Egypt Debtor Policy

BRITISH COUNCIL EGYPT

Egypt Debtor Policy
Issue date: 28 August 2012
Version Number: 1

Egypt Debtor Policy

This policy follows process guidance for debtor management as outlined in New Essential Finance,
chapter 12, and should be read in conjunction with this New EF Chapter. At the points that this
local policy deviates from New EF Chapter 12 for reasons of the local context, this deviation is
noted and the reasons explained.
Aim: To ensure debts are collected fully and in a timely manner and any risks are reported to the
Debtor Manager.
1. The Debtor Management Process
2. Risks and potential Impact
3. Contracts
4. Method of Payments
5. Issuing Invoices
6. Clearing invoices
7. Policy on Late Payment
8. Assurance
9. Debtor Management Process Separation of Duties
10.Example templates of letters to debtors
11.Aged Debt Report
12.Cancelling invoices and Write off process
13.Debtor Management Flow Chart
1. The Debtor Management Process:
a. Agree and sign terms and conditions of contract. This should be done by both parties
before the activity starts. Contracts can only be signed by CD and as set out in Egypt DA.
b. Once activity/ delivery of service has commenced, the customer should be invoiced, either
in line with the contract or immediately upon delivery of the service
c. Gamal Asaad is the debtor Manager who prints the Aged debt report at month end and
provides debtor reports to budget holders at the end of each month. Budget holders report
on their debt position at debts meetings.
d. Contacting debtors, The Budget Holder will nominate a member of staff in his/her
department who is the contact point for customers. In the event of due date expiry,
customers are contacted by phone first. Subsequently we issue a first Chaser Letter
requesting payment. The letter should be sent no later than 14 days after the due date
e. The Debtor Chaser in the relevant department should issue a 2 nd payment request
reminder if customer has not responded to the 1st reminder after 14 days (all
communications must be documented in the Debts Folder and on the G drive)
f.

If review and follow up action suggests debtor has possible cash flow difficulties /
imminent bankruptcy:
o
o
o

Consider suspending / discontinuing activity until payment is received;

Stop further credit to customer
Request that in future, payment is made in advance of activity or a staggered
payment schedule for activity/services / goods.

g. These decisions should be made by the Debtor Manager based on proposals from the
Budget Holders.

Egypt Debtor Policy

h. If the customer / client is also a supplier, this will be identified in the FCCF meeting and
the Finance Manager should withhold any outstanding payment(s) to them until our
invoices have been settled and our future relationship with that organisation is resolved.
i.

If invoice not settled within two weeks of 2nd reminder being sent, the Debtor Chaser
should issue a 3rd and final reminder. This should contain a declaration of intent to take
legal action, if payment is not received within 7 days of issuing the final reminder.

j.

Where it appears that the client will not settle, the Debtor Manager should consult with the
Budget Holders and Director with the view to taking a decision on whether legal action
should be pursued. If legal action option is chosen, consult with Legal Adviser first.

k. Where it is confirmed that the client will not settle and legal proceedings will not be
taken/have not been successful you should commence the write-off process.
l.

No new contract should be issued to a client with an existing debt. The Debtor Manager
should consult with the Budget Holders if there is a case to make an exception. This
should be documented as part of the BR framework stating reasons.

2. Risks

Poor delegation of debt monitoring

Poor follow up on debt: debt meetings should be held monthly in addition to the reporting at
FCCF
No contract.
Unknown debtor position
Late billing / incorrect billing or collection
Understated / overstated debtors in published accounts if debtors not accurately recorded
(e.g. duplicated debtors not corrected)
Absence of billing timetable and / or late collection results in lost investment potential and
could have significant impact on organisations cash flow
Incorrect billing of client may affect client relations / confidence
Inability to judge whether to give further credit to customers who have poor payment record
Absence of debtor records or untimely debtor management reporting, inaccurate reporting,
has significant impact on cash flow planning increasing exposure to currency devaluation or
investment planning

3. Contracts

Should be prepared and signed by both parties before activity starts. All pages should be
initialled.

Adequate separation of duties must exist between contract approval, issuing contract and
receipt of funds.

Include full details of debtor (full commercial name, address, VAT number).

Include price and currency in which we expect to be paid - Contracts should be negotiated
in EGP, USD or Sterling.

Where appropriate, include details on liability, indemnity, copyright, premature

termination, force-majeure, arbitration procedure and variance in terms.

Aim for advances to be received from the client against the contract.

Egypt Debtor Policy

Stipulate the British Council bank account into which payment must be made and the
payment schedule.

The debt manager must be part of the contract approval process. New contracts must be
passed to the Debt Manager who will audit them for compliance and enter them onto the
Register of Contracts (see below). The Activity Manager should inform the Debt Manager
as to projected invoices schedules that will be entered onto the Register and used for
follow up. The contract will be initialled by the Debt Manager to show all the above has
taken place.

Contracts should be held securely under lock and key.

All transactions should be confirmed by a contract that:

o
o
o
o
o
o

is prepared and signed by both sides before the activity commences

includes full details of the debtor (full commercial name and address)
includes price and stipulate currency
stipulates the payment schedule
states the process that will be applied in the event of late payment
Identifies the individual responsible for settling the process at the client end.

If there has been a relationship in the past between the customer and other departments,
it is prudent to check with these departments on the customers credit worthiness.

Deviations:
For some contracts in the Egyptian context, it is unrealistic to ask for advances. Managers
should use their discretion to get the best possible result for the Council
In dealing with many Egyptian organisations, currency controls make it very difficult to
expect payment in anything other than LE.
When it comes to payment by cheque or bank transfer, there are different practices
between customers and activity streams. For business reasons it is more effective to let
customers and business stream managers determine which payment method they prefer.
Payment method and bank account details, if applicable, will be specified on the invoice.
4. Methods of Payment:
Where settlement is by cheque, invoices should state that all cheques and postal orders must be
made payable to British Council and crossed Account Payee only.
Where settlement is by bank transfer, invoices should stipulate the British Council Bank account
into which payment should be made.
State the following on the covering letter:
To ensure payments are received and cleared, please contact us by email/letter to confirm
payments made, including:
Invoice Number
Method of payment
Date of payment
We will then confirm receipt of your payment and clear it

State the BC process/penalty that will be applied for late payment.

Equal opportunity and diversity: The Sponsor agrees to services being delivered according to
the British Council Equal Opportunity and Diversity statement, which can be found at
http://www.britishcouncil.org/home-diversity-what-we-do?mtlink=home-diversity-what-we-

Egypt Debtor Policy

do.htm

Identify the individual responsible for settling the invoice at the client end
NB - In the Egypt context, credit ratings are not available but do liaise with other departments
when contracting any business with new customers.

5. Issuing Invoices
Once activity/ delivery of service has commenced, the customer should be invoiced, either in line
with the contract or immediately upon delivery of the service
Invoicing Protocol: invoices must always be issued using SAP.
Standard payment terms should state that settlement is required within 30 days of the invoice
date.
Where settlement is by cheque, invoices should state that all cheques and postal orders must be
made payable to British Council and crossed Account Payee only.
Where settlement is by bank transfer, invoices should stipulate the British Council Bank account
into which payment should be made.
Invoicing is the responsibility of the budget holder
6. Clearing invoices

Receipt of funds should be recorded with accounts on the same day as received cheque/cash/direct bank transfer - or the next working day if the same day is not feasible.
If cash/cheques are received by other depts., this should be logged and passed to Accounts
Dept on the same day or next working day if the same day is not feasible.

7. Policy on Late Payment

Debt monitoring cannot be separated out from the debt policy more generally. Effective debt
management begins with contracting (or agreeing sponsorship) to agreed formulas and
standards, accurate income recognition and appropriate recording/charging of payments.

All debt chasing related communications must be logged according to agreed formulas i.e. In
the spreadsheet on Debt Monitoring linked to that for logging contracts/agreements raised,
payments etc Please ensure all columns are completed. All letters must be filed in the folder
for the relevant customer. All chasing spreadsheets must be up-dated monthly for the
monthly debt meeting.

When the initial 30 day credit period has passed without payment, you should contact
customer by phone to agree the debt is overdue and request a deadline for payment. On the
back of this phone call, send out the 1st chaser letter requesting payment to the agreed
template. The letter should be sent no later than 14 days after the due date.

You should issue a 2nd payment request reminder if customer has not responded to the 1st
reminder after a further 14 day period.

If review and follow up action suggests possible cash flow difficulties:

-

Consider suspending / discontinuing activity until payment is received;

Stop further credit to customer
Request that in future payment is made in advance of performing contract or providing
services / goods

Egypt Debtor Policy

Sequence:
If the credit period has passed and the customer has not settled the invoice, the customer
should be first contacted by phone to request payment.

If after 14 days from the due date the invoice has not been paid, the 1 st chaser letter should
be sent

If no response to the 1st letter is received after 14 days, send 2nd chaser letter

If no response to 2nd letter is received, 3rd chaser letter should be sent invoking clause in
contract/ MoU suspending activities and/ or referring to legal action

If it appears customer will not settle, consult with Legal Team in UK on possibility of taking
legal action.

Deviations:
threats of legal action in Egypt are very detrimental to the relationship and are probably
best left until all other avenues are exhausted. It should also be noted that if legal action
is initiated, it can be years before the case reaches the Courts. Mangers should use their
discretion in deciding if they wish to go down this route.
If it appears customer will not settle and legal action will not be taken, then the debt will need to
be written off. Consult Accounts for the steps to take
For future reference:
Ensure that any future payment is made in advance of performing the contract or providing
services/ goods or that an instalment plan is agreed. In principle a quarterly instalment plan
should be agreed with all closed group contract activity that spans more then 2 quarters of the
FY.
(TCM/debt manager must be alerted immediately about any discussion around suspension of
activity and the risk of default in payments.)

If the customer/client is also a supplier you should withhold any outstanding payment(s) to
them until our invoices have been settled and our future relationship with that organisation is
resolved.

If invoice not settled within two weeks of 2 nd reminder being sent, you should issue a 3rd and
final reminder. This should contain a declaration of intent to take legal action to agreed
template, if payment is not received within 10 days of issuing the final reminder.

Where it appears that the client will not settle, consult with the senior management team and
relevant budget holder to take a decision on whether legal action should be pursued and for
consultation with the lawyer.

Where it is confirmed that the client will not settle and legal proceedings will not be taken/have not been
successful you should commence the write-off process Local practice may dictate an alternative late
payment policy (e.g. local regulations, consider types of customers). If this is the case, the local policy
should be documented and clearly communicated.

8. Assurance
Monthly Assurance Gathering

Egypt Debtor Policy

As invoices are now entered on SAP, Account provides monthly debtor reports to budget holders.
Debtor Manager should provide debtor reports to budget holders at month end.
Debtor Manager should review unmatched transactions and match/account allocate any
unmatched items immediately on receipt of cash or within 3 days at latest.
Budget Holder should review reports monthly and initiate action as appropriate. The action
taken should be recorded for own records and for review by the Debtor Manager if required.
Budget Holder should report debtors older than 30 days after due date to Debtor Manager with
explanation of action taken.
Debtor Manager should:

review debtors older than 30 days (beyond due date) and seek assurance on action
being taken by Budget Holders - retain record for own purposes.

carry out additional assurance tests on areas that are considered weak. For example if a
particular Budget Holder has an unacceptable level of overdue debts the Debtor Manager
may wish to review their processes and contracts to determine why increased risk is
being carried.

carry out a walk through of the complete process. Action should be taken immediately
to address any control weaknesses discovered.

ensure completeness checks are carried out monthly (or less frequently depending on
volume of invoices issued) on invoices issued either personally or with the help of the
Finance Manager. (Overseas countries can do this by running a report in SUN which
will be available shortly. Details will be issued by Overseas Accounting Support).

Egypt Debtor Policy

Periodic Assurance Gathering

Debtor Manager should periodically:

Establish income areas to ensure they are all reviewed

Review debtor process for all income areas for effectiveness / compliance with standards
as recommended here by spot checking or walking through the process.

Review income collected for which an invoice was not issued - ask why this is happening
and set up process for it to be invoiced in future if it is invoiceable.

Where gaps are identified, changes should be initiated to ensure the local process in
place meets the standard of the process set out in this chapter. A schedule should be
set up to monitor the new process until such time as you are assured that the process is
working effectively.

Monthly Reporting at FCCF Meeting

The following should be reported by Debtor Manager at the monthly FCCF Meeting:

Debtors older than 60 days after the due date and action being taken

Any control weaknesses found in the debtor management process, as a result of a more
detailed review

Material debtors older than 120 days unlikely to be recovered (should also be reported
to the relevant Activity Stream at the centre with details of action being initiated e.g. via
FCCF Return
Note: Responsibility for recovering the debt remains with the country / department.

If any issues are identified prior to the FCCF Meeting, Budget Manager should be consulted
immediately. If Budget Manager, Activity Manager and Debtor Manager reach a conclusion that
the deviation from the standard poses a high risk, you should consult the centre for advice.
Evidence of issues raised and action to be taken e.g. risk containment, responsibility for action
etc. should be documented in the FCCF Return. Future FCCF Return should show evidence that
actions have been followed up
The principal areas in the office that have debtors, and the initial contact points, are:
Teaching Centre (Hany Samy)
Programmes (Cathy Costain)
Exams (Hala Hamad)

Egypt Debtor Policy

9. Debtor Management Process Separation of Duties

Task

Operational Unit
Budget Holder

Operational
Unit Budget
Holder

Corporate
coordinator or
registrar

Finance
Unit

Negotiate
contract
Sign contract

Issue invoice

Record the
invoice on excel
sheet
Send copy of
the invoice to
BP
Receive the
money , cheque,
DBT
Clear the invoice

Bank the money

, process the
cheque, process
the DBT

10. Example templates of chasing letters to debtors

Text for initial contact letter after 30 days (polite request for settlement)
Prepare letter on headed paper
One copy of the letter must be kept on file
Name of contact
Company name
Address

DATE
Dear XXXXXX
I would like to draw your attention to the following invoice(s) which remain(s) more than (30?)
days overdue.
(here we can cut and paste or attach?)
Student

Egypt Debtor Policy

Term
Dates
Fees
Invoice number
We would very much appreciate immediate settlement of the outstanding amount/s.
Payments
Please arrange for payment for the following amounts by (date):
a. By bank transfer to:
British Council Account Name
Bank Name
Bank Address
Account no:
Swift Code:
b. By cheque made payable to British Council
If you have any questions relating to this matter, please feel free to contact our Corporate
Activity Co-ordinator
We would also be grateful if you could advise us of the details of the final payments
when made. Contact Details:
Yours faithfully
xxxxxx
Text for final contact letter after 90 days (termination of service)
Prepare letter on headed paper
One copy of the letter must be kept on file
Name of contact
Company name
Address

DATE
Dear XXXXXX
Termination of Services
I refer to my letter dated (date of previous letter) and telephone calls in respect of the following
outstanding invoice:
Student
Term
Dates
Fees
Invoice number

10

Egypt Debtor Policy

As we have not received payment, I would like to advise you that all British Council Teaching
Centre services will be terminated with immediate effect and that further services will only be
provided on pre-payment basis.
If you have any questions relating to this matter, please feel free to contact our Corporate
Activity Co-ordinator
We would also be grateful if you could advise us of the details of the final payments
when made. Contact Details:
Yours faithfully
xxxxxx
11. Aged Debt Report

Run this report at month end, and as part of the termly reporting process, after running
the grant evaluation.

Maintain an off-system record of invoices issued, and use this to check sponsor accounts
on the system. The off-system record should include the following fields: Company name,
Business partner number, Invoice number, Invoice date, Session, Amount

Enter all new invoices on this spreadsheet as they are issued.

Monitor the spreadsheet weekly or monthly (depending on volume of invoices) and mark
paid invoices. Items remaining unpaid on the spreadsheet should be match to amount in
the Aged Debt Report

Corporate policy requires reporting to FCCF meetings for overdue debts > 60 days and a recovery
plan should be in place for overdue debts > 30 days. If local context dictates an alternative risk
strategy or local policy determines the age of debt to be reported to these meetings and this
policy must be documented and clearly communicated to FCCF and all staff with a role in
implementing the policy.

11

Egypt Debtor Policy

12. Cancelling invoices and Write off process

o

Cancelling invoices in the same financial year:

If we issued a wrong invoice, this invoice should be cancelled and cancellation done by the
following steps:
- the Budget Holder should be informed and his/her approval for the cancellation should be
taken
- the hard copy of this invoice should be crossed (cancel manually) and the country director
should approve the cancellation by signing on the crossed hard copy of the invoice
- the signed copy should be Scand and e-mailed to the Regional Decision Support Manager
to get his/her approval
- When the Region Finance Manager approves the cancellation his approval with all the
related documents will be send to Finance HUB to finalise the cancellation.
o

Write off

Writing off a loss (including special payments and abandoned claims) constitutes the formal end
to internal procedures. It cannot take place until all investigations and actions following the
discovery of a loss, including any police prosecutions are completed and the full extent of the loss
is clear. Any costs involved are then reported in the Council's accounts and the file closed.
The procedure to be followed is set out in the losses section of Essential Finance which is on the
intranet at http://intranetdev/essfinance/sectiona/A6.doc
You will need to complete the relevant loss forms which can be found on the intranet at
http://intranet.britishcouncil.org/finance/Forms/Pages/Default.aspx
FA1 form for losses above 100 which is then sent towriteoffrequests@britishcouncil.org
to process and obtain approval from the relevant authorisers in HQ.
FA2 form for losses up to 100 and can be approved by Country Director.
Please make sure when you complete the form that you have included full details of:
What the loss relates to
How the loss arose
What steps have been taken to try to recover the loss (including legal advice where
appropriate)
What steps have been taken to avoid similar losses arising in the future
The FA1 form needs to be signed by the CD under Signature of Budget Manager before sending it
to writeoffrequests@britishcouncil.org, with supporting documents (email reminders, legal advice
sought) where applicable.

12

Egypt Debtor Policy

13. Debtor Management Process Flow Chart

Negotiate
contract
settlement
terms
Sign
contract

Receive
advance

Commence
work

Invoice as
per terms
Telephone
customer & send
st
1 reminder letter
14 days after due
date

Record invoice
on the invoice
tracking excel
sheet
Debtor report
received by
Budget Holder

Receive payment

Clearing the
invoice

Record the clearing

in the invoice
tracking excel sheet

Overdue
(credit
period has
passed)

2 wks after 1
reminder,
nd
send 2
reminder

Report to Debtor
Manager

st

nd

2 wks after 2
rd
reminder, send 3
& final reminder
with intention to
take legal action

Debtor
Manager
report
debtors 30
days overdue
at Risk
Meeting

If invoice not settled

within 7 days of final
reminder, consult with
Activity Stream about
action to take

13