Credit Management Procedures


This policy applies to all University staff involved in raising invoices and credit notes, and the management of debtor accounts (except student debts which are managed by student administration).


This procedures document accompanies the Credit Management Policy. It provides specific instruction for the processes described in the policy document. It is carries the same mandatory obligations and consequences as a policy document.


Approval of credit

1. The decision to extend credit may only be made by staff at or above the level of Faculty or Service Division Accountant.

2. Issues to be considered in making a decision to grant credit must include:

  • the nature of the relationship between the University and the debtor
  • the payment history of the debtor
  • the amount involved (the minimum level of credit is $50)

3. Credit must not be extended to applicants who have a poor credit history. Credit may not be extended to applicants who have overdue debts with the University.

4. Credit checks must be carried out by the originating department, before a new debtor is created.

Refusal of further credit

5. Refusal of further credit must be applied with discretion, and will depend on the nature of the debtor, the value of their business, and how overdue the account is. All practical steps must be taken to manage the situation rather than lose a large account or unnecessarily offend a customer.

Terms of trade

6. The University's terms of trade are that payment must be made within 14 days of the invoice date. Collection action may commence at any time after the due date for payment of an account.

7. Variations to the standard terms of trade are subject to negotiation but should be clearly stated in the agreement or contract between the University and the external customer.

8. The University prefers payment of invoices to be made by direct credit to the bank account quoted on the customer invoice.


9. All non-student related invoices are to be produced by the originating department using the Billing module in the financial system.

10. Interim accounts are to be sent for long term projects or contracts. This improves cash flow, and reduces the University's debt exposure.

11. The person producing the invoice is to check it for completeness and accuracy before finalising it in the Billing module of the financial system.

12. The PS Financials Billing and Accounts Receivable user guide provides detailed guidance on creating invoices.


13. The University is legally required to charge GST on all invoices where applicable.

14. Faculties and service divisions are to quote prices as being GST exclusive in line with normal commercial practice.

Credit notes

15. A credit note is not to be given to write off a debt. Write-offs must be authorised in accordance with the Financial Delegations Policy.

16. All credit notes must be authorised by the designated approver for the billing business unit.

17. Credit notes are to be processed by the originating department using the billing module in the financial system. All supporting documents must be attached.

18. Credit notes will only be given in limited circumstances for example if an invoice has been incorrectly issued or the amount has been reduced by negotiation.

Collection of overdue accounts

19. Follow-up action should be a continuous process commencing before an individual debt becomes overdue, rather than waiting for a particular time of the month for it to take place.

20. The emphasis will be on personal contact with debtors by means of phone calls as this is the most effective method of collecting overdue accounts. Phone calls will be supplemented with letters appropriate to the situation once the account becomes one month overdue.

21. The collection policy should recognise the size of the debt and the disproportionate amount of time that can be wasted on the collection of small amounts. As a benchmark, a lot of time should not be spent chasing debts of $500 and below. However, this is not a hard and fast rule.

22. All collection actions are to be logged, including (as a minimum) the date, what was done, and if a phone call was made, what was asked of the debtor and what their response was with regard to payment.

23. The first collection action is to be a phone call. Depending on the circumstances and nature of each debt, this should occur 14 days after the due date for the debt.

24. The objective of the first contact is to obtain a firm payment promise for a specified date from the debtor. The call is also an opportunity to ask the debtor if there are any factors relating to the account preventing payment, for example account errors.

25. The debtor should be asked to pay the portion of the account which is not under dispute. Reasons for non-payment of an account must be followed up and resolved promptly. The debtor should be advised once the issue has been resolved so that payment can be made.

26. If the account is still outstanding, the second phone call should be made within 7 days after the promised payment date, reminding the debtor of their promise. The debtor should be advised that payment must be made to avoid referral to a debt collection agency and possible harm to their credit rating.

27. At the time of the second contact, a decision (based on the debtor's response) should be made whether to immediately send the delinquent account to a debt collection agency, whether to give another opportunity to pay based on another payment promise or whether to stop supply. Debtors should not be allowed to continue to make payment promises after it becomes obvious they will not be met.

28. In limited circumstances, automatic payment authorities can be set up under appropriate approval if a debtor cannot pay in full immediately. This would typically apply only to small debtors solely as an alternative to non-payment.

29. Month-end account statements can continue to be sent to debtors. However, care should be taken to ensure that any messages on them relating to the overdue portion of the account do not conflict with phone collection actions.

30. Accounts for which there is a reason for non-payment, for example query or awaiting a credit are to be flagged in the billing module of the financial system.

31. Collection action on these accounts should be suspended pending resolution, but still need to be actively reviewed.

32. Accounts should be referred to a debt collection agency as soon as it becomes apparent that the University's collection efforts are unsuccessful.

33. Bad debts will be charged to the department that originated the bill.


The following definitions apply to this document:

Credit means deferred payment by a customer for the goods/services provided by the University.

Debtors is a party who owes money to the University.

Staff means those employed or contracted by the University.

University means the University of Auckland and includes all subsidiaries.

Key relevant documents

Document management and control

Owner: CFO
Content manager: Group Financial Controller
Approved by: Vice-Chancellor
Date approved: 3 April 2014
Review date: 3 April 2019