• Section 1 - Context
• Section 2 - Authority
• Section 3 - Scope
• Section 4 - Procedure
• Authorisation of Revenue Contacts
• Recognition and Measurement of Revenue
• Application and Approval of Debtors
• Review of Debtors and Setting Credit Limit
• Invoicing Customers
• Trading Terms
• Bad Debt Guideline
• Recognition and Measurement of Doubtful and Bad Debts
• Section 5 - Definitions

Section 1 - Context

(1) This procedure provides rules for revenue contracts and management of debtors, as required by the relevant Accounting Standards and Financial Management Act 1994. It enables compliance with RMIT’s Financial Management Policy.

Section 2 - Authority

(2) Authority for this document is established by the Financial Management Policy.

Section 3 - Scope

(3) This procedure applies to the RMIT Group unless there are different legislative requirements in the country of origin. In this instance, the entity must have its own documented process.

Section 4 - Procedure

Authorisation of Revenue Contacts

(4) Contracts must only be signed on behalf of RMIT by persons who are fully aware of RMIT’s obligation attached to the revenue or expense in accordance with the Delegations of Authority Policy and the Contract Management Policy.

(5) When entering into contracts with parties domiciled outside of Australia, guidance must be sought from Central Finance Operations prior to finalisation due to the complexity of international tax matters requiring consideration.

(6) Where any doubt regarding RMIT’s obligations exist, support should be sought from Legal or Finance teams as relevant.

Recognition and Measurement of Revenue

(7) Revenue is recognised in accordance with applicable Accounting Standards.

Application and Approval of Debtors

(8) A Create New Customer Details in Workday form must be completed by the relevant entity, school or department for all debtors. Such a request should be made, and a response received, before any goods or services have been provided to the customer.

(9) If it is recommended that a credit check be carried out by an RMIT-appointed credit reporting agency, the cost will be charged to Central Finance Operations.

(10) The Accounts Receivable Team is responsible for notifying the applicant of any issues with the credit history of the proposed customer. The individual department is responsible for approving or rejecting the risk of dealing with any customers with a poor credit history.

(11) If the application is approved subsequent to credit checks, the account will be created, and the school or department will be advised of the customer number within two working days.

(12) When a decision is made to deal with a customer that represents high risk to RMIT, approval must be sought from the Chief Financial Officer or Director Central Finance Operations. Risk will be borne by the applicant’s cost area.

Review of Debtors and Setting Credit Limit

(13) A review of credit limits will be performed regularly by Central Finance Operations. The scope of review, undertaken at the time of application, is dependent upon the size of the credit limit required and the associated credit risk.

(14) Recommended checks based on the total contract value:

1. less than $25,000 – no credit check is required
2. from $25,001 to $50,000 – payment history analysis is required
3. from $50,001 to $250,000 – payment history and ASIC check is required
4. over $250,001 – full credit check report is required.

(15) Government agencies and departments are not subject to credit limits.

(16) All sales made to customers who have not been approved for credit are to be made on a cash on delivery (COD) basis only.

Invoicing Customers

(17) Where a customer invoice is required, the relevant entity, school or department must initiate a Create Customer Invoice task in Workday. See Workday Finance and Procurement Guides, or seek support from Service Connect.

1. An invoice must quote the customer’s purchase order or details of the contract to which the invoice relates.
2. If no purchase order or contract exists, the invoice request must be submitted with supporting documents and authorised in accordance with Delegations of Authority.
3. An invoice must provide the full name of the customer contact or be addressed to the customer’s accounts payable department.

(18)  Where a customer requires a credit note, the relevant entity, school or department must initiate a Create Customer Invoice Adjustment task in Workday. See Workday Finance and Procurement Guides, or seek support from Service Connect.

1. the credit note must refer to the original invoice and have reasons for credit amendments clearly stated.

(19) If a claim is made disputing part of the amount outstanding, the undisputed amount must be paid as per the credit terms.

Trading Terms

(20) The trading terms for trade debtors are set up as per the relevant contract terms. A general trading term of 30 days from the date of the invoice is acceptable by RMIT.

(21) The Accounts Receivable team may propose restricted trading terms if a debtor does not comply with RMIT’s trading terms.

(22) Any customer whose account remains outstanding 60 days from invoice date may be placed on ‘stop credit’ unless the customer disputes the account.

(23) A debtor who is on ‘stop credit’ with any controlled entity may also be placed on ‘stop credit’ across the RMIT Group until overdue balances have been paid in full.

(24) The details of all inter-company charges are subject to compliance with separate service level agreements (SLAs), royalty agreements and international tax legislation. Queries related to inter-company charges may be directed to Central Finance Operations.

Bad Debt Guideline

(25) The Accounts Receivable team will ensure that all debtors and doubtful and bad debts are properly authorised in accordance with the Delegations of Authority Policy.

(26) The Accounts Receivable team will recommend debts are written off after all economical attempts to recover the amount have failed. Authorisation of write-offs will be performed in accordance with the Delegations of Authority Policy or with authorisation from the Chief Financial Officer.

(27) Once the write-off is approved and the debt is removed, any subsequent recovery will be recorded as revenue.

(28) Subject to Limitation of Actions Act 1958, RMIT may legally enforce recovery of the debts at a later date, up to six years from the date of write-off. The Accounts Receivable Team will periodically review debts that have been written off.

(29) Students with overdue unpaid debt are subject to cancellation of enrolment, in accordance with the Enrolment Procedure - Discontinuation of Student Program.

(30) The Team Leader, Accounts Receivable, is responsible for implementing this process. Any deviation from this process should be requested in writing and addressed to the Director, Central Finance Operations for approval.

Recognition and Measurement of Doubtful and Bad Debts

(31) Debtors are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method less provision for impairment, in accordance with applicable Accounting Standards.

(32) During the financial year estimated provision for doubtful debts is recorded based on the budgeted amounts.

(33) Periodically, each debt will be assessed individually, and provision will be recalculated based on a history of debt recovery and accordingly to the requirements of Australian Accounting Standards. In case of liquidation, receivership and insolvency the provision will always be 100%.

Section 5 - Definitions