Keystone Offset Program

A debt is eligible for KOP if it:

• is 90 or more days past due;
• has a dunning level of 1-4; and
• has been certified as valid by the receiving agency.

The KOP program provides a passive debt collection mechanism for accounts receivable administered in SAP.  The offset receivable is applied in SAP just as if the customer made the payment.  A second benefit is that unlike a third party collection contractor, no collection costs are charged to the organization - the full amount of the offset is credited to the organization owed.  Another anticipated benefit is the reduction of write-offs performed by the Commonwealth.  Fees paid to third party debt collectors and the write-off of uncollected receivables result in lost revenue to Commonwealth organizations.

Without TINs, there is no way to link vendor payments and customer debts.  Without this link, SAP is unable to block outgoing payments for further investigation.

When a payment is blocked by KOP, an email is sent notifying the invoice processor of the block, just as is done with CRP (Contractor Responsibility Program) blocks.  The invoice processor should obtain the information about the obligation and provide the information to the vendor.  Directions on how to accomplish this are available on the CRP system website.  Agency staff should also provide any requested information about the payment to Comptroller Operations should an offset be pursued.

First, customer records should contain TIN information.  Management Directive 215.9, Section 6.h.(5) states that agencies shall "ensure that all liabilities owed to the Commonwealth are collected to the extent practicable through the offset process."  The inclusion of TIN data in customer records is essential to KOP and should be collected to the extent practicable.  It is also important that receivables in SAP be maintained accurately and be dunned properly in accordance with policy.

When an opportunity to offset presents itself, the receiving agency is asked to certify that the debt is accurate.  Comptroller Operation does not wish to put an undue burden on our business partners and wants to be sure a debt is valid before offsetting any payment.

A debt is certified when the receiving agency informs Comptroller Operations that:

• the amount of the debt is accurate;
• the customer has been dunned for this debt; and
• the customer has been notified of the Commonwealth's intent to offset.

When a certification is needed, the agency receives an email from Comptroller Operations asking the agency to certify the debt.  

Dunning is the notification to a customer that they are delinquent on an obligation to the Commonwealth.  Dunning intervals vary by organization, but are typically at a 30/60/90/120 day cycle.  A dunning level of 1-4 is required for KOP. 

A manual block can be used to prevent dunning, but should only be used when warranted.  Dunning levels exist for debt that is in litigation or has been referred to the Office of Attorney General for collection.  It is important that receivables are dunned properly so that payments are not made to vendors with delinquent debt or payments to vendors are not incorrectly blocked.  

KOP has little impact on procurement.  There is a "soft stop" if a KOP obligation exists.  It is strongly recommended that the purchaser notify the vendor that an outstanding obligation exists; however, this will not prevent the organization from proceeding with the procurement.  This is handled similarly to a performance issue in CRP (Contractor Responsibility Program) system.

Yes, any organization with non-tax accounts receivables administered outside SAP can participate. 

There are two options.  The administration of the receivables can be moved into SAP or the organization can provide a file to be used by the CRP (Contractor Responsibility Program) system to match against payment data.  Please contact the Office of Comptroller Operations' Bureau of Payable Services.

Since much of this program leverages existing processes, training classes are not required at this time.  Many resources, including step-by-step guidelines, are available and Comptroller Operations' staff are also available to assist and answer questions. 

If you have any questions or require additional assistance, please contact the Office of Comptroller Operations' Bureau of Payable Services.