If your Municipality has trouble to collect revenue then this article might just be for you to break through the barrier of non collections.
The following best practice guidelines are provided for municipalities to use and to implement:
- Get Political Buy-in
- It is important that Credit control and debt collection policies are approved by Council and that Councilor’s play a pivotal role in the implementation thereof. Councilor’s should at all times promote and defend the implementation of the policy.
- Encourage Culture of payment
- A culture for payment should be established in all communities by ensuring that bills are provided and provision of easy access to payment facilities.
- Implement ERP solution
- Municipalities must ensure that their ERP solution is integrated with the collection processes and that adequate reporting is forthcoming to take corrective decisions with regard to collection of outstanding debt.
- Analyse debtors book
- Each municipality should analyse their debtors to have a full understanding and appreciation of the outstanding debt. It is good practice to categorise debt according to an order of priority e.g. Top 100, 80/20, etc.
- Collective responsibility towards debt
- There is a collective responsibility in a municipality to ensure that residents pay for services. In this regard it is important to establish an internal committee consisting of heads of department looking at how services are delivered. Customers are reluctant to pay rates if there are potholes in the roads, and this can be addressed by the internal committee to keep track thereof.
- Debt should targeted
- Debt should be targeted to see results and in this regard should debt be targeted and allocated to specific debt controllers to see results of their effort in the collection process. This should include performance targets which is measureable and easily verifyable.
- Ensure that your municipality has a communication strategy with regard to credit control actions, policy changes and adoption. The Mayor could use the local media on a regular basis to encourage payment for services, and defending the credit control policy of Council.
- Supply Chain Management - Control
- Each Municipality should implement a control system whereby accounts of service providers are verified and if in arrears should any amounts owed to them be set off against their outstanding debt on their municipal account.
- Indigent Management
- Each municipality should have an effective indigent policy framework to provide support to households who cannot afford their municipal services.
- Contracting with Owners only
- All Municipalities should have proper property registers which will easily identify owners of property and a policy should be adopted whereby services will be provided to owners only. Tenant accounts should be phased out over a period of time to minimize the impact to owners.
- Training of staff
- All staff responsible for debt collection should be properly trained in the legislation, council policies and procedures.
The implementation of Credit Control policies and By-laws are also governed by the precedent rule set by courts and knowledge of these court cases are a must for effective credit control.