Revenue Collections Seminar Revenue: It’s Yours for the Taking

Revenue Collections SeminarRevenue: Its Yours for the Taking

Association of Public Treasurers (www.aptusc.org)

Collection Goals

Fair and timely collections80% Collection rateReduced costs Efficient staff useSecurityReduced floatAutomation when possibleAccurate record keepingComplete approach to collections

Reaching your goals...

UtilizeImprovisePoliticizeCentralizePrivatize

Focus on all revenue not just delinquent revenue

Getting Started

Identify your sources of revenueTaxes, utilities, fees, fines, etc.

Assign responsibilities

Assess needs of departments

Find and clarify existing policies

Getting Started

Determine WhoHow 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 duplicationUtilizes staff Builds departmental supportCreates centralized information Strengthens settlement authority

Centralize Processes Not PeopleStandardizeCashiering in outlying departmentsReceipting proceduresDeposit procedures

CentralizeCombination delinquent billingUtilize combination billingCentralize receivablesCombine department information

Getting Started

To get started

Create a plan how to manage collectionshow to administer collections

Strategies

Generate support from elected officials communicate your goals/purposes

Tolerate short term seasonal delinquenciesfocus 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

LockboxMICR EncodingGeneric BillsCredit CardsRemote DepositACH Positive Pay Specialty MailersCross Referencing

Lockbox

Lockbox for high volume itemsUtilities and taxes

Lockbox is more than paymentsCapture and transmission of Images and DataExpediting Information ProcessingUseful for all high volume paymentsAvoids Capital ExpensesKeeps You Up-to-Date In Technology

Lockbox

The goal is reduction of float

Mail floatUnique post office box and multiple pickupAutomated postage direction Processing float24/7 operationsDirect deposit to bankDirect transmission of data to youClearing floatMultiple deposits

Lockbox Processing

LOCKBOX -opens mail -sorts -verifies payment -captures image -deposits funds -transmits

Same day deposit to your accountSame day transfer of data and images to City

JUST GET STARTED !!

Determine revenue sourcesDevelop a collection planIdentify ObstaclesWrite a Mission StatementDevelop proceduresAssign ResponsibilityGet Started!

Developing a Collection Plan

Develop well defined procedures Script telephone calls Write model letters Evaluate collection agencies Evaluate credit card use

Obstacles to Effective Collections

Obstacles

Political Considerations

Internal PoliticsExternal Politics

Obstacles

Political ConsiderationsUnderstanding the Art of Collections

The Art of Collection

Understanding human natureTurning objections to opportunitiesEffective communicationsSuccessful negotiations

The Seven Axioms of Collections

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 serviceEstablish relationships with clientsRefuse service if appropriateRequire deposits where possibleObtain collateral LOCCDs

Identify individuals credit risk

The Four Cs of Credit:

CHARACTER- willingness to payCAPACITY- ability to payCAPITAL- financial conditionCONDITIONS- current credit


Collect before you send the bill

The best technique is simply to ASKAsk By Telephone

The Collection Phone Call

Collection telephone calls should be:

PERSONAL - know your client

IMMEDIATE - dont 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


Develop an Opening Statement

Ask for the right party

Identify yourself and your entity

State the reason for the call

Wait for responses Pause


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


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)


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 MessagesConfirm the name of person responsible Determine the best time to reach the personLeave your name, organization,telephone and request to call backGet the name of person taking messageALWAYS be courteousDo not make a demand for payment

Record Keeping -Collection Call PlannerCustomer__________ 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 FormsDate:Customer:________________Tel:_____Individual:________________________Invoices Due: #____________________Contact Response:__________________Action:____________________________

Create a database of all contacts.

Record Keeping - Call LogMONTH: _______________

Date Customer Invoice/Amt Phone


Simply Ask!By TelephoneBy Letter

The Collection Letter

Creativity increases collections

Creativity gets noticed

Creativity generates support

Creativity motivates staff


Motivate them to payDont threaten without follow-throughUse accurate informationBrevity is bestWrite on a six-grade levelCheck to avoid unintended inferences


State the factsState the proposalState the reason State the Action

Review letters periodicallyPersonalizeAvoid humorBe Creative


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 billSimply Ask!Do not treat everyone the same

Late fees are the best INCENTIVEUse as much as possible


Collecting even before your send the billSimply 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 addressBroken promises of paymentMessages ignoredChanges in payment habitsCustomer changes banksPartial Payments or post dated checksCustomers key personnel are leaving

Early Bird Success

Initiate billing immediately

Establish monthly cycles

Contact delinquents a.s.a.p.


Collect before you 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

Be CREATIVEMake your request stand out in the stack!

Creativity pays...

Return envelopesCoupon booksNews articlesDifferent approaches TechnologyDepartmental assistance


Collecting before you 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 Be creative You have to find them to make them pay!

Information Sources

Be creative - be Columbo

Who has the information?Relatives?colleges?Landlords?professional groups?Employers?trade groups?Roommates?other creditors?

Choose your weapon and focusFree or inexpensive sources

Cross-cross directoriesInternet directoriesPublic records

Outside sources of information

Informational databasesCredit reportsSocial searches Search disksProfessional skip-trace companies

Collecting Your Money


Successful Collection Telephone CallsSuccessful Collection Letters

Collecting Returned Checks

Returned Checks

Require repayment be in cash, cashiers check, certified check or money order. DO NOT accept a second bad check.Add a service charge - if legally allowedPost warning signs clearly stating feesKeep a history of returned checks

Consider NSF collection by ACH

NSF and ACH

New bank serviceNSF checks are not re-deposited immediatelyCheck data changed to an ACHACH targets likely payment dateFirst of the month?Appears to increase collections 20%May be lower bank cost also


Successful Collection Telephone Calls Successful Collection Letters Collecting Returned Checks

Other Collection Techniques

Other Collection Techniques

Promissory notesDiscontinuation of serviceAmnestyWithhold or deduct paymentsDeny contracts, Loans or Grants (database)Legal Action

Guido?????

Other Legal Remedies

Wage garnishment

Property lien

Levy

Property seizure

Making It Easier To Pay

Accepting Credit Card Payments

Accepting Credit Cards

Advantages to customers More choices for the customer(especially in-transit clients)Ease of payment May enable earlier payments May produce better records


Advantages to your organization Faster access to receivables Reduces mistakes Reduces cash handling Eliminates check losses Reduces billing and collection efforts(shifts collection burden to credit company)


DisadvantagesCost to the governmental unitCheck percentage charge versus flat rateCredit rate costs to customersMay add extra steps administrativelyPossible legal hurdles



Electronic Payments

What are Electronic Payments?

ACH and EDIThe banking world is going to EDIExchange of electronic payment and backup information through standard formats via financial institutionsEDI uses on payments and receivablesVariable trailer information availableTrailer length is critical on internal information flowElectronic withdraws of monthly payments from customers account through direct debits

Electronic Payments

Advantages Customers save processing costs Eliminates late payments On-time collections and cash flow Security Minimal excuses re lost, stolen checks

Electronic Payments

DisadvantagesProcedural controls

Pre-notification cautionsNSF collections by ACH requires disclosure


Accepting Credit CardsElectronic PaymentsDirect Payment

Accepting off-site payments

Using Technology

Payments by phone, fax, or internet

Front end payment acceptanceVerisignRemote deposit


Successful Collection Telephone CallsSuccessful Collection LettersCollecting Returned ChecksOther Collection Techniques

Write Offs

Write-offs

When to give up?

Discharged bankruptciesWrong responsible partyDeceased accountsInvalid referralsCourt denials of claims/judgmentsAmount or age doesnt warrant efforts

Write Offs: When?

When cost benefit of further action is not justifiedTo accurately present your financial position

Guidelines: after one year write off a) most accounts without legal problems; b) small amounts (under $25.00) c) problem accounts

Using Contracted Services


Using a Collection Agency

Considering a Collection Agency?

Stability and Reputation Location and Coverage

Procedures and Capabilities

Compliance / Client Service


Advantages Contingency fee basis Collection focus only

Pressure of collection agency

Possible credit report impairment

More productive staff usage


Disadvantages

Loss of contingency incomeCustomer reaction Unsupervised collection activitiesNeed for repetitive quality reviews


Using a Collection AgencyUsing a Collection Attorney

Collection Attorney Considerations

Cost

Letterhead Effect

Oversight

Using Contracted Services Using a Collection Agency Using a Collection Attorney Using Credit Bureaus

Credit Bureaus

Payment information available to subscribersJudging a credit reportUnspoken fear of credit impairmentBureaus:Equifax, Atlanta, GA.Transunion, Chicago, ILExperian, Cleveland, OH

Credit Bureau ReportDebtor Information

Credit Bureau ReportPublic Records

****** PUBLIC RECORDS OR OTHER INFORMATION ******

04 07/99*COLL 01/99 772YC854 UNTD COMPU FOR CIRCLE K

AMT:$55 BAL:$55 UNPAID DLA:12/98, I,2457231

RETURNED CHECK

05 10/98*COLL 12/96 200YC91 ERM-ALBHE2 FOR COLORADO STUDEN AMT:$3169 BAL:$3220 UNPAID DLA:06/94, I,189978

06 08/98*COLL 08/98 118YC364 ACTION COL FOR JAMES E PFOST AMT:$497 BAL:$497 UNPAID DLA:10/97, I,1145920

07 11/97*CGLL 02/94 605YC53225 RMA FOR ST ALPHONSUS RM AMT:$1294 BAL:$1294 UNPAID DLA:08/93, I,11484688

08 09/97*COLL 09/97 118YC1784 INT CR SRV FOR VIDEO MEMORIES AMT:$138 BAL:$138 UNPAID DLA:02/97, 1,971100263

09 03/94*COLL 01/94 605YC53225 RMA FOR INTERMOUNTAIN G AMT:$197 BAL:$197 UNPAID DLA:09/93, I,11482651

Credit Bureau Report

Creditor Inquiries

*INQS-ERM-ALBHE2 200YC91 03/27/00

ERM-ALBHE2 200YC91 08/24/99

ERM-ALBHE2 200YC91 05/27/99

USBANK 613BB26109 01/11/99

ERM-ALBHE2 200YC91 12/03/98

US WEST 91OUT13468 08/11/98

ERM-BOIARS 200YC570 05/12/98

FK 124YCO0051 STU LOA 04/02/98

ERM-ALBHE2 200YC91 01/18/00

ACTION 118YC2295 08/06/99

ERM-ALBHE2 200YC91 02/25/99

RECEIVABLE 403YC2284 12/22/98

ERM-ALBHE2 200YC91 09/08/98

ERM-BOIARS 200YC570 05/13/98

FK 124YCO0051 STU LOA 04/13/98

Credit Bureau ReportTradelinesCredit Bureau Reports

FIRM/ID CODE RPTD OPND H/C TRM AIRTOUCH *701PZ963 02/00 10/98 272 104

CHARGE

STUDENTLNS*124VZIO 02/00 09/93 19K COLLECTION ACCOUNT

CO STUDENT*146VS946 02/00 07/93 2760 STUDENT LOAN

COLLECTION ACCOUNT

CO STUDENT*146VS946 08/98 07/93 2760 30(00)60(00)90+(Ol) 08/93-I5

STUDENT LOAN

COLLECTION ACCOUNT

CHEVRON *906OC24

30 (00) 60 (01) 90+ (01)

CHARGED OFF ACCOUNT

CREDIT CARD

F S BK STU*118BB1176

STUDENT LOAN

F S BK STU*118BB1176

STUDENT LOAN&

06/96 08/91 602 05/95-R5,01/95-R3

BAL P/D CS MR ECOA 104 01 15 I

35K 35K I5 74 I

05/96 09/89 CONTACT MBR FOR STATUS

4 666

05/96 11/86 CONTACT MBR FOR STATUS

4448

I5 17 1

202 202 R9

I5 61 I

I

END OF REPORT EQUIFAX AND AFFILIATES -

03/30/00

ACCOUNT NUMBER 5017380

5199616601

519961660002

519961660005 DLA 07/93

7246091511 DLA 06/96

100400172904

100400172902

Legal Aspects of Collection

Fair Debt Collection Practices

How hard can I push?


Fair Debt Collection PracticeTo eliminate abusive practices by collectorsGovernment agencies are exempt (letter not spirit!)Prohibited Practices:Threatening or harassing languageCalling before 8:00 AM or after 9:00 PMAbusive languageCalling place of employment (if employer prohibited)


Fair Debt Collection Practice

Do:Limit communication with debtorLimit communication with third partiesAvoid harassment and abuseAvoid false or misleading representationsProvide written validation of the debt



Dont:Dont make contact with debtor more than twice a week unless otherwise arrangedTalk to ANYONE other than the debtor about the debtHarass the debtorThreaten the debtor with actions that can not be carried out

Credit Reporting

Abide by the FCRA

Notify the debtor of your intent to report debtUse information for legitimate business uses onlyDisclose information ONLY to employees whose duties relate to the business purposeRefrain from selling or distributing the information to third parties



Bankruptcy


What is bankruptcy?

Legal means by which individuals and corporations place a hold on debts incurred prior to a filing date.

Bankruptcy

Creditors are prohibited from attempting any collection action on pre-filed debts.

Post filing debts are due in the normal course of business.

Bankruptcy Chapter and VerseChapter 7 - Liquidation proceeding available to individuals and corporations

Chapter 11 - Allows a business to continue to operate while formulating a plan to return to profitability

Chapter 13 - Partial or full pay off of creditors over extended period of time -for individuals only.

Bankruptcy

Terms and datesNoticeFiling dateCase numberAutomatic stayTrustee341 meetingDeadlinesProof of claimDischargedismissal

Evaluating Your Collection Performance

Do you have age-less receivables ??

Evaluating Collection Performance

DSO - Accounts Receivable Turnover

Days Sales Outstanding = days required to collect a dollar of revenue from the date billed until collected

Receivable at end of month ($12,500)Revenue for month ($10,000)$12,500 x 30 days /$10,000 = 37.5 days

Analysis of Aged Receivables

Aging delinquencies in set time periods 0 - 30 days$30 - 60 days$60 -90 days $

Used for transfer to outside agency

Not helpful in determining causes

Schedule of Collected Revenue

Total dollars collected by days

Used for new programs

Determines natural collection periods

Uncollectible Accounts

If write-offs are not authorized

Target large $$ dormant accounts

Identification allows future prevention

Analysis purposes

Evaluating Performance

Accounts Receivable TurnoverAccounts Receivable AgingSchedule of Collected RevenueUn-collectable Accounts

Comparison of Revenue and Expenses

Revenue Comparisons

Quarterly or semi-annual reviews

Program reviews

Departmental reviews

Cost benefit evaluations

In Summary

Set ObjectivesMake a PlanEvaluate your resourcesDesign your toolsEvaluate outside assistanceEvaluate your progress

Reaching your goals...

UtilizeImprovisePoliticizeCentralizePrivatize

MONEY NEVER SLEEPS

Wake Yours Up !Through better collections.

Good Luck !

About your trainer:Linda Patterson, CTPPresident, Patterson & Associates

Linda, who has trained cash handling, collections, and investment courses for the Association of Public Treasurers and Public Treasury Institute for over 20 years, is the President of Patterson & Associates, an investment advisory firm established in Austin, Texas in 1994.

800-817-2442 www.patterson.net

APT US&CAPT represents over 1,000 public treasury and finance officials in local, county and state/provincial governments throughout N. America. The Association provides education, certifications and technical assistance to its membership. Visit www.aptusc.org for information on the 2007 Annual Conference in San Diego, August 11-15.

PTIPTI provides training manuals and coordinates training seminars for public treasury and finance officials. The Institute and APT formed an alliance in 2004 for a wide range of training manuals workshops. Visit www.PublicTreasuryInstitute.com for information on booking a seminar in your city, county or region or to purchase the latest treasury manuals on line.

Revenue Collections Seminar Revenue: It’s Yours for the Taking

Documents

Transcript of Revenue Collections Seminar Revenue: It’s Yours for the Taking