Accounts Receivable Ramp Up

While fiscal year end for the university has passed, for the Shared Services Center Accounts Receivable (AR) teams, the busy season is just getting started. From a robotics lab pushing the boundaries of how technology can help us to health clinics trying to minimize harmful medication side effects, AR plays an integral role in supporting innovation at the University of Michigan.

The majority of the customers that AR serves are sponsors of research and programs across the university. These sponsors range from federal entities and pharmaceutical companies to other universities, resulting in very different approaches to ensure payment. One of the largest sponsors, the State of Michigan, has a fiscal year end of September 30, causing a significant increase in workload around this time for the AR team. AR professionals work to accurately allocate money coming into the university to the correct department accounts in a timely manner, which requires a significant amount of flexibility.

 The AR process starts with billing. The AR Billing team supports billing for general invoices like scholarships, membership dues, and subscriptions, as well as sponsored invoices for research project grants.  Each customer they serve has their own invoicing requirements, including how they need to be submitted to the customer. In many cases this means AR billing associates must log into individual customer portals to submit invoices and other support electronically.  Many sponsors, including governmental entities, require the use of invoice portals, which facilitate timely payment to the university. The AR Sponsored Billing team spends over 40 hours a month submitting invoices through these portals, sometimes completely reformatting the invoice to align with portal requirements.

Once billing has completed their invoicing process, it creates a receivable for the collections team.  The collections team primary focus is to follow up with the customer and identify what is needed to secure payment on the outstanding receivable.  There could be a variety of things that delay payment. This requires the collectors to reference specific contracts, work with both departments and sponsors, and identify barriers (ie. contract negotiations or delayed deliverables) to satisfy the customer’s needs. When payment is sent,  AR has a specific team of diligent employees that act quickly to apply payment to outstanding receivables. In addition, the payment processing team is charged with handling all payments to the University of Michigan and applying the payments to the specific unit. This has its own unique set of challenges, especially when payments aren’t clearly identified.  The team does a great job of thoroughly researching the payments, contacting potential owners, and follow up prior to placing the payment in the unallocated funding bucket. 

Last fiscal year ended with the AR balance at $54 million, representing a near 10 percent increase over the prior year.  AR Billing invoiced a total of $476 million through 22,000 invoices. AR Collections brought in $439 million represented by over 18,000 invoices.  These figures demonstrate AR’s main goal: getting money to the department accounts in a timely manner in order to support their research.

To learn more about the Shared Services Center Accounts Receivable team and the other excellent services they provide, please visit the SSC website.