Prompt collection of revenues and quality customer service: the twin missions of St. Petersburg's collections division.

• Author: Friedel, George K.

By consolidating all collections functions into a single division, the city focuses on process improvements that increase revenues, improve customer satisfaction, and help reduce property taxes.

Each year the Government Finance Officers Association bestows its prestigious Award for Excellence to recognize outstanding contributions in the field of government finance. The awards stress practical, documented work that offers leadership to the profession and promotes improved public finance. This article describes the 1997 winning entry in the policies and procedures subcategory of the cash management and investing category.

Some people would say that collecting money and providing quality customer service are contradictory ideas. The image of a bill collector knocking on the door and that of a concerned employee eager to help a customer may seem as different as night and day. In St. Petersburg, Florida, however, they are considered two sides of the same coin, as evidenced by the improvements made to the collection process when the functions were consolidated into a single department.

St. Petersburg (population 241,000) is located on the west coast of Florida between Tampa Bay and the Gulf of Mexico. The operating budget for 1997 was $251 million, and the capital budget was $34 million.

The consolidation of St. Petersburg's collection efforts began in 1984 when the finance director suggested that it would yield greater returns than the existing fragmented approach used to collect money owed the city. A new four-person collections division was created with the mission of ensuring "the prompt collection of monies due to the city while at the same time maintaining the good will of the customer." With these simple beginnings, the city laid the foundation for a collections division that eventually grew to a 47-member staff that is responsible for the collection and/or processing of the city's more than $300 million in annual revenues.

Individual departments still prepare invoices but are not involved in the collection process. Centralizing collections has allowed departments to use the time previously spent on collections for other departmental activities. This time has been estimated, citywide, to be equivalent to five full-time employees.

In assuming collection responsibilities on behalf of individual departments, the collections division established long-term as well as short-term objectives. In addition to the immediate goal of collecting the revenue from past due accounts, the division focused on collecting all accounts faster. The sooner revenue can be turned over to the treasurer, the more interest the city earns.

Reducing Delinquent Revenues

Several improvements were implemented to reduce delinquent revenues and returned checks. Rather than let a receivable become delinquent before taking action, the division contacts the customer when payment is overdue to find out if there was a problem preventing on-time payment, such as an invoice never being received.

Invoices now are due upon receipt rather than in 30 days, and invoices not paid in 45 days are charged a 15 percent penalty. City council raised the service charge for returned checks from a flat $10 fee to 5 percent of the value of the check with a minimum charge of $15. A 40-page collection manual, distributed to city departments at training sessions, establishes collection objectives, responsibilities, and policies. The manual also contains information on invoice preparation, what to look for when accepting checks, and guidelines for pledged collateral.

A presentation explaining the new emphasis on collections was made to city council. Several articles with headlines such as "City Gets Tough in Collecting Late Bills" and "City Plays Hardball with Bounced Checks" ran in local newspapers. This media coverage helped convey the message to the community that delinquent payments would no longer be tolerated.

When the collections division was established in 1984, invoices more than 120 days past due totaled $567,000, the average...