Revenue collection is a large part of government work, and it’s one they do every day. But for smaller municipalities or county governments, it’s a challenge to implement new processes and procedures for smooth collection.
If you work for a local or county government, you may be wondering about outsourcing your collections or ways you can improve the process. Here are some things to consider.
Your team will need to develop a system and process for:
- Tax assessments, fees, and charges
- Billing of taxes, fees, and charges
- Collection of revenues
- Deposits and cash handling procedures
- Auditing of taxpayers
- Internal auditing
- Developing, implementing, and evaluating effective collection procedures
- Tax litigation and legal efforts for delinquent revenues
- Accounting processes and prioritization of revenue collections
- Information management, software systems, and network structure and administration
Of course, the authority granted to municipalities to generate taxes and revenues varies depending on if they are under “Home Rule” or a “Dillon’s Rule.” Regardless, smaller or rural towns and counties must be prudent and prioritize their efforts based on their resource limitations.
The Role of Technology
Technology is, of course, helping in some ways. In the last two decades, we’ve seen a growth in governments using software for revenue and cash management. By employing such technology, a small local government will improve their efficiency for their revenue collections.
If your team is thinking about adding software, consider first whether it will reduce labor costs and improve the speed or productivity for collection and processing. The more revenue that is collected and deposited into financial accounts, the greater the opportunity for interest earnings, improved cash flow, and ultimately, better delivery of local services for residents.
Should Your Community Outsource Collections?
Regardless of the software programs you use, nearly every municipality has departments and operational areas where they struggle to balance the cost of operations against potential revenues and improved cash flow.
One of the best opportunities for a municipality to make more productive use of resources is to determine which parts of their operations they can outsource. Some activities can be outsourced at a much lower cost than that of an internal team.
A professional and respected organization that handles outsourcing work for municipalities is also working for many other municipalities performing the same or similar functions. The fact that they are performing these tasks for a pool of municipal or government clients provides them the opportunity to give those services to you at a much lower cost than if you attempted to do them yourself internally. In today’s business environment, there is much competition among third-party service providers. This competition forces these organizations to improve their performance, professionalism, and investment in technology which, in the end, is a big win for municipal and county revenue managers.
A Checklist: What’s Working and What’s Not?
This is where an analyzation of your internal resources, talents, and technologies is worth some time. Here are some areas to review in your organization:
- Processing of revenue receipts.
- Ability to provide prompt positive revenues.
- Slow billing — are your systems and resources prepared to have all billing issued timely?
- Internal incentives to pursue collections. Some departments with collections responsibility lack the incentive to pursue delinquent accounts aggressively. The greater the volume of delinquency, the more secure their work.
- Weak enforcement of revenue laws. Are you leveraging every legal process that you can or leveraging sufficient penalties that would increase motivation for delinquent citizens to pay?
- Some taxes revenues are self-assessed by the taxpayer. Do you have a definitive process to ensure that you are being paid properly?
- Staff training — a poorly trained staff for collections and proper enforcement techniques may lead to an inefficient and ineffective revenue collection operation.
- Lack of internal controls can result in revenue losses do the possibility of fraud committed by employees.
- Inadequate records management will make it difficult to follow-up on accounts and increases collection costs.
As a member of revenue management, you should be thinking about:
- How long has it been since you’ve had a conversation with your leadership internally, or consulted with industry experts on these topics?
- What opportunities for improved revenue collections and cash flow are you missing?
- What if you could free up operational resources to focus on taxpayer and constituent services rather than being focused on chasing taxpayers and revenue collections?
One of the government’s most significant roles is customer service and the collection of tax money in addition to other fees and charges for various services. These are just a few ways you can get started in making that process better. If your revenue management team needs more ideas, would like some consultation or is seeking an outsourced solution, contact us to learn more.