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Centralization, standardization and digitization
is the answer
Within most municipalities, a web of
independent agencies and departments
collect revenues for various taxes, licenses,
permits, fines and other services. Their
collection systems and practices also tend to
be paper-based and autonomous, creating a
host of inefficiencies.
Take the case of New York City. Before recently
modernizing its receivables processes, it had
33 semi-autonomous agencies collecting more
than $40 billion in revenues via a maze of
disparate collections systems, methods and
payment processing providers.
Such arrangements, where agencies replicate
billing, support and receivables infrastructures
for no incremental benefit, are clearly
inefficient and costly. Disjointed processes
can also make it difficult to maintain up-to-
date and consistent customer records, and
can make it challenging to capture timely
and reliable financial data for forecasting
city-wide cash flows. Plus, citizens and
businesses become frustrated by dealing with
a hodgepodge of payment methods, channels
and rules to settle their obligations.
While few cities face challenges of the
magnitude of New York’s, virtually every city
looking to revamp its receivables processes
can reap the benefits of centralization,
standardization and digitization.
The digital revolution of the past decade,
and associated advances in e-commerce and
e-payments, makes it possible to centrally
capture customer details and payment
options, allowing local governments to both
standardize receivables processes and their
interactions with residents and businesses in
their communities.
Today, municipalities can offer payers a
single on-line city-branded portal where they
can remit payments for various bills, fines,
licenses and other services – regardless of
agency – using their PC, smartphone or tablet.
Ultimately, payers will be able to make periodic
payments that match their personal finance
circumstances, similar to how they might
spread out payments to a retailer throughout
the year, and to receive electronic alerts when
new bills come in.
What a shared service center offers
Already, metropolises like New York and
smaller cities alike are streamlining and
integrating receivables processes with the
ultimate goal of making it simpler and more
efficient for their citizens and businesses to
make payments.
New York City’s solution involved
consolidating receivables and related
services in a single shared service center
(SSC), allowing the city to offer residents
the convenience of paying multiple bills
electronically, online or via ACH transactions.
The Citi-provided electronic invoice and
presentment solution includes a web-based
portal that New Yorkers can use to manage
their accounts with the city. They can view
their billing information and make payments
at their convenience. The solution also
created the flexibility within city agencies
to accept payments directly from residents’
bank accounts, credit cards or debit cards.
“Customers now have the flexibility to
submit their payments virtually how, when
and where they want,” said Sarah Knapp,
Assistant Commissioner, Citywide Payments &
Receivable Services.
SSCs for receivables provide numerous
potential benefits, one of the most significant
being the centralization of billing, collections
and reconciliations. Because SSCs are scalable,
leverage electronic infrastructures, and create
consistent processes, customer data can be
standardized across agencies and postings
to both general ledger and agency-specific
systems can be automated. Automation helps
reduce errors and facilitates straight-through
processing, making it easier for agencies to
both accept and reconcile their payments
because files can be sent back to them in
their required format. With the automation
of manual processes, staff can be freed up to
focus on their day-to-day responsibilities and
value-added services.
In the private sector, SSC technology has
yielded a long track record of success and
been an important driver in the shift from
paper-based to electronic payments. Still,
unique circumstances within the public sector
mean some policy changes may be necessary.
Corporate processing centers, for example, are
typically sited in low-cost locations, whereas
cities normally must maintain operations
within their jurisdictions. Similarly, private