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AGENDA ITEM REVIEW FORM |
5.B.
Regular City Council Meeting
- Meeting Date:
- 03/11/2020
- Department Head:
- Jorge Perez
- Submitted By:
- Jorge Perez, Billing & Collections Manager, Finance Department, Billing & Collections
Action Requested:
Motion
ITEM:
Discussion and possible action on any and all matters regarding the proposed agreement between Valley Collection Service, LLC., and the City of San Luis for implementation of collection procedures to achieve maximum recovery of debt. (Jorge Perez, Billing & Collections Manager)
SUMMARY:
The City of San Luis currently does not work with any third-party collection agencies to recover any debt on its utility accounts or any other debtors. The main reason for not collaborating with an agency in the past is an issue with our billing software in generating actual arrear and bad debt reports as well as accurate information to provide to such agency.
During the current fiscal year, the Billing and Collections, Finance and IT departments worked together to fix the issues that we had in the past in order to move forward with this much-needed collection process. Our software is ready to produce the data that a collection agency will need in order to perform its established collection procedures for debt recovery.
Just in utility accounts, the city has not received payments from bad debt balances on inactive accounts to the total amount of $72,780.63.
The Billing and Collections division contacted other municipalities within the State of Arizona and received some good feedback about Valley Collection Service (VCS), LLC., which is a debt collection agency. Some municipalities being served by VCS are Chandler, Gilbert, Goodyear, and Scottsdale, to name a few. Attached is a list of all the cities in Arizona being served by VCS.
Valley Collection Agency establishes a commission fee of 20% on all collections made. The city may elect to add this fee amount to the balance so 100% of the monies owed are paid to the city. However, to make this election, the city must first go through a fee public notice process. We would like to get started now with Valley Collections keeping 20% of what they collect until the notice process can be completed.
Benefits of Using a Collection Agency
Using a collection agency to collect on the city’s delinquent accounts is a cost-effective tool to produce more revenue.
VCS uses multiple skip-searching databases along with the National Change of Address databases to locate individuals who have moved. The time that VCS spends on this is time saved for the city in performing any collection activities and brings about increased revenue when they are able to find the individual and get them to pay their obligation.
While it is the focus of Valley Collection Service, LLC., to maximize collections for their clients, it is also very important for them to do this with an ethical approach. This approach has allowed them to maintain a clean record with the Better Business Bureau and a clear conscience. They also feel that it is a good business practice.
Ordinance No. 314
Other than approving the contract with a collection agency, there will not be a need to adopt a new ordinance as the city already has an ordinance in place. Ordinance No. 314 in its Section 2 (D), states that “The city may elect to assign any and all utility accounts considered delinquent with unpaid charges, fees, or assessments to a collection agency or attorney to collect, in addition to the disconnection of any and all services.”
During the current fiscal year, the Billing and Collections, Finance and IT departments worked together to fix the issues that we had in the past in order to move forward with this much-needed collection process. Our software is ready to produce the data that a collection agency will need in order to perform its established collection procedures for debt recovery.
Just in utility accounts, the city has not received payments from bad debt balances on inactive accounts to the total amount of $72,780.63.
The Billing and Collections division contacted other municipalities within the State of Arizona and received some good feedback about Valley Collection Service (VCS), LLC., which is a debt collection agency. Some municipalities being served by VCS are Chandler, Gilbert, Goodyear, and Scottsdale, to name a few. Attached is a list of all the cities in Arizona being served by VCS.
Valley Collection Agency establishes a commission fee of 20% on all collections made. The city may elect to add this fee amount to the balance so 100% of the monies owed are paid to the city. However, to make this election, the city must first go through a fee public notice process. We would like to get started now with Valley Collections keeping 20% of what they collect until the notice process can be completed.
Benefits of Using a Collection Agency
Using a collection agency to collect on the city’s delinquent accounts is a cost-effective tool to produce more revenue.
VCS uses multiple skip-searching databases along with the National Change of Address databases to locate individuals who have moved. The time that VCS spends on this is time saved for the city in performing any collection activities and brings about increased revenue when they are able to find the individual and get them to pay their obligation.
While it is the focus of Valley Collection Service, LLC., to maximize collections for their clients, it is also very important for them to do this with an ethical approach. This approach has allowed them to maintain a clean record with the Better Business Bureau and a clear conscience. They also feel that it is a good business practice.
Ordinance No. 314
Other than approving the contract with a collection agency, there will not be a need to adopt a new ordinance as the city already has an ordinance in place. Ordinance No. 314 in its Section 2 (D), states that “The city may elect to assign any and all utility accounts considered delinquent with unpaid charges, fees, or assessments to a collection agency or attorney to collect, in addition to the disconnection of any and all services.”
RECOMMENDATION / SUGGESTED MOTION:
I MOVE TO APPROVE THE CONTRACT FOR VALLEY COLLECTION SERVICE, LLC., TO RETAIN 20% OF COLLECTIONS AS COMMISSION WITH THE FUTURE OPTION TO ADD THE COMMISSION TO ACCOUNT BALANCES AS PRESENTED.
Fiscal Impact
- IS THERE FISCAL IMPACT ASSOCIATED WITH THIS ITEM:
- Yes
- CITY/STATE/FEDERAL FUNDS:
- City
- TOTAL:
- $3,800.00
- BUDGETED AMOUNT:
- $66,100.00
- AVAILABLE AMOUNT TO TRANSFER:
- $31,237.00
- ACCT NAME & GL#/REMAINING BALANCE BEFORE PURCHASE:
- Contractual Services 100-750-80000 $31,237.00
FISCAL IMPACT STATEMENT (IF THIS IS A BUDGET TRANSFER, YOU MUST ATTACH THE BUDGET ADJUSTMENT FORM):
The commission will be taken from 20% of the debt collected. There is an option in the future to pass the commission fee to debtors.
Attachments
- Valley Collection Service Contract
- Collection Pamphlet - City of San Luis
- Municipalites served by VCS
- Ordinance No. 314