Improving the collection process.

• Author: Larson, M. Corrine

In recent years, state and local governments have been under increasing pressure to streamline operations and maximize revenues without imposing additional taxes. As a result, state and local governments increasingly have begun to rely on more unusual revenue sources, such as rescue-squad charges, false-alarm fines, garbage fees, and other user fees; this, in turn, has complicated the standard process of collecting revenues.

To address this issue, the Government Finance Officers Association (GFOA) created a Debt Collection Task Force in 1990 made up of members from the Committees on Cash Management; Governmental Budgeting and Management; and Accounting, Auditing, and Financial Reporting. The task force began its quest for information on collection practices by surveying subscribers of GFOA's monthly investment newsletter, Public Investor. More than 200 responses were received and indicated a need for practical information on improving and systematically evaluating current collection practices. As a result, the task force began developing a hands-on manual to provide practical advice, which culminated in a new GFOA publication: Collecting Delinquent Revenues.

The manual explores various collection methodologies and presents tried-and-true collection tips and techniques to help governments improve their collection rates. Much of the publication is based on actual practice, with sample letters, forms, and notices. This manual comes at a time when governments are realizing that uncollected receivables can represent a large, untapped source of revenue. Computerization of delinquent account records, automation of collection systems, and implementation of skip-tracing and other more aggressive collection policies and procedures can have a major impact on a government's success in collecting monies owed. Furthermore, by focusing on the identification of delinquent taxes and fees and by developing more effective methodologies for collecting delinquent accounts, governments can significantly improve their revenue stream.

Overview of the Collection Process

The collection process involves many different players - the jurisdiction's legislative body that passes laws and ordinances governing the collection process; various departments within the government entity that administer the programs; and outside participants such as commercial banks, private collection agencies, credit reporting services, and courts. The role of these players in the collection...