Cash Management Plan

Controller's Office Policy CO 02 10

Statutory Policy
North Carolina law, Chapter 147-86.10 of the General Statutes, requires that "all agencies, institutions, departments, bureaus, boards, commissions and officers of the State...shall devise techniques and procedures for the receipt, deposit and disbursement of moneys coming into their control and custody which are designed to maximize interest-bearing investment of cash and to minimize idle and nonproductive cash balances."

Plan Administration
The State Controller, with the advice and assistance of the State Treasurer, the State Budget Officer, and the State Auditor, is charged with developing and implementing a uniform statewide plan to carry out the cash management policy for all State agencies, departments, and institutions. This Statewide Cash Management Plan outlines the policies, duties, responsibilities, and requirements for cash management within State government on a broad basis. The University of North Carolina at Pembroke (UNCP) Controller, who reports directly to the Senior Associate Vice Chancellor of Finance, with advice and assistance of the Office of the State Controller and State Auditor has the responsibility to prepare a cash management plan that meets both the requirements of the Statewide Plan and the unique cash management needs of the UNCP. The plan will be submitted to the Office of the State Controller for approval. The State Auditor, as a part of the annual financial audit, will determine if the University of North Carolina at Pembroke is in compliance with the Statewide Cash Management Plan.

Plan Requirements

Cash Management over Receipts:

The objectives of cash management over receipts are to use diligence in collecting funds owed to the State, to provide internal control over cash and cash equivalents, and to expedite the movement of monies collected into interest bearing accounts. To accomplish these objectives, all plans adopted will include these rules:

  1. Except as otherwise provided by law, all funds belonging to the State of North Carolina, and received by an employee of the State in the normal course of their employment shall be deposited as follows:

    1. All monies received shall be deposited with the State Treasurer pursuant to G.S. 147-77 and G.S. 147-69.1.
    2. Monies received in trust for specific beneficiaries for whom the employee-custodian has a duty to invest shall be deposited with the State Treasurer under the provisions of G.S. 147-69.3
  1. Monies received shall be deposited daily in the form and amounts received, except as otherwise required by law.

The University cashier’s office is the central depository and the office of record for all University receipts.  Due diligence is exercised for proper receipting of University monies to ensure accuracy, timeliness and adherence to University and State guidelines pursuant to G.S. 147-77.  Internal control policies are followed to ensure proper practices are employed throughout the University including receipting privileges, official endorsement and safeguarding of monies. 

Cash reports are provided to the cashier’s office to help receipt the funds to the correct fund and account.  The daily deposit time at local banks is 2 P.M.  Any deposits to the State Treasurer’s accounts at a bank must be deposited by 2 P.M. and appropriately certified.  Moneys received after 2 P.M. must be safeguarded overnight.  Suggested methods of safeguarding are putting the money in a safe or in a cabinet or desk that is locked for that night.  Any department that receipts money at a satellite location/non cashier’s office must make deposits weekly if their collected receipts do not exceed $150. 

Departments that accept credit card payments must do a deposit daily.  All credit card sales made before 3:00 PM must be closed out and included on that day’s deposit.  Any credit card sales made after 3:00 PM will be included in the next business day’s deposit.

Any checks received via U.S Mail are receipted into the cashiering system once they arrive.  They are subsequently scanned and added to the check register log.

A processing fee of $25 is charged for each returned check.  When a check has been charged back to UNCP, a letter notifies the maker of the check that they must pay the face amount of the check plus the service charge within a specified time frame.

In accordance with the Office of the State Controller (OSC), Cash Management Control System (CMCS) and University policy, electronic wire receipts from outside sources are processed within daily deposit rules, included in certifications of deposit and recorded in University ledgers upon receipt.

When monies are deposited in error, one of the following is done: 

  • If the error is found in the same month and involves only one bank account, a receipt correction will be made by debiting the monies out of the incorrect fund and crediting the appropriate fund.
  • If the error is found after the month it was originally receipted in, a journal entry is done rather than a receipt correction.
  • If funds are deposited in the wrong bank account at any time, the receipt is charged to the bank clearing fund and a transfer of funds will be executed via CMCS.

Funds received in advance for future academic terms are receipted to a “Funds Held” account, a temporary holding account, until funds can be receipted to the appropriate term.

A system of internal control is maintained by periodic unannounced cash counts, providing methods of secure handling of monies, and segregation of duties.

Cash Management of Receipts and Billing:

  1.  Monies due to a State agency, department or institution from other governmental agencies or from private persons shall be promptly billed, collected, and deposited.  All agencies, departments, and institutions will establish accounts receivable management policies and procedures.  These policies and procedures will incorporate the statewide accounts receivable policies and procedures (https://www.osc.nc.gov/state-employees/statewide-policies/200-accounts-receivable/accounts-receivable-collection ), in accordance with G.S. 147-86.21, and be included as a part of the University’s cash management plan. 

Periodic emails notifying students that a balance is due are designed to maximize collections within the enrollment periods while ensuring that no student having an outstanding past due account is allowed to enroll for the next term or receive a diploma, or transcript.

The University’s account receivables are interfaced with the general ledger system, aged in accordance with OSC’s requirement and properly accounted for when estimating doubtful accounts and subsequently written off when deemed uncollectible.

The University incorporates the statewide accounts receivable procedures, in accordance with G.S.  147-86.21 for collection of receivables, employee debts, overpayments and miscellaneous billings.  The University collection policy incorporates all cost effective and appropriate actions to collect accounts receivable.  Past due billings are turned over to the Attorney General’s office, collection agencies, and/or Department of Revenue for setoff debt collection once the account is in arrears greater than 60 days.  The University will use skip tracing services to aid in student collections.

In accordance with G.S. 147-86.23, the University charges interest at the rate established pursuant to G.S. 105 241.21 on a past due account receivable from the date the receivable was due until paid.  The University adds a late payment penalty to a past due account receivable of no more than ten (10%) of the account receivable.  The Department of Revenue provides the current interest rate being charged.  The University policy is located at http://www.uncp.edu/resources/finance-and-administration/policies-and-procedures/controller/student-account-collection-policy .

Billing Procedures

  1. Unpaid billings, of $50 or greater, due to the University shall be turned over to the Attorney General for collection no more than 60 days after the due date of the billing.  The University may handle these unpaid bills pursuant to the debt collection procedures identified in the previous item.

At the completion of registration for each upcoming term, bills are generated and electronically sent to registered students and authorized users.  The billing packet includes costs for the registered period, date the payment is due and additional information pertinent to the term of enrollment.  New students who fail to make payment are dropped from the semester after several attempts have been made to contact them.  Enrolled students and former students who have not met their payment obligations have holds applied to their student account which denies other services from being performed until payment is made.  After unsuccessful attempts to collect the payment, collection procedures are implemented.

Additional collection techniques are used as accounts become aged in delinquency.  Those techniques are referrals to the N.C. Attorney General’s Office; issuance of University promissory notes; additional billing; and referrals to the N.C. Department of Revenue Setoff Unit as well as state contracted Collection Agencies.  Accounts referred to the Attorney General’s Office must be $50 or greater and have a delinquency greater than 60 days.  University promissory notes involve working with debtors negotiating repayment plans to satisfy the indebtedness prior to being submitted to a collection agency.  A schedule of payments is provided to the debtor.

N.C Department of Revenue Setoff Unit referrals are entered at least monthly.  However, during the first four months of the year referrals are submitted bi-weekly.  Claim listings are sent to the University from the Setoff Unit and are receipted to a clearing account until the required 30 days appeal process.  Debtors are sent a letter from the University advising them of the debt and they have 30 days to contest the claim in writing or in appearance.  In order to recover the costs incurred in setting off funds against Setoff Program Agency debts, G.S. 105 A-13 allows the Department of Revenue to charge a fee.  The fee is deducted from the debtor’s income tax refund and the remaining refund is applied against their debt.

After all attempts to collect the debt have failed and the account has become aged, the Bursar will review the accounts and deem those accounts uncollectible.  The uncollectible accounts are written off prior to the close of the fiscal year.

  1. Federal funds received for major federal assistance programs that are governed by the Cash Management Improvement Act of 1990, must be drawn in accordance with the current State/Federal Agreement.  Funds are drawn down to minimize the time elapsing between the transfer of funds from the United States Treasury and the disbursement of funds.  Funds are deposited with the State Treasurer when received within one business day.  Such funds are separately maintained and identified in the funds of the University as Federal Funds.
  1.  All federal fund draws should be timed so that funds are on deposit with the State Treasurer no more than two business days prior to the disbursement.  Federal funds are drawn on a reimbursable basis.  Requests for funds are completed via internet.  When funds are received, the bank calls to inform the Grants Accountant that the requisitioned funds have been deposited.  The Grants Accountant then informs the cashiers of the incoming deposit and the funds are receipted to the appropriate accounts.  The bank will fax a copy of the deposit received so the University will have the proper documentation.
  1. State Agencies shall accept electronic payments (credit/debit cards [merchant cards] and electronic fund transfer (EFT)), in accordance with G.S. 147-86.22, to the maximum extent possible and consistent with sound business practices.  The University must submit a business plan to the State Controller for evaluation prior to the acceptance of electronic payments.  The University utilizes the Master Service Agreement (MSA) for electronic payment processing.  Policies and procedures are established to facilitate the use of electronic payments.  These policies and procedures incorporate the statewide electronic payment policies and procedures (https://www.osc.nc.gov/state-employees/statewide-electronic-commerce-program-secp ) and included as a part of the University’s cash management plan. 

The processing of a payment by credit/debit card shall be no slower than the processing of payment by check for the actual deposit of funds to a state account.  All monies received shall be deposited with the State Treasurer pursuant to G.S. 147-77 and G.S 147-77 69.1.

All credit card transactions must be settled daily (except for weekends and banking holidays).  This daily settlement requirement includes University breaks and extended holidays.  Weekend transactions must be settled Monday morning. 

The University accepts Visa and MasterCard credit cards, certifies deposits when received at the Department of State Treasurer and utilizes a separate bank account to facilitate timely processing and certification.  The University accepts payments via credit and debit cards with the use of internet applications for student payments of tuition, fees and charges.  The University utilizes the electronic funds transfer services with SunTrust Bank for merchant card services acquired through the State Controller’s Master Service Agreement (MSA).  Departments cannot negotiate their own contracts with credit card processing companies.  All merchant accounts for accepting credit cards must be approved by the Bursar and participate in the State’s MSA.

The cost of the services secured through the MSA for outbound electronic transfers are paid with University’s institutional funds for all non-payroll transactions.  The University reserves the right to charge transaction fees for electronic inbound credit card transactions, however, at this time, no fees are being charged.  Transaction fees for student online payments are retained by the third-party vendor (TouchNet) and are not received by the University. 

The University adheres to appropriate security and privacy requirements and complies with all general statutes for timely completion of security assessments as required by OSC and with the Payment Card Industry (PCI-DSS).  PCI-DSS are national standards from the Card Association and apply to all organizations anywhere in the country that process, transmit or store credit cardholder information.  The University and all departments that process payment card data have a contractual obligation to adhere to the PCI-DSS and for annually certifying their continued compliance by submitting the PCI-DSS Self-Assessment Questionnaire (SAQ) appropriate to their credit card activities.  All computer security measures which include physical security, logical application controls, transmission security and firewall utilization have been met.  Individual credit card information is confidential.  Failure to maintain strict controls over this data could result in unauthorized use of credit card data. 

For merchant card transactions and electronic funds transfers, the owner’s data is stored and protected in accordance with industry standards. No account information is disclosed and available only to administrative staff as part of their job responsibilities.  UNCP does not receive any owner data, owner’s data is stored with our third party payment processor.  For point of sale transactions, the University adheres to both applicable State law (G.S. 14-113.24) and the Payment Card Industry Security Standards pertaining to printing of account numbers and expiration dates of cards on the cardholder’s copy.  The receipt only prints the last four digits of the account number.  Merchant card approval is received electronically in real time.

Inbound transactions, utilizing merchant cards as a method of payment through the web, generate a confirmation that the transaction has taken place by showing the account balance (student accounts) or providing an electronic confirmation to the user. 

Merchant credit card disputes are resolved by the University with the credit card user and with the assistance of the merchant card service provider.  All changes resulting from credit card disputes are supported by fully detailed information.

The University accepts Electronic Funds Transfers for authorized prepayments of inbound funds as established by the Office of the State Controller and receipted by University authorized CMCS users.  The funds are then properly certified.  The University is enrolled in the electronic fund transfer for drawdowns for federal agencies that allow funds to be received electronically.

In addition to adhering to these guidelines, University plans employ proven techniques, which improve cash handling.  Some of these techniques include:

  • Reassignment of personnel, or the hiring of temporary personnel, when this proves cost effective, to accelerate the processing of remittances during peak periods.
  • Utilization of cash concentration banks.
  • The use of remittance processing equipment when justified by the volume of deposits.
  • Establishing billing schedules which are both efficient and lead to earlier receipt of monies due to the State.
  • Timing deposits in order to receive current day credit in accordance with schedules available from the State Treasurer.

Cash Management over Disbursements

The objective of managing disbursements is to maintain funds in interest-bearing accounts for the longest appropriate period of time. This allows the State to realize the maximum earning potential on its funds. This is not intended to encourage late payment or have a negative impact on relationships with firms who, in good faith, supply goods and services to the State. The following rules apply for cash management over disbursements:

  1. Monies deposited with the State Treasurer remain on deposit with the State Treasurer until final disbursement to the ultimate payee.   The University disbursing accounts are protected by positive pay.  All Department of State Treasurer accounts are also protected by positive pay. 
  1. Cash disbursements made through the University’s financial system, Banner, contain internal controls.  The first of which is the duplicate invoice verification process.  If the invoice has previously been entered into the system (by any payment method) the system will not accept it a second time. 

Cash disbursements are made according to vendor terms after proper approvals.  Data is entered and is held until the due date on the invoice.  Funds are requisitioned from the State Treasurer prior to the release of checks and as needed to cover disbursements.  Reports are analyzed prior to a check run to determine availability of funds.  Bond requisitions are approved once a week.  Requisitions on any check written using bond funds should be submitted by Thursday, no later than 11:00 A.M.  After requisitioning bond funds, the check must be written and mailed within hours.

All biweekly and monthly payrolls are prepared in accordance with University, State and Federal regulations and transfers to the respective disbursing and payroll deduction accounts are made on the due date for such payments.

Payroll disbursements are processed through the Automated Clearing House (ACH) for all employees with the exception of those individuals that did not provide bank account information in advance of the first check or termination pay for employees.  Employees that have not provided bank account information timely are issued a check.   The State of NC payroll disbursing account is also protected by positive pay.  http://www.uncp.edu/resources/finance-and-administration/policies-and-procedures/controller/direct-deposit-policy

The University uses the State Controller’s Cash Management Control System (CMCS) for the requisition of funds to cover disbursements and for intra- and inter-agency transfers as directed by the State Controller and State Treasurer.  Funds equal to the amount of checks drawn daily are requested by 10 A.M the next business day.  The checks are released when notification is received the funds have been deposited. 

Both Bank 10 (Institutional funds) and Bank 3 (State Funds), must be reconciled each month.  The State Treasury account is solely comprised of State budgeted funds.  The disbursing technician only requisitions amounts that are actually spent each month.  In order to reconcile the State Treasury account to Banner, any outstanding deposits should be added to the balance of the month per the bank statement.  Any outstanding checks should be subtracted from it.  The institutional trust account is comprised of funds that are not State-budgeted funds.  These monies remain in a Short Term Investment Fund (STIF) account at the State Treasury.  The Institutional Trust account is reconciled to Banner each month by obtaining the balance per the bank statement, adding the outstanding deposits and transfers in, less outstanding checks and transfers out.  The grand total should agree with the balance per the General Ledger Group Summary Report.

  1. As provided in Section 147-86.10, the order in which appropriations and other available resources are expended shall be subject to the provisions of the Executive Budget Act, G.S. 143-27, regardless of whether the State agency disbursing or expending the monies is subject to the Act.
  1. Federal and other reimbursements of expenditures paid from State funds shall be paid immediately to the source of the State funds.
  1. Billings to the State for goods received or services rendered shall be paid neither early nor late but on the discount date or the due date to the fullest extent practicable.
  1. Disbursement cycles are established to the extent practicable so that the overall efficiency of the warrant disbursement system is maximized while maintaining prompt payment of bills due. In order to avoid disbursing account overdrafts, warrants will not be released before adequate funds have been requisitioned by the University and approved and deposited to the applicable disbursing account by the OSC.

The financial system does not produce warrants for invoices until the due date specified.  Time is allowed to sort and mail checks so vendors and others will receive University checks as payment becomes due.  Payments to the same payee are combined on one check.  Prior to mailing out warrants, the Disbursing Technician must verify that both the check and invoice are the same amount.  The verification process should also include ensuring the account number on the invoice is the same as the account number on the check.

  1. Electronic Funds Transfer (EFT) should be used for certain payments between State and local units, vendors and employees when it is determined to be mutually beneficial to both parties.  The University utilizes EFT for certain payments between State and local units, vendors, and employees.  Transfers include payments for payroll direct deposits, payroll taxes, employee benefit programs, and intra-agency services.  Authorized users of CMCS, upon approval by the Controller, request EFT for payment of the obligation on the due date.  As a condition of employment, permanent employees are required to receive their pay as a direct deposit.  Student and temporary employees are strongly encouraged to have their pay direct deposited. 
  1. State administered procurement cards are used to provide employees with food, lodging, and other applicable subsistence in emergency situations.  For OSC policy, refer to: (https://www.osc.nc.gov/state-employees/statewide-policies/1100-state-disbursing/expenditures-emergency-situations )
  1. “Delegation of Disbursing Authority” agreements are kept current. Regardless of whether changes have occurred since the last submission, “Delegation of Disbursing Authority” agreements are submitted annually for OSC approval.
     

Techniques helpful in controlling disbursements include:

  1. Establishing special procedures for making large disbursements such as social security and federal withholding tax remittances to ensure that payment is made on the due date and not before.
  1. Managing inventory and supply levels to stock the minimum necessary to conduct business without disruption.