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How to Manage Collections of Municipal and Government Receivables

A city’s delinquent accounts can be one of the most difficult to collect. Citizens want the best of both worlds: lower taxes, but more amenities offered by the municipality. We all know that good cities and counties provide great services and these come at a cost.

It is inevitable that some residents find themselves in a tough place, where they have more bills than money. So, how do you collect on delinquent municipal accounts effectively, keeping your costs down — without angering or alienating your citizens?

Unique Challenges
Unlike private-sector businesses, government agencies and municipalities have to mail notices and invoices to every individual household. They are also notifying individual citizens with regard to some billable services or accounts (e.g. court notices, DMV renewals, etc.). In order to keep costs down and be a good steward of taxpayer dollars, invoicing and lettering processes need to be well organized and highly efficient.

One best practice is to make sure that the various departments of your local municipality — and whenever possible other local government departments — are sharing resources such as vendors that provide volume discounts for billing, lettering and invoicing services. With regard to tax bills, it’s best to have a set date chosen that defines when invoices will be sent out to those living in the municipality. Advertise this date through announcements at city council or township trustee meetings, posting fliers at the city or town hall, making note of it on the municipality website — any and all forms of communications you have. The more prepared your citizens are, the more likely they will pay.

Of course some cannot pay or simply do not pay on time and then roll 30, 60, 90 days or more delinquent. Here are some consideration to make it cost effective for you to follow-up with these citizens.

Internal Collection Efforts
Although government workers are very busy with a million other tasks, managing your municipal accounts receivable will actually make your life a lot easier in the long run. Take the time to call or send a second notice to those with delinquent bills. Make it clear that if the bill continues to go unpaid they will lose those services such as waste management and city water. Also communicate in your notices and phone calls that beyond a certain point (choose 90 or 120 days), the accounts will be placed out for collections, which will include additional fees or collection costs (as permitted by your local or state statutes).

Internal Software
Whenever possible, make sure whatever municipal accounting and account management software you choose includes a “Collection Module or Function.” If this is not possible, then at least make sure whatever additional collection software you choose will integrate with your government business software. The accounts receivable software you choose should be able to send tax documents to citizens via email or postal service. It should also offer a place for them to pay online.

The most important part of the delinquent accounts receivable system you choose: it should organize each taxpayer separately and give you notifications when their bill becomes delinquent. Your internal collection staff should be able to use your software to schedule appointments, tasks, future calls with citizens, and keep clear history records of all communications by phone and mail.

The collection component of your software should provide a way for your collection agents to set-up and maintain payment plans in the event a delinquent account holder can afford a payment plan. Furthermore, the system should report usable and relevant data, creating better transparency for your municipal accounts receivables that your town management team can use to analyze, set strategies and for reporting. This is something your leadership and constituents are sure to appreciate.

Choosing a Good Collection Agency
If and when it’s time to turn the city’s delinquent accounts over to an agency, be sure to look for certain tangible features: technology, data security measures, compliance programs and processes that ensure they are operating legally and ethically.

One of the most important factors however, is an intangible. It is important that you choose an agency that will not alienate your taxpayers. Every collector must “sell” the debtor on the benefits of paying their bill. They often must be problem solvers, and in many cases, must help the debtor find a way to resolve the debt. To be successful, the collector must use non-alienating communication techniques to achieve payment, because if the collection process makes an enemy of your citizen or taxpayer, you are far less likely to get payment, not just now, but in the future.

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