New York City Department of Finance

Integrating municipal agencies’ collection and tracking of $40 billion in receivables cuts costs, increases efficiency and improves customer service

The Client

New York City’s Department of Finance has a 1,700-person staff that supports dozens of city-wide agencies, collects and safeguards the city’s tax revenue, values 1,045,000 properties, conducts tax audits to promote compliance, and operates public hearings on more than one million parking tickets annually.

The Challenge

Each year the City of New York collects more than $40 billion in taxes, fees and various other payments through a network of 33 semi-autonomous agencies responsible for everything from parking tickets to property taxes.

Over the years, however, the agencies’ revenue collection activities, which span 20 distinct categories, evolved into a maze of disparate systems, collection methods, and payment processing providers, not to mention independent approaches to capturing critical data about customers and their payments.

The disjointed approach frustrated both the city’s central Department of Finance and the agencies burdened with maintaining their own systems. Consumers and corporations also were frustrated by having to deal with a hodgepodge of payment methods, channels and rules to settle their different obligations to the city.

In 2010 the city recognized that its growing uncollected debt was linked to the ad hoc nature of procurement and receivables. In response, the Department of Finance was charged with transforming receivables citywide and resolving a number of issues, including:

Decentralized and isolated payment channels that hindered gathering a timely, holistic view of accounts receivable for reconciling agencies’ payment activities;
Inefficient and costly paper-based invoices and check collections, with 75 percent of all payments being submitted by check or money order and processed at dozens of autonomous lockbox sites;
Lack of uniformity and often the inability to accept customers’ preferred forms of payment;
The absence of electronic bill presentment options that created missed opportunities to reduce days collections outstanding;
The inability to leverage the municipality’s massive scale to reduce processing costs.

The Solution

The Department of Finance chose Citi to re-engineer its collection processes and modernize billings and collections across all of the city’s agencies.

A large shared service center environment was created by tapping the whole breadth of Citi’s receivables and data management capabilities, standardizing processes and systems, and relieving agencies of the responsibility of managing their own payment processing, collection and settlement systems.

The massive project includes the implementation of new centralized services and technologies to:

Reduce paper-based payments. Citi^® Present and Pay for Consumers, an electronic invoice presentment and payment portal, serves as a single, integrated platform for all agencies and provides customers with one easy-to-use web-based portal for managing their accounts and transactions.
Optimize payments made through home banking sites. Citi’s Electronic Receivables Service provides a single connectivity point for receiving payments initiated via consumers’ home banking sites. When payments are made through the sites, it accelerates the receipt and application of them, eliminates the cost of processing electronically originated retail lockbox payments as exceptions, and improves automatic cash posting to the city’s accounts receivables system by ensuring that the payments are delivered electronically.
Electronic Payments via eChecks: Many agencies expanded their online payment acceptance options beyond cards or gained the ability to accept electronic payments for the first time via eChecks, a lower cost option for the city and its citizens. Bill payers conveniently make funds transfers directly from their checking accounts without having to write and mail paper checks or physically visit a distant payment location.
Drive adoption of electronic channels. Citi, based on its extensive marketing experience, also developed strategies for encouraging consumers to adopt electronic payment channels, helping to design marketing campaigns that span print and electronic communications, and leverage increasingly popular social networks.

The Result

New York City has entered a new era of receivables management and visibility. New payment methods provide consumers and city agencies alike with added convenience and efficiency.

“Citi’s receivables management solution has been a win-win for the City of New York and its customers,” said Andrew Salkin, Deputy Commissioner. “We’ve standardized our processes on modern systems and made it easier for city agencies to accept and reconcile their payments. At the same time, we made it easier for customers to access their invoices and make payments. Plus, customers now have the flexibility to submit their payments virtually how, when and where they want to.”

In addition, the solution package includes Citi’s ReceivablesVisionsm, an information management and analytics tool that delivers a 360-degree view of open and aged receivables citywide and by individual agency. ReceivablesVision provides a picture of payment trends and details aid funding and investment decisions. These details include, for example, payment volumes, amounts collected by category and method of payment, and aged receivables.

New York City’s integration and consolidation of processes allowed it to reap the economies of scale that come with being one of the largest cities in the world, resulting in significant operational benefits and cost savings.