Accounting Services Section (ACT)

POLICY 21

Effective Date: 07/01/1996

Last Modified Date: 03/31/2006

The goal of cash management procedures is to maximize interest-bearing investment of cash and to minimize idle and nonproductive cash balances.

University Cash Management Plan

The University Cash Management Plan sets forth the basic policies, responsibilities, and requirements for cash management within UNC-Chapel Hill. This Policy summarizes the Plan; to see a copy of the actual Plan, contact the Cash Management Accountant in Accounting Services.

Plan Administration

The Cash Management Accountant, under the direction of the Director of Accounting Services and the University Controller, is responsible for developing, revising, and implementing the University's plan to carry out cash management policies. The departments primarily responsible for cash management are Student Accounts and University Receivables, Sponsored Research, and the Controller; however, all department cash management activities must abide by the plan.

The State Controller and State Auditor determine whether Carolina is in compliance with statewide cash management requirements.

Plan Requirements

Cash management is divided into three areas: control of receipts, management of disbursements, and investment of funds on deposit.

Cash Management and 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 money collected into interest-bearing accounts. To accomplish these objectives, the following rules apply.

Depositing Money Received

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 business, shall be deposited daily in the form and amounts received. The State Treasurer has approved an exemption to the daily deposit rule if receipts total less than $250.00 and deposits are made at least weekly.

Use the online Daily Cash Transmittal (Form 446) for most such deposits. See instructions and link from here to the online form.

Receivables

Money due to the University from other governmental agencies or from private persons shall be promptly billed, collected, and deposited. See ACT Policy 20, Collection of Accounts Receivable and Delinquent Accounts.

A processing fee of $25.00 is charged and collected for checks on which payment has been refused by the payor bank because of insufficient funds or because the drawer did not have an account at that bank.

All accounts receivable should be billed monthly. A concerted effort should be made to collect accounts, including the current amount due applicable to installment payments. Follow-up notices should be sent on collected accounts.

Unpaid bills 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 unless (for institutions where applicable) the amount is owed by a medical patient and is less than the Federally established deductible applicable to Part A of the Medicare program.

The Attorney General's office has authorized seven private collection agencies to collect delinquent accounts. Only five of these seven are authorized for use by universities. (The other two agencies are for use by non-university state agencies.) The University utilizes the State of North Carolina's Set Off Debt Collection Act (SODCA) and the State Employee Debt Collection Act (SEDCA).

Federal Funds

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.

All Federal fund draws should be timed to that the funds are on deposit with the State Treasurer no more than two business days prior to the disbursement.

Drawing of Federal Funds under Letters of Credit: The cash needs for Federal awards funded by letters of credit or lines of credit are determined daily and the cash requests are made against each funding source to meet the immediate cash needs for each account.

Receiving of Federal Funds under Letters of Credit: A "Certification of Deposit" and a "Cash Receipts Voucher" are prepared at the time the request of funds is made. Daily these certifications are reviewed against a fax received from the Bank of America of deposits received that day. After a verification of deposits is made, Accounting Services certifies the deposits to the State Treasurer.

Depositing of Federal Funds under Letters of Credit: Institutional Trust Funds, which include Federal funds, are required to be on deposit with the State Treasurer, who shall hold the funds in trust in a separate account in the name of the University. The State Treasurer invests these funds and returns a portion of the income to the University for distribution to the participants. The University money market system provides a control account to track the Federal funds participation.

Electronic Payments

State agencies shall accept electronic payments to the maximum extent possible and consistent with sound business practices. The agency must submit a business plan to the State Controller for evaluation prior to the acceptance of electronic payments and must establish appropriate policies and procedures. These policies and procedures will incorporate the statewide electronic payment policies and procedures and be included as a part of the agencies', departments', or institutions' cash management plan.

The University utilizes the Cash Management Control System (CMCS) to receive electronic payments from other UNC System schools and from other state agencies. The University receives ACH payments from Federal agencies and receives wire transfers through the banking system. In addition, various University departments receive credit card payments in person, via the telephone, and via the Internet.

Other Techniques

In addition to adhering to these guidelines, the University employs proven techniques that improve cash handling. Some of those techniques include

• Receiving Federal grant payments by wire transfer when possible
• Maintaining special post office boxes to facilitate the processing of large remittances
• Color-coding mailing labels and envelopes to identify remittances for special handling
• Reassigning personnel, or hiring temporary personnel when cost effective, to accelerate the processing of remittances during peak periods
• In areas outside Raleigh, making deposits with cash concentration banks designated by the State Treasurer
• In areas that are large sources of remittances, but geographically distant from the nearest State agency office, establishing lock-boxes (locked Post Office boxes tended by banking agents) to receive payments
• Using remittance processing equipment when justified by the volume of deposits
• Establishing efficient, effective billing schedules
• Timing deposits in order to receive current day credit in accordance with schedules available from the State Treasurer

Cash Management and 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 to have a negative impact on relationships with firms who supply goods and services to the State in good faith. The following rules should be included in all plans:

• Cash disbursements are made through the University's Financial Records System (FRS), which rejects duplicate entries.
• Money deposited with the State Treasurer remains on deposit with the State Treasurer until final disbursement to the ultimate payee. Payments are made as close to the due date as possible. Specifically:
  • FRS automatically holds payments made on UNC purchase orders for 28 days from the invoice date to maximize the available funds, but ensure prompt payment. The system allows two days for the US mail so that net 30 is met.
  • Transfers to payroll accounts are made on the due date for such payments.
  • Payments on scheduled notes payable, scheduled bond principal and interest payments, statutory payroll taxes, and direct-deposit payrolls are made on the due date.
  • Funds are requested daily to cover the amount of checks written the previous business day. The checks are not released until those funds have been deposited.
• The order in which appropriations and other available resources are expended shall be subject to the provisions of the Executive Budget Act, regardless of whether the State agency disbursing or expending the monies is subject to the Act.
• Federal and other reimbursements of expenditures paid from State funds shall be paid immediately to the source of the State funds.
• Electronic Funds Transfer (EFT) and bank wire transfers 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 purchasing card (P-card) and central airfare billing (CABS) are settled by EFT. In each case the information is transmitted to UNC electronically from the vendor and reconciled with the departmentally supplied information. EFT transmits the reconciled amount, and the unreconciled items are investigated and resolved before the next month's transmission.
  • Student Accounts and University Receivables initiates a daily EFT payment in which they transfer student aid refunds from their account at the bank to students' personal bank accounts.
  • Bank wire transfers are completed on a daily basis in the Cash Management section of Accounting Services. Wire transfers payments, both domestic and international, are made from an approved University check request, purchase order, independent contractor form, or travel request form. The majority of wire transfers are made for vendor payments, debt service payments, and cash advances.
• All bank statements received from the State Treasurer and banks are reconciled on a monthly basis.
• Delegation of Disbursing Authorities must be kept current and must be approved by the State Controller.

Other techniques helpful in controlling disbursements include 1) using the State Electronic System for transmitting Social Security and Federal tax withholding and 2) reducing inventory needs and multiple check writing through e-commerce agreements.

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