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INTRODUCTION1. This Chapter outlines the policies and procedures for the operation of the CANEX, VISA, and MasterCard credit plans. 2. The use of VISA and MasterCard credit cards is authorized for use in most CANEX outlets. The BComd may authorize extended use of these bank credit cards to other base NPF entities. 3. This chapter is divided into two sections: a. CANEX Credit Plan; and b. VISA and MasterCard. CANEX CREDIT PLAN 4. The CANEX Credit Plan is authorized by the NPF Board of Directors. The purpose of the plan is to provide eligible authorized CANEX patrons with a no-interest purchase plan that will generate additional sales and profit. Operational procedures are detailed in the CANEX Policy and Procedures Manual. CONDITIONAL SALES CONTRACT (CSC) 5. The NPFAO shall ensure that the Conditional Sales Contract (CSC), number of instalments and post-dated cheques are in agreement. The NPFAO will file the post-dated cheques by date and ensure that the cheques are deposited in a timely fashion. The CSCs shall be filed in alphabetical order by surname to facilitate out-clearance procedures. NOTES 1. For spouses of Regular Force members, CSCs shall be filed as if the note had been initiated by the member personally. 2. Requirements for annotating the back of the post-dated cheques are detailed in Chapter 18. 6. On receipt of the DSR with the attached CSC and post-dated cheques, bookkeeping action shall be taken as follows: DR Bank (for downpayment and applicable taxes) DR Accounts Receivable customer account for the balance outstanding CR Sales CR Accounts Payable GST/PST as applicable REFUNDS 7. Should merchandise purchased on a CSC be returned for a refund, the CANEX manager shall advise the NPFAO in writing of the return of merchandise, providing information on any refund (eg. name of customer, amount of purchase, amount refunded by the store, amount refundable by the NPFAO). The NPFAO shall: a. Raise a cheque and debit sales for the amount of any CSC cheques already cashed; b. Return any uncashed CSC cheques to the customer via registered mail, credit accounts receivable and debit sales; and c. Raise a correction notice for the total of the amounts at sub-paragraphs a and b. EARLY PAYMENT 8. Early payment may be mandatory (eg. CF member is posted to another geographical working area) or it may be voluntary. Voluntary early payment of amounts owing may be made for the entire outstanding balance of a plan. Partial payment of the outstanding balance of a plan is not authorized. Early payments shall be made through the NPF cashier. BAD DEBTS 9. In the event of a customer's cheque being returned for insufficient funds, the NPFAO shall inform the customer in writing within 48 hours that they are in default on the CSC and to make restitution immediately. If the cheque is made good prior to the next payment date, the credit plan shall remain in effect. If a second cheque is also returned for insufficient funds, even though the previous NSF cheque was made good, the NPFAO shall inform the customer in writing within 48 hours that they are in default on the CSC and that any outstanding balance is due immediately. Upon receiving payment, the NPFAO will inform the store manager that the CSC is cancelled. If payment in full is not received, the NPFAO should refer the matter to the store manager for resolution. VISA AND MASTERCARD GENERAL 10. VISA and MasterCard will supply each participating unit with all the forms, procedural manuals and advertising materials needed to operate their programmes. Any queries relating to the standard bank programme are to be resolved by contacting the appropriate bank area representative. NOTE Any requirement for additional imprinters is to be satisfied by contacting local VISA or MasterCard representative. Purchase costs involved are a base/station responsibility.
ACTION AT THE SELLING OUTLET
11. Each base or entity will be given a unique merchant number for
VISA and a similar number for MasterCard. These numbers will appear on
the charge plate of the imprinter and will be imprinted through the
sales slip when a sale is made. When making a charge sale the sales
clerk will follow the procedures as outlined in the bank manuals, ring
the sale into the register, give one copy of the slip to the customer
and place the bank and merchant copies in the cash register till.
12. When the register is cleared, all the merchant and bank copies of
the sales slips will be attached to the Daily Sales Report (DSR) and
forwarded to the NPFAO.
DISCOUNT EXPENSE (CREDIT CARD FEES) ACCRUAL
13. Entities with credit sales shall account for credit sales discount
expense (credit card fees) by the accrual method. Under this concept,
discount expense at the applicable percentage of credit sales is charged
directly to the appropriate outlet during the same accounting period as
the related sales are recognized. The offsetting bookkeeping action is
to reduce the accounts receivable for VISA or MasterCard for the amount
of the expense.
14. The following are the accounting entries to be used in the
application of the accrual procedures of allocating credit card fees:
a. On Receipt of Credit Sales Item (from outlet):
CR Sales (by department) for the gross value of items
received
DR Accounts Receivable (VISA or MasterCard) for the net
amount of items received (credit sales less credit card
fees)
DR Credit Card Fees (by outlet) for the amount of the credit
card fees
NOTE
Current rates for credit card fees are 1.75 percent on VISA credit
sales, and 1.5 percent on MasterCard credit sales.
b. On Reimbursement by the Bank
DR Share of CBA for the net reimbursement, (gross value of
items processed less credit card fees charged)
CR Accounts Receivable (VISA or MasterCard) for the net
reimbursement
c. Action on Returned Credit Sales Items
DR Sales (by department)
CR Accounts Receivable (VISA or MasterCard) gross value of
items returned
NOTE
For the resubmission of returned items the accounting action at
para c is reversed.
ACTION BY THE NPFAO
15. On receipt of the DSR from the outlet, the NPFAO will:
a. Balance the total of the sales slips to the DSR;
b. Accrue for credit card fees as directed at paras 13 and 14
above;
c. Post the net amount (ie. less credit card fees) of the sales
slips to the Accounts Receivable columns of VISA and
MasterCard of the cash receipts journal;
d. Post the net amounts (ie. less credit card fees) of the total
daily VISA sales and MasterCard sales to the appropriate
Credit Sales Control Sheet (Annex A); and
e. Place sales slips on a file pending preparation of bank
submission.
SUBMISSION OF SALES SLIPS TO THE BANKS
16. The NPFAO shall submit MasterCard batch headers and VISA sales
recaps to the banks in accordance with the following:
a. Once per week; or
b. More frequently when the total of charge sales on hand for
any one bank exceeds $1,500; or
c. Regardless of the above, on the date of the monthly NPF
close-off.
17. VISA and MasterCard procedures state that if the net deposit is a
credit, due to customer refunds, a cheque for the amount of the credit
must be forwarded under separate cover to the bank. It should be the aim
of every NPFAO to ensure that no net credit deposits are submitted. The
contract with both VISA and MasterCard states that sales slips must be
deposited within fifteen calendar days of the date of sale or refund.
Therefore, refund slips should be held until they are offset by other
sales. However, if a credit is still outstanding on the fourteenth day
after the sale, the credit must be submitted along with a cheque for the
credit amount. Ensure that if this happens the cheque is made payable to
the Bank and is cross-referenced by the appropriate deposit and Merchant
numbers.
18. Both VISA sales recaps and MasterCard batch headers must be run
through the imprinter prior to submission.
VISA SUBMISSION
19. The NPFAO will prepare the VISA submission as follows:
a. Ensure that the sales recap has been processed through the
imprinter;
b. Enter the merchant number in the space provided;
c. List the total individual sales in the spaces provided, or if
the number of sales slips exceed fourteen, list the total
dollar amount of the sales and refund slips on an adding
machine tape and enter net amount in the spaces provided;
d. Separate the forms and attach the adding machine tape if
applicable to the bank copy of the sales recap and insert the
bank copy of the recap together with the bank copies of the
appropriate sales slips in the deposit envelope ensuring that
the merchant name, branch name (ROYAL BANK MAIN BRANCH), and
net amount appear in the window;
e. Complete the pre-coded deposit slip provided by the bank and
enter the net amount of the deposit in the space provided;
f. Separate the deposit slip and attach the merchant copies of
the sales slips together with the merchant copy of the sales
recap to the white copy of the deposit slip;
g. File the white copy of the deposit slip;
h. Staple the blue and yellow copies of the deposit slip to the
deposit envelope; and
j. Place the deposit envelope in another envelope and mail by
normal mail to:
Royal Bank of Canada
90 Sparks Street
Ottawa ON K1P 5T6
MASTERCARD SUBMISSION
20. The NPFAO will prepare the Master Card submission as follows:
a. Ensure that the batch header has been processed through the
imprinter;
b. Ensure that the batch header to be submitted is in serial
number order;
c. Enter the Base deposit number in the account number space of
the header;
d. Enter the date of deposit;
e. Calculate the total number and amount of sales slips and
enter in the space provided;
f. Calculate the total number and amount of refund slips and
enter in the space provided;
g. Calculate the total number of items by adding the number of
sales and refund slips and enter in the space provided;
h. Calculate the total amount of the deposit by subtracting -
total refunds from total sales and enter in the space
provided;
j. Write the merchant number (not the deposit account number) in
the upper left hand corner;
k. Sign in the space provided;
m. Place the BANK COPY (3rd) of the batch header in front of the
sales and refund slips and place in the deposit envelope.
Ensure that the merchant name and account number show through
the window and that the envelope is sealed;
n. Staple the BRANCH COPY (2nd) of the batch header to the front
of the deposit envelope;
p. Attach merchant copies of sales slips to the merchant copy
(1st) of the batch header;
q. File the merchant copy of the batch header by serial number;
r. Enter the date, serial number and the amount of deposit in
the MasterCard Credit Sales Control Sheet (Annex A); and
s. Place the deposit envelope in another envelope and mail by
normal mail to:
Bank of Montreal
Main Office
Wellington and O'Connor
Ottawa ON K1P 5T3
REIMBURSEMENT THROUGH DNPFS
21. Monthly, DNPFS will receive from the Royal Bank and the Bank of
Montreal individual deposit and chargeback account statements for each
base. The statements will list batch headers or sales recaps as
applicable under credits, chargebacks as debits and in addition clearing
entries to the CBA will also be shown as debits. DNPFS, on receipt of
each statement, will credit units with the total of the weekly clearings
covered by the statement and forward, with accompanying chargeback slips
as part of the end-month CBA statement in the case of MasterCard and for
VISA, immediately on receipt.
VISA/MASTERCARD STATEMENT
22. In addition to the items referred to in paragraph 21, the discount
expense will also be shown as a debit on the VISA and MasterCard monthly
statements. The NPFAO shall reconcile the statements to his records and
journalize the following entry:
DR Entity share of the Base CBA
DR Accounts Receivable - VISA or MasterCard (amount of
chargebacks shown on statement)
CR Accounts Receivable - VISA or MasterCard
The bank figure in the above entry is calculated by deducting the total
of the chargebacks and discount expense. Chargebacks are additionally
posted to the credit sales control sheet.
CHARGEBACKS
23. Chargebacks resulting from failure to adhere to bank procedures
will be debited to the unit deposit account at the appropriate central
bank and advice of the chargeback will be included in the monthly
statements forwarded through DNPFS to the unit. The reason for the
chargeback will be investigated, corrective action taken and the
adjusted/amended draft resubmitted in the normal manner.
UNITS NOT IN THE CONSOLIDATED BANKING SYSTEM
24. Dealings between units not in the CBA and DNPFS will be conducted
by cheque.