This chapter shall be known and may be cited as the Accounts Receivable Management Act.
State FundsThe Accounts Receivable Management Act
Section § 16580
This part of the law is called the Accounts Receivable Management Act. It sets the rules and guidelines for managing accounts receivable, which are the money owed to a business by its customers.
Accounts Receivable Management Act money owed
Section § 16581
This law defines the term "Participant" as referring to all state agencies, departments, and offices.
“Participant” for the purposes of this chapter means all state agencies, departments, and offices.
state agencies departments offices
Section § 16582
This law allows the Controller to ignore small errors of $25 or less in payroll accounts if it's more efficient in terms of time and cost.
Within the uniform state payroll system, the Controller may, for each participant, disregard errors of twenty-five dollars ($25) or less in individual accounts receivable, if he or she has determined that time and expense will be saved in doing so.
uniform state payroll system Controller discretion individual accounts receivable
Section § 16583
This law requires that resources for collecting debts should be focused primarily on the accounts expected to yield the most money. Additionally, participants are advised to seek guidance from the Franchise Tax Board or any other state agency with a proven successful debt collection system.
(a)CA Government Code § 16583(a) Each participant shall allocate collection resources based on giving highest priority to those accounts with the highest expected return.
(b)CA Government Code § 16583(b) Each participant shall consult with the Franchise Tax Board or any other state agency that has successfully established an effective accounts receivable collection system.
debt collection accounts receivable collection resources
Section § 16583.1
This law allows a participant to charge a fee to cover the costs of collecting money that is overdue. However, the fee cannot be more than the actual amount it costs them to collect the past due payment.
A participant may impose a reasonable fee, not to exceed the actual costs, to recover the participant’s collection costs on a past due account.
collection fee past due account actual costs
Section § 16583.2
This law requires participants to annually report their accounts receivables and any discharged accounts to the Controller. The Controller is responsible for notifying participants of the report's format and submission date at least 60 days before it is due.
(a)CA Government Code § 16583.2(a) A participant shall submit an annual report to the Controller of the participant’s accounts receivables and discharged accounts.
(b)CA Government Code § 16583.2(b) The Controller shall inform a participant, not less than 60 days before the annual report is required to be submitted to the Controller, of both of the following:
(1)CA Government Code § 16583.2(b)(1) The format for the annual report.
(2)CA Government Code § 16583.2(b)(2) The submission date for the annual report.
annual report accounts receivables discharged accounts
Section § 16584
This law allows participants, such as state agencies, to contract with private debt collectors to sell or assign their accounts receivable, which means debts owed to them. However, the sale should generate more profit than if the state collected the debts itself, and it should not hurt future revenue collections. The debtor must be informed in writing before their debt is sent to collections, giving them a chance to pay or appeal. If the debt is in dispute, it cannot be sold or assigned. Any contract made must comply with existing public contract regulations.
(a)CA Government Code § 16584(a) A participant may enter into a contract with a private debt collector or private person or entity for the assignment or sale of all or part of its accounts receivable, provided that the participant does all of the following:
(1)CA Government Code § 16584(a)(1) Determines the assignment or sale is likely to generate more net revenue or net value than equivalent state efforts.
(2)CA Government Code § 16584(a)(2) Determines the assignment or sale will not compromise future state revenue collections.
(3)CA Government Code § 16584(a)(3) Notifies the debtor in writing at the address of record that the alleged accounts receivable debt will be turned over for private collection unless the debt is paid, or appealed within a time period, as determined by the participant.
(b)CA Government Code § 16584(b) No participant shall enter into a contract for the assignment or sale of any accounts receivable pursuant to subdivision (a) if the accounts receivable debt has been contested.
(c)CA Government Code § 16584(c) Any contract entered into pursuant to this section is subject to Article 4 (commencing with Section 10335) of Chapter 2 of Part 2 of Division 2 of the Public Contract Code.
private debt collectors accounts receivable debt assignment
Section § 16585
This section allows a city or county in California to sell or transfer its unpaid debts to private collectors. However, before doing so, they must inform the person who owes the debt, giving them a chance to pay or dispute the debt.
If the person argues that they don’t owe the money, the city or county cannot sell the debt to a private collector.
(a)CA Government Code § 16585(a) A city, county, or city and county may sell or transfer part or all of its accounts receivable to a private debt collector or private persons or entities, provided the city, county, or city and county notifies the debtor in writing at the address of record that the alleged accounts receivable debt will be turned over for private collection unless the debt is paid, or appealed within a time period, as determined by the city, county, or city and county providing the notice.
(b)CA Government Code § 16585(b) No city, county, or city and county shall assign or sell any account receivable pursuant to subdivision (a) if the account receivable debt has been contested.
accounts receivable private debt collector debt notification
Section § 16586
This section states that claims for reimbursement specified under certain sections of the Welfare and Institutions Code are exempt from the regulations in this chapter.
Claims for reimbursement under Sections 11487 and 11487.5 of the Welfare and Institutions Code are not subject to this chapter.
reimbursement claims exemption Welfare and Institutions Code
