Improve Your Delinquent Accounts Receivable April 27, 2016 IMG / - PowerPoint PPT Presentation

Improve Your Delinquent Accounts Receivable April 27, 2016 IMG / Professional Credit 1

Improve Your Delinquent Accounts Receivable April 27, 2016 IMG / Professional Credit 2

Improve Your Delinquent Accounts Receivable Institute for Modern Government Center for Governance and Public Policy Research Atkinson Graduate School of Management Willamette University 900 State Street Salem, Oregon 97301 April 27, 2016 IMG / Professional Credit 3

Improve Your Delinquent Accounts Receivable  Let’s Get Busy . . .  Think about this -  You need to purchase an annuity - how much would you pay – TODAY - for an annuity of $1 million dollars?  What questions do you need to ask?  We will analyze and discuss this at the end of today’s session  My SOCO – (Single Overriding Communication Objective)  Oregon’s Collectors are GREAT Collectors – Because they are SO GREAT at Math!  Lets examine the State’s Debt History through – the Past – the Present – & the Future . . . April 27, 2016 IMG / Professional Credit 4

A Brief History Of Time April 27, 2016 IMG / Professional Credit 5

The Early Times . . .  NASC Presentation: March 15, 2001  1997  Secretary of State Audit #97-77 - Nine Recommended Actions...  Senate Interim Budget Comm. Report...  $1.8 Billion in Delinquent Debt @ 6/30/97  1999  HB3509 – Oregon Laws 1999, Chapter 1092  Two Significant New Requirements...  Inter-Agency Receivables Concerns  “The Oregonian” explains debt collection  2001 - - Are More Laws Coming? 3/15/2001 NASC Presentation April 27, 2016 IMG / Professional Credit 6

The Early Times . . .  SoS Audit #97-77 - Nine Recommended Actions... 1) Statewide Collection Committee – (A/R Core Committee – ARCC) 2) Statewide Vendor Offset Program – ( Hmmmmmmmm. . . ) 3) Statewide Master Collection Contract – (w/ 300 local governments) 4) Pilot Tests for Account Assignment - (petition for more automation) 5) Legislative Authority: Sharing Agency Information – 6) Legislative Authority: Administrative Garnishment – 7) On-Line DMV Access – >> Now available by PC-modem, by phone, & by fax. 8) Improve Automation – >> Explore new technologies and collection software … 9) Autodialer Systems – Studied Autodialer technology... >> Developed comprehensive report on system use. 3/15/2001 NASC Presentation April 27, 2016 IMG / Professional Credit 7

The Early Times . . .  Senate Interim Budget Comm. Report...  Circa 1998 - 1999  Developed by the Oregon Collector’s Assn.  Surveyed most state agencies and found $1.8 Billion in “Delinquent Debt”  Partial Debt Detail: $933 Million in Child Support (3rd-party)  $317 Million in (Income) Taxes  $200 Million at State Courts (Restitution)  $189 Million in student loans, tuition, etc. (OSAC)  -------- $1.639 Billion (91% of the $1.8 Billion amount.)  3/15/2001 NASC Presentation April 27, 2016 IMG / Professional Credit 8

The Early Times . . .  HB3509 - Or. Law 1999, Chapter 1092 Two Significant New Requirements...  Assignment of Liquidated and Delinquent Accounts :  Assignment to Department of Revenue  Assignment to Private Collection Firm  Some Accounts can be Exempted  DAS providing policy / procedures  Reporting of Liquidated and Delinquent Accounts  Each State Agency Annually Reports their Previous Fiscal Year Liquidated and Delinquent Accounts by October 1st.  Agency notifies LFO if it cannot comply  LFO to Collect Data and Annually Report to the Legislature by December 31st 3/15/2001 NASC Presentation April 27, 2016 IMG / Professional Credit 9

The Early Times . . .  The Oregonian says the State should:  Centralize collection efforts,  Add collection costs to the bill like WA & UT, Compare Apples to Orangutans  Turnover debts to private firms in 90-days. 3/15/2001 NASC Presentation April 27, 2016 IMG / Professional Credit 10

The Early Times . . . 3/15/2001 NASC Presentation April 27, 2016 IMG / Professional Credit 11

The Early Times . . . 3/15/2001 NASC Presentation April 27, 2016 IMG / Professional Credit 12

Make Good Comparisons April 27, 2016 IMG / Professional Credit 13

The Early Times . . . Oregon’s Assets ~ Comparisons Growth of Revenues Versus “ Net ” Receivables Billions: Receivables = A/R, Interest, Interfund and Taxes Receivable $14 $12 $10 $8 Revenues Receivables $6 $4 $2 $0 1995 1996 1997 1998 1999 Source: Oregon’s Comprehensive Annual Financial Report 3/15/2001 NASC Presentation April 27, 2016 IMG / Professional Credit 14 14

The Early Times . . . Oregon’s Assets ~Comparisons Growth of Revenues Versus “Net” Receivables Billions: Receivables = A/R, Interest, Interfund and Taxes Receivable $20 00 $18 00 $16 00 $14 00 $12 00 $10 00 $8 00 $6 00 $4 00 $2 00 $0 $0 2002 2003 2004 2005 2006 2007 Revenues Receivables Source: Oregon’s Comprehensive Annual Financial Report 2009 Legislative Presentation April 27, 2016 IMG / Professional Credit 15 15

The Early Times . . . Oregon’s Assets ~ Comparisons Growth of Revenues Versus “Net” Receivables $30 $25 $20 Billions of $ Revenue $15 A/R $10 $5 $0 2008 2009 2010 2011 2012 Source: Oregon’s Comprehensive Annual Financial Reports 5/14/2015 Legislative Update April 27, 2016 IMG / Professional Credit 16

The Early Times . . . Oregon’s Assets ~Comparisons Growth of Revenues Versus “Net” Receivables With Liquidated and Delinquent Debt Included $30 $25 $20 Billions of $ Revenue $15 A/R L&D $10 $5 $0 2008 2009 2010 2011 2012 Source: Oregon’s Comprehensive Annual Financial Report / LFO Reports 5/14/2015 Legislative Update April 27, 2016 IMG / Professional Credit 17

The Early Times . . . Dollar Collection Rate History Collections ÷ (Beginning Balance + Additions) 30% 25% 20% 15% 10% 5% 0% 2001 2002 2003 2004 2005 2006 2007 2008 State Agency Collections Overall collection rate OAA Collections PCF Collections 2009 Legislative Presentation April 27, 2016 IMG / Professional Credit 18

The Early Times . . . SoS Audit 2015-25 April 27, 2016 IMG / Professional Credit 19

A Brief History Of Time Circa 2005, the ACA published their collection firm surveyed Presentation Rates: 1 st Presentations: ~ 11-18%, Compare Apples to Orangutans 2 nd Presentations: ~ 5 - 8%, 3 rd Presentations: ~ .5 - 2.5% ACA = American Collector’s Assn. April 27, 2016 IMG / Professional Credit 20

A Brief History Of Time State: ID AZ CA WA OR UT NV Oregon Versus Other Western Property No Yes Yes Yes No No Yes States Tax No “State” ~ Property Tax All State Tax Income Yes Yes Yes No Yes Yes No Collection Tax Sources 1.6- 2.9- 1.0- 5.0- 2.3- 7.8% 5.0% 9.3% 9.0% 7.0% Compare Sales Yes Yes Yes Yes No Yes Yes Apples to Tax 5.0% 5.6% 6.0% 6.5% 4.75% 6.5% Orangutans Population 1.3m 5.3m 34.5m 6.0m 3.5m 2.3m 2.1m Source: Federation of Tax Administrators/US Census AGA Winter Conference February 2004 April 27, 2016 IMG / Professional Credit 21

A Brief History Of Time Compare Apples to Orangutans Don’t make a monkey of yourself! April 27, 2016 IMG / Professional Credit 22

Statewide Financial Services SWARM Analysis 5 Year Cumulative Collection Summary In Thousands $1,200 $1,000 $800 Agencies $600 OAA $400 PCF $200 OAA - Dept. of Revenue’s $0 Other Agency Accounts Unit 2000 2001 2002 2003 2004 PCF – Private Collection Firms Source: LFO Reports BAM Presentation January 2006 April 27, 2016 IMG / Professional Credit 23

Statewide Financial Services SWARM Analysis 9 Year Collection Summary $2,400 $2,100 $1,800 Millions $1,500 $1,200 $900 $600 $300 $0 '00 '01 '02 '03 '04 '05 '06 '07 '08 Cumulative collections by fiscal year Agencies OAA PCF Source: Annual LFO Report on Liquidated and Delinquent Accounts Receivable 2009 Legislative Presentation April 27, 2016 IMG / Professional Credit 24

Statewide Financial Services SWARM Analysis Inventory of Accounts in Dollars 100% 80% 60% PCFs OAA 40% Agencies 20% OAA - Dept. of Revenue’s Other Agency Accounts Unit 0% PCF – Private Collection Firms 2000 2001 2002 2003 2004 Source: LFO Reports BAM Presentation January 2006 April 27, 2016 IMG / Professional Credit 25

Statewide Financial Services $1,800 SWARM Analysis Ending Inventory by Fiscal Year $1,100 $1,000 $900 $800 Millions $700 $600 $500 $400 $300 $200 $100 $0 2015 '00 '01 '02 '03 '04 '05 '06 '07 '08 Agencies OAA PCFs Source: Annual LFO Report on Liquidated and Delinquent Accounts Receivable 2009 Legislative Presentation April 27, 2016 IMG / Professional Credit 26

Statewide Financial Services SWARM Analysis Note that the dashed line represents what the Unemployment Rate vs. Collection Dollars FY 2008 collections would have been without the $42 million in Kicker offsets. The chart only reflects a history with the annual unemployment rate as high as 8.1%, as of February 2009 Oregon’s unemployment rate was already 10.8% (preliminary) and expected to go higher. The impact of a potential double digit annual unemployment rate on collections is unknown. This is what OAA can do for you – how about the Federal offset? Legislative Update April 27, 2016 IMG / Professional Credit 27 May 2015