Building a Building a StrongStrong Government Collection Government Collection

Program that Works!Program that Works!Michael Vogl, Collection Manager, City of San Michael Vogl, Collection Manager, City of San

DiegoDiego

Why have a Collection Why have a Collection Program?Program?

Maximize revenueMaximize revenue Motivate public to pay on timeMotivate public to pay on time Centralize collection activities/reduce Centralize collection activities/reduce

duplication of collection effortsduplication of collection efforts Reduce collection related costsReduce collection related costs Improve reporting on delinquent amounts Improve reporting on delinquent amounts

and tracking of collection performance and tracking of collection performance

1. Getting Started!1. Getting Started!

Identify What Receivables You Identify What Receivables You Have:Have:

Taxes (Business Tax, TOT)Taxes (Business Tax, TOT) Services (Water, Sewer, library)Services (Water, Sewer, library) Risk (Risk (PropertyProperty damage, medical cost damage, medical cost

recovery)recovery) Enforcement (Parking cites, administrative Enforcement (Parking cites, administrative

violations)violations) Permits/inspectionsPermits/inspections

Other receivablesOther receivables

Returned checksReturned checks Emergency response cost recoveryEmergency response cost recovery Damaged treesDamaged trees

* Identifying additional penalties, damages, and other add-ons increases revenue and elevates the consequences of non-payment.

Authority and OrganizationAuthority and Organization Create Authority:Create Authority:

City Charter, Resolution, OrdinanceCity Charter, Resolution, Ordinance Administrative regulation, PolicyAdministrative regulation, Policy

Organizational considerationsOrganizational considerations Centralized or decentralized?Centralized or decentralized? General fund or internal service fund?General fund or internal service fund? In-house collectors or External Collection In-house collectors or External Collection

Agency?Agency?

Actual Performance ComparisonCity Collections Staff vs. Private Collection Agency

City Staff Private Agency

Referral $1,200,000 $1,200,000Gross Revenue $ 33,000 $ 5,500Less Expenses: Agency Fee $ 0 $ (679) City Staff (PE/NPE) $ (10,000) $ 0

Net Revenue to City $ 23,000 $ 4,821

Staffing and ComplianceStaffing and Compliance

StaffingStaffing Private sector collection experiencePrivate sector collection experience Clearly identified roles and responsibilitiesClearly identified roles and responsibilities Well thought out performance plans and goalsWell thought out performance plans and goals

Legal ComplianceLegal Compliance Fair Debt Collection Practices Act (FDCPA)Fair Debt Collection Practices Act (FDCPA) Robbins-Rosenthal Act Robbins-Rosenthal Act

2. How to Get Results!2. How to Get Results!

Create the Right PerceptionCreate the Right PerceptionDevelop SupportDevelop Support

EducateEducate Council members and or Council staffCouncil members and or Council staff Department front-line staffDepartment front-line staff

Conflicts in missionsConflicts in missions Debtors will attempt to circumvent collection staffDebtors will attempt to circumvent collection staff

PartnerPartner Department managementDepartment management Key stakeholdersKey stakeholders

Set High ExpectationsSet High Expectations Set annual and monthly goals for staffSet annual and monthly goals for staff

Collections and ProductivityCollections and Productivity Quality and ComplianceQuality and Compliance Customer ServiceCustomer Service

Track performance at various levelsTrack performance at various levels Communicate expectations and results Communicate expectations and results

regularlyregularly Reward successReward success Address poor performersAddress poor performers

$0

$2,000,000

$4,000,000

$6,000,000

$8,000,000

$10,000,000

$12,000,000

$14,000,000

$16,000,000

Collection Program Collection Program

Annual Revenue HistoryAnnual Revenue History

Create and Escalate Create and Escalate Consequences of Non-paymentConsequences of Non-payment Stop providing serviceStop providing service Send collection letters, make telephone Send collection letters, make telephone

callscalls Credit reportingCredit reporting File liens, suspend driver’s license, File liens, suspend driver’s license,

impound carimpound car State tax refund interceptionState tax refund interception Legal actionLegal action

The Motivation GameThe Motivation Game Consequences should be communicated in Consequences should be communicated in

letters, notices, and telephone callsletters, notices, and telephone calls

If the debtor still does not comply, you If the debtor still does not comply, you mustmust follow through with these follow through with these consequencesconsequences

Spread responsibility to individuals vs. Spread responsibility to individuals vs. business entitiesbusiness entities

Credit ReportingCredit Reporting Government receivables can be credit Government receivables can be credit

reportedreported Must Must attemptattempt to notify debtor of derogatory to notify debtor of derogatory

reportingreporting Information reported must be accurateInformation reported must be accurate Requires resources to investigate and Requires resources to investigate and

respond to disputesrespond to disputes Especially effective when interest rates are Especially effective when interest rates are

lowlow

State Tax Refund State Tax Refund InterceptionInterception

Limited to certain types of accountsLimited to certain types of accounts Must have social security numberMust have social security number Special limitations on parking citationsSpecial limitations on parking citations Requires minimal resources Requires minimal resources

Legal ActionLegal Action Small Claims CourtSmall Claims Court

$5,000 per case jurisdictional limit$5,000 per case jurisdictional limit

City AttorneyCity Attorney Higher jurisdictional casesHigher jurisdictional cases Parking citation judgmentsParking citation judgments Conversion of criminal restitution order to civil Conversion of criminal restitution order to civil

judgmentjudgment

Make it Easy to Pay!Make it Easy to Pay! Offer a wide variety of payment optionsOffer a wide variety of payment options

Mail, walk-in, telephone, service centerMail, walk-in, telephone, service center Cash, check, credit and debit cardCash, check, credit and debit card InternetInternet

Post-dated check planPost-dated check plan Time extensions/payment plansTime extensions/payment plans Settlement authority Settlement authority

3. Maximize Benefit3. Maximize Benefitand Minimize Cost!and Minimize Cost!

Focus Resources on Focus Resources on Collections!Collections!

CollectorsCollectors SkiptracingSkiptracing Making and receiving phone callsMaking and receiving phone calls Minimize specializationMinimize specialization Must be aggressiveMust be aggressive

SupervisorsSupervisors Minimizing complaints/Improving serviceMinimizing complaints/Improving service Handling complex casesHandling complex cases Training and re-trainingTraining and re-training General supervisionGeneral supervision

AccountsAccounts Target accounts with higher payback and Target accounts with higher payback and

likelihood of successful collectionlikelihood of successful collection

Eliminate old or likely uncollectible work from Eliminate old or likely uncollectible work from collector workloadcollector workload

Implement a collection fee and or interest Implement a collection fee and or interest charge on collection accountscharge on collection accounts

Automate notice seriesAutomate notice series

Treasurer’s Collections ProgramTreasurer’s Collections ProgramCost/Revenue ComparisonCost/Revenue Comparison

REVENUE COST

FY 1993 $4,900,000 $ 956,000

FY 2004 $16,100,000 $3,700,000

Revenue vs. Cost

$4.35 to $1

4. Leverage Technology!4. Leverage Technology!

AutomationAutomation

Collection systemCollection system Electronic interfaces to billing systems and Electronic interfaces to billing systems and

data providersdata providers Telephone systemTelephone system Voice logging/recordingVoice logging/recording Document imagingDocument imaging

Access to a Wide Variety of Access to a Wide Variety of Data SourcesData Sources

Department of Motor VehiclesDepartment of Motor Vehicles Agency databasesAgency databases NCOA, phone directoryNCOA, phone directory New internet toolsNew internet tools

AccurintAccurint

5. Provide Excellent 5. Provide Excellent Customer Service and Customer Service and

Maintain a Positive Agency Maintain a Positive Agency Perception!Perception!

Customer ServiceCustomer Service Staff should provide accurate information in Staff should provide accurate information in

a pleasant professional manner regardless a pleasant professional manner regardless of the debtor’s behaviorof the debtor’s behavior

Listen and Respond timely to requests and Listen and Respond timely to requests and inquiriesinquiries

Be aware of tone and body language Be aware of tone and body language (sarcasm)(sarcasm)

Use “We,” “This office,” and “Our system” Use “We,” “This office,” and “Our system” rather than “I” rather than “I”

Inform rather than threatenInform rather than threaten Voice logging/recordingVoice logging/recording External collection agencies will not provide External collection agencies will not provide

the service expected from government the service expected from government agenciesagencies

Educate the mediaEducate the media Stories on collection efforts educate the public Stories on collection efforts educate the public

on consequences of late paymenton consequences of late payment Stories generally result in telephone calls and Stories generally result in telephone calls and

paymentspayments