Best practices in collections and disbursements.

• Author: Kinney, Anne Spray
• Position: Electronic payment - Editorial

Late last year, a Federal Reserve study confirmed what many suspected--that electronic payments were exceeding check payments for the first time. In 2003, the number of electronic transactions totaled 44.5 billion, compared to 36.7 billion check transactions. Although the dollar amount of check payments still exceeded that of electronic transactions, the message is clear: electronic payment methods--in all their variety--are the future.

A recently updated GFOA recommended practice on electronic government acknowledges the shift toward electronic payments. "With time," the recommended practice reads, "electronic transactions will be the dominant form of financial transactions." The trend toward electronic payments has already changed the way state and local governments do business. As the pendulum swings still more heavily from checks to electronic payments, the impact will be even more significant.

This issue of Government Finance Review explores the rapid changes occurring in the way state and local governments collect and disburse funds, and offers timely advice on how to use new technology to reduce costs and improve customer service. Our first article presents the findings of a GFOA/JP Morgan Chase survey of cash management practices of GFOA member governments. According to authors R. Gregory Michel and Mark MacKenzie, the survey results show that many governments are already receiving and disbursing funds electronically, and those that are not plan to do so soon.

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