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Revenue Collections SeminarRevenue: It’s Yours for the Taking Association of Public Treasurers (www.aptusc.org)
Collection Goals • Fair and timely collections • 80% Collection rate • Reduced costs • Efficient staff use • Security • Reduced float • Automation when possible • Accurate record keeping • Complete approach to collections
Reaching your goals... • Utilize • Improvise • Politicize • Centralize • Privatize • Focus on all revenue not just delinquent revenue
Getting Started • Identify your sources of revenue • Taxes, utilities, fees, fines, etc. • Assign responsibilities • Assess needs of departments • Find and clarify existing policies
Getting Started • Determine • Who • How • Where all revenues are received
Centralize • Centralizing collections – • especially delinquent collections • Centralization may improve efficiencies • Centralizing utilizes resources • Centralizing focuses $$ impact
Centralized Collections • A centralized collection department can increase the collection of revenues • Eliminates duplication • Utilizes staff • Builds departmental support • Creates centralized information • Strengthens settlement authority
Centralize Processes Not People Standardize Cashiering in outlying departments Receipting procedures Deposit procedures Centralize Combination delinquent billing Utilize combination billing Centralize receivables Combine department information
Getting Started • To get started • Create a plan • how to manage collections • how to administer collections
Strategies • Generate support from elected officials communicate your goals/purposes • Tolerate short term seasonal delinquencies focus attention elsewhere • Prior year delinquents are one-time revenue • Focus on big-ticket and attainable collections
Getting Started • Create a “Mission Statement” “ To collect all revenue promptly and maintain the goodwill of the customer”
Getting Staff Started • Assign Responsibility • Assign Tasks • Set Objectives
Utilize New Technology • Lockbox • MICR Encoding • Generic Bills • Credit Cards • Remote Deposit • ACH • Positive Pay • Specialty Mailers • Cross Referencing
Lockbox • Lockbox for high volume items • Utilities and taxes • Lockbox is more than payments • Capture and transmission of Images and Data • Expediting Information Processing • Useful for all high volume payments • Avoids Capital Expenses • Keeps You Up-to-Date In Technology
Lockbox • The goal is reduction of float • Mail float • Unique post office box and multiple pickup • Automated postage direction • Processing float • 24/7 operations • Direct deposit to bank • Direct transmission of data to you • Clearing float • Multiple deposits
Lockbox Processing Same day deposit to your account LOCKBOX -opens mail -sorts -verifies payment -captures image -deposits funds -transmits Same day transfer of data and images to City
JUST GET STARTED !! • Determine revenue sources • Develop a collection plan • Identify Obstacles • Write a Mission Statement • Develop procedures • Assign Responsibility • Get Started!
Developing a Collection Plan • Develop well defined procedures • Script telephone calls • Write model letters • Evaluate collection agencies • Evaluate credit card use
Obstacles • Political Considerations • Internal Politics • External Politics
Obstacles • Political Considerations • Understanding the Art of Collections
The Art of Collection • Understanding human nature • Turning objections to opportunities • Effective communications • Successful negotiations
The Seven Axioms - #1 • Collect before you send the bill. Government is not in the business to extend credit.
Minimize your credit risks • Obtain all needed information at time of service • Establish relationships with clients • Refuse service if appropriate • Require deposits where possible • Obtain collateral • LOC • CDs
Identify individual’s credit risk The Four C’s of Credit: • CHARACTER-willingness to pay • CAPACITY-ability to pay • CAPITAL- financial condition • CONDITIONS-current credit
The Seven Axioms - #2 • Collect before you send the bill • The best technique is simply to ASK • Ask By Telephone
The Collection Phone Call • Collection telephone calls should be: • PERSONAL- know your client • IMMEDIATE - don’t delay contact • INFORMATIVE - to both parties • FLEXIBLE- adjustable
The Collection Phone Call Pre-Call Planning: • Use records concerning the account • Use all sources in the organization • Contact the right person: the decision maker
The Collection Phone Call Develop an Opening Statement • Ask for the right party • Identify yourself and your entity • State the reason for the call • Wait for responses – Pause
The Collection Phone Call Plan the approach: • Be clear with planned questions: • Give specific amounts, dates, reasons • Avoid negative phrases • Anticipate excuses
Ask for the money • State the facts • Ask for the balance in full • Negotiate through objections • Settle on mutually agreeable terms • Be sure of their intentions
The Collection Phone Call Ask for the money! • Be ready for excuses • Involve the customer in the options • Be prepared with payment plans
Reasons and Excuses • Already paid… (get details) • In dispute… (mediate) • No money… (situation and plan) • Bankruptcy… (info and file) • Not scheduled… (late fees) • Carry over? (payment plan)
The Collection Phone Call Closing the deal! • Reiterate the commitment • Get a commitment from the customer • Agree on dates and amounts due • Confirm it in writing • Calendar for follow-up
The Collection Phone CallLeaving Messages • Confirm the name of person responsible • Determine the best time to reach the person • Leave your name, organization,telephone and request to call back • Get the name of person taking message • ALWAYS be courteous • Do not make a demand for payment
Record Keeping -Collection Call Planner Customer__________ Tel.______ Date______ Opening Statement:_____________________ If not, payment plan will be:______________ Benefits to the payment plan:_____________ Excuses expected:______________________ Especially useful for new employees.
Record Keeping -Customer Contact Forms • Date: • Customer:________________Tel:_____ • Individual:________________________ • Invoices Due: #____________________ • Contact Response:__________________ • Action:____________________________ Create a database of all contacts.
Record Keeping - Call Log • MONTH: _______________ Date Customer Invoice/Amt Phone
The Seven Axioms - #2 • Simply Ask! By TelephoneBy Letter
The Collection Letter • Creativity increases collections • Creativity gets noticed • Creativity generates support • Creativity motivates staff
The Collection Letter • Motivate them to pay • Don’t threaten without follow-through • Use accurate information • Brevity is best • Write on a six-grade level • Check to avoid unintended inferences
The Collection Letter • State the facts • State the proposal • State the reason • State the Action • Review letters periodically • Personalize • Avoid humor • Be Creative
The Seven Axioms - #3 • Collecting even before your send the bill • Simply Ask! • Do not treat everyone the same
Customer are not equal • Size and type of account • Level of risk
The Seven Axioms • Collecting even before your send the bill • Simply Ask! • Do not treat everyone the same • Late fees are the best INCENTIVE Use as much as possible
The Seven Axioms - #5 • Collecting even before your send the bill • Simply Ask! • Do not treat everyone the same • Late fees are the best incentives • The earlier the effort - the better the return
Warning Signals • Returned mail, no forwarding address • Broken promises of payment • Messages ignored • Changes in payment habits • Customer changes banks • Partial Payments or post dated checks • Customer’s key personnel are leaving
Early Bird Success • Initiate billing immediately • Establish monthly cycles • Contact delinquents a.s.a.p.