable to the College (please include your student EMPID #) and mailed to the following address:

XXXX Community and Technical College
Attn: Business Office
101 Payment Way
Easystreet, KY 40399

Thank you for your prompt attention to this matter. If you have questions please call (XXX) XXXXXXX.


College Contact Person, and Title