Building a Strong Government Collection Program that Works!

1
Building a Strong Government Collection Program
that Works!

• Michael Vogl, Collection Manager, City of San
  Diego

2
Why have a Collection Program?

• Maximize revenue
• Motivate public to pay on time
• Centralize collection activities/reduce
  duplication of collection efforts
• Reduce collection related costs
• Improve reporting on delinquent amounts and
  tracking of collection performance

3
1. Getting Started!
4
Identify What Receivables You Have

• Taxes (Business Tax, TOT)
• Services (Water, Sewer, library)
• Risk (Property damage, medical cost recovery)
• Enforcement (Parking cites, administrative
  violations)
• Permits/inspections

5
Other receivables

• Returned checks
• Emergency response cost recovery
• Damaged trees

Identifying additional penalties, damages, and
other add-ons increases revenue and elevates the
consequences of non-payment.
6
Authority and Organization

• Create Authority
• City Charter, Resolution, Ordinance
• Administrative regulation, Policy
• Organizational considerations
• Centralized or decentralized?
• General fund or internal service fund?
• In-house collectors or External Collection
  Agency?

7
Actual Performance Comparison City Collections
Staff vs. Private Collection Agency
City Staff Private Agency
Referral 1,200,000 1,200,000 Gross
Revenue 33,000
5,500 Less Expenses Agency Fee
0 (679) City Staff (PE/NPE)
(10,000) 0
Net Revenue to City 23,000 4,821
8
Staffing and Compliance

• Staffing
• Private sector collection experience
• Clearly identified roles and responsibilities
• Well thought out performance plans and goals
• Legal Compliance
• Fair Debt Collection Practices Act (FDCPA)
• Robbins-Rosenthal Act

9
2. How to Get Results!
10
Create the Right PerceptionDevelop Support

• Educate
• Council members and or Council staff
• Department front-line staff
• Conflicts in missions
• Debtors will attempt to circumvent collection
  staff
• Partner
• Department management
• Key stakeholders

11
Set High Expectations

• Set annual and monthly goals for staff
• Collections and Productivity
• Quality and Compliance
• Customer Service
• Track performance at various levels
• Communicate expectations and results regularly
• Reward success
• Address poor performers

12
Collection Program Annual Revenue History
13
Create and Escalate Consequences of Non-payment

• Stop providing service
• Send collection letters, make telephone calls
• Credit reporting
• File liens, suspend drivers license, impound car
• State tax refund interception
• Legal action

14
(No Transcript)
15
The Motivation Game

• Consequences should be communicated in letters,
  notices, and telephone calls
• If the debtor still does not comply, you must
  follow through with these consequences
• Spread responsibility to individuals vs. business
  entities

16
Credit Reporting

• Government receivables can be credit reported
• Must attempt to notify debtor of derogatory
  reporting
• Information reported must be accurate
• Requires resources to investigate and respond to
  disputes
• Especially effective when interest rates are low

17
State Tax Refund Interception

• Limited to certain types of accounts
• Must have social security number
• Special limitations on parking citations
• Requires minimal resources

18
Legal Action

• Small Claims Court
• 5,000 per case jurisdictional limit
• City Attorney
• Higher jurisdictional cases
• Parking citation judgments
• Conversion of criminal restitution order to civil
  judgment

19
Make it Easy to Pay!

• Offer a wide variety of payment options
• Mail, walk-in, telephone, service center
• Cash, check, credit and debit card
• Internet
• Post-dated check plan
• Time extensions/payment plans
• Settlement authority

20
3. Maximize Benefitand Minimize Cost!
21
Focus Resources on Collections!

• Collectors
• Skiptracing
• Making and receiving phone calls
• Minimize specialization
• Must be aggressive
• Supervisors
• Minimizing complaints/Improving service
• Handling complex cases
• Training and re-training
• General supervision

22

• Accounts
• Target accounts with higher payback and
  likelihood of successful collection
• Eliminate old or likely uncollectible work from
  collector workload
• Implement a collection fee and or interest charge
  on collection accounts
• Automate notice series

23
Treasurers Collections Program Cost/Revenue
Comparison
REVENUE COST
FY 1993 4,900,000 956,000 FY
2004 16,100,000 3,700,000
Revenue vs. Cost
4.35 to 1
24
4. Leverage Technology!
25
Automation

• Collection system
• Electronic interfaces to billing systems and data
  providers
• Telephone system
• Voice logging/recording
• Document imaging

26
Access to a Wide Variety of Data Sources

• Department of Motor Vehicles
• Agency databases
• NCOA, phone directory
• New internet tools
• Accurint

27
5. Provide Excellent Customer Service and
Maintain a Positive Agency Perception!
28
Customer Service

• Staff should provide accurate information in a
  pleasant professional manner regardless of the
  debtors behavior
• Listen and Respond timely to requests and
  inquiries
• Be aware of tone and body language (sarcasm)
• Use We, This office, and Our system rather
  than I

29

• Inform rather than threaten
• Voice logging/recording
• External collection agencies will not provide the
  service expected from government agencies
• Educate the media
• Stories on collection efforts educate the public
  on consequences of late payment
• Stories generally result in telephone calls and
  payments

30
(No Transcript)