Centralizing CollectionsByWilliam MillerMiller ConsultingMiller Consultants
BudgetsMany states, cities, and counties are facing revenue deficiencies increased spending, long-term economic pressures, sales tax pressures from a decline in consumption and a heavy decline in housing market trends, slowing personal income growth and tax reform initiatives, state and federal mandates, reduced state, federal and county funding levels. Policy changes need to evolve to deal with ongoing budget challenges.
Government StructuresState GovernmentCounty Government City GovernmentMunicipal GovernmentsLocal Government Services
Penalties and Fines
A Holistic View to Centralizing CollectionsWhy Centralize?
To collect revenue in the most efficient and effective manner, and to do so in a way that is fair, open and transparent to the taxpayer and publicConsolidating the collection functions can reduce redundancy, significantly increase collections, streamline and standardize the collections process with better efficiency and effectiveness.
StrategyGovernment must consider the expansion of their delinquent debt collection programs to increase revenue from their accounts receivable as part of a balanced program for getting into, and staying in, fiscal shape.Decentralized collection operations tend to receive less focus, are not properly funded, and seldom pursue opportunities for improvement.
StrategyGovernment states, cities and counties must shift their focus to identifying opportunities to improve programs and generate significant new revenues.The private sector continues to offer solutions that raise customer expectations, and government agencies are be expected to offer similar solutions.Miller Consultants
StrategyGovernment agencies must become customer-centric and process-centric organizations for the delivery of services and should include public and private sector partners.
Government agencies must review old statutes and implement legislative changes to be able to adopt improvements and efficiencies
Government management teams must use analytic tools to be predictive planners rather than historical planners.
StrategyWhile each revenue agency is unique, there are three common basic strategic goals:
Maximizing revenues Improving constituent services Maximizing agency efficiency
StrategyGovernments need to take a fresh look at how their receivables are managed.They need to propose new approaches for managing them.Positive innovative changes will help states, cities, and counties reduce budget deficits and sustain fiscal fitness.
DecisionsManagement decisions must be based upon a comprehensive understanding of available opportunities.
This allows the agency to maximize revenue-generating capabilities, properly prioritize workloads and assign work to the appropriate in-house staff and outside vendors, allowing for the effective utilization of resources.Miller Consultants
StrategyCentralizing the approach to collecting accounts receivables requires a change in thinking and the way governments do business.
Government agencies states, cities, and county governments need to view delinquent debt management as a base function of government as opposed to a secondary activity of agencies with other basic service missions.
A centralized collection management system provides the necessary collection infrastructure to automatically assign debts to the most cost-effective collection stream, and provide modern day automation for executing collections.
A centralized collection function makes use of analytics and enterprise data to automate many key collection functions, including skip tracing, write-off of accounts and the issuance of legal actions
StrategyTaxpayers must be offered multiple ways to resolve their accounts, including installment agreements and offers-in-compromise if appropriate. The advancement of web-based technologies has introduced many new ways of doing business. New strategic changes in business processes, information technology, organizational work settings, and new regulations must be created to address todays economic conditions and challenging budgets.
StrategyThere are a number of options that a centralized collection department could employ to defer the cost of establishing a centralized debt collection operation.Some states have contracted with private companies who will invest in the new technology and then wait to be paid for their efforts out of the increased revenues collected.Through contractual models such as benefits funding, the department can defer paying for the new technology infrastructure until after the benefits have been achieved.Miller Consultants
State Example: OhioOhios centralized collection environment in which economies of scale are present, significant efficiencies are gained allowing government to collect more of the liabilities that are owed. The Ohio State Attorney General during the past quarter of a century has implemented a robust centralized collection division with the necessary tools and state statutes to efficiently process delinquent debts. Acting alone, individual government agencies, cities and counties lack the economies of scale to bring the tools, workflow processes, and technologies needed to materially improve collections.
State Example: OhioThe Attorney General in Ohio established cost reimbursement rules for their centralized collection function, authorizing the central collection agency to charge a reasonable cost for recovery by adding collections cost to the original debt and in many cases pass along the cost to collect to the delinquent debtor.
State Example: OhioThe Ohio Attorney General receives approx. 10% of every dollar collected.During fiscal year 2010 the office recovered over $400 million dollars on behalf of its clients.Adding approx. $40 million dollars to the office revenue stream.The estimated budget to operate the office centralized collection division during fiscal year 2010 was approx. $15 million dollars. The additional revenue allows the office to support other less funded services.
CreditsResearch Resources:CGI Lexis/NexisNASACTSunGard AvantGard InsightsMacias Consulting GroupQuarter of a Century of Experience
Miller Consultants LLC
CGI CGI Group Inc. is one of the largest independent informationtechnology and business process services firms in the world. CGI provides state and local governments with creative IT solutions that drive efficiencies, effectiveness and cost containment.The National Association of State Auditors, Comptrollers and Treasurers (NASACT) is an organization for state officials who deal with the financial management of state government.*