Government Debt Collection Facts You Need To Know In A Slow Economy

Posted by David P. Montana

February 6, 2010

by David P. Montana

When most people think of debt collection, government debt collection isn’t the first thing to come to mind. When you picture collection agencies you’re thinking about late credit card payments or missed mortgage payments, not government debt. However, in the current difficult economy, the government has cash flow problems the same as any other business. Making sure that all fees owed them come in helps continue the programs that people rely upon. For this reason, government debt collection is a growing concern.

Some people don’t even consider the fact that the government has debt collection concerns. However, they have income they rely on to keep running just the way ordinary businesses do. If the incoming receivables stop, the government can not run smoothly.

If your department of government has receivables that are more than 60 days past the due date, you’re getting into the danger zone that they may never be paid. A debt collection agency with experience in government debt collection can be a big help in this case. People who specialize in this area will understand the problems unique to government debt collection.

Some strategies for government debt collection include making arrangements to get delinquent accounts back in good standing, employing third party collection agencies, and employing collection agencies that also handle first party billing.

Payment plans on delinquent accounts save the municipality time and money. It requires labor and materials to shut off utilities, and to reconnect them when the account is brought current. It’s far better to work out creative payment options, like installment plans. This will both keep a positive cash flow and reduce extraneous cost for the municipality.

Another option is to hire a collection agency that will do all of your billing from the beginning. Local governments can find significant cost savings with this method because it eliminates the middle of the process. When an account goes into collections the agency can take care of it immediately without having to transfer information.

If you choose a collection agency that offers first party billing, they handle the billing for the utility company from the beginning. This saves time and money for the utility company because if an account falls into collections the process of starting debt collection in earnest is seamless. One of the main costs when it comes to government debt collection is mailing costs.

Another advantage to handling government debt collection this way is the reduction in operational costs such as phone and mailing. Debt collectors who specialize in government clients get major volume discounts in these areas. They pass the cost savings on to you and are able to get more money back more quickly at lower cost to you. The best part about this is that you don’t even have to pay them until they recover anything. Their fee is usually taken out as a percentage of whatever recovery they accomplish. If government debt collection touches your area of responsibility, you should definitely consider hiring a specialized collection agency that understands government collection sooner rather than later.

About the Author:

David P. Montana has been a recognized industry expert, business advisor and writer in collection agency services for thirty years. He offers additional valuable tips and information on government debt collection.

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