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© 2014 Fair Isaac Corporation. Confidential. This presentation is provided for the recipient only and cannot be reproduced or shared without Fair Isaac Corporation’s express consent. How Smart Government Collects Debt Michelle Burk CIO Ohio Attorney General Mike DeWine Debra Gates CAO Shelby County Trustee
© 2014 Fair Isaac Corporation. Confidential. Ohio is implementing Debt Manager, and Shelby County is looking back on two years of live production using Debt Manager. We'll start the discussion with Michelle and Sharukh, and the motivations they had for selecting and implementing a new platform. Starting the Discussion
© 2014 Fair Isaac Corporation. Confidential. ► While each revenue agency is unique, there are three common basic strategic goals: ► Maximizing revenues ► Improving constituent services ► Maximizing agency efficiency ► Reduce expenses ► Improve Technologies Goals—Mission Impossible? 3 Central Collection Process ClientsPeopleTechnologyProcesses
© 2014 Fair Isaac Corporation. Confidential. ► Ohio’s centralized collection environment in which economies of scale are present, significant efficiencies are gained allowing government to collect more of the liabilities that are owed ► Ohio has implemented a robust centralized collection division with the necessary tools and state statutes to efficiently process delinquent debts ► Ohio is continuing to build upon the current collection environment by improving and implementing current industry tools, technologies and processes ► Individual government agencies, cities and counties lack the economies of scale to bring the tools, workflow processes, and technologies needed to materially improve collections. Ohio statute enables centralized debt collections through Ohio Attorney General's Office State of Ohio 4
© 2014 Fair Isaac Corporation. Confidential. The evolving landscape with regulatory agencies. Will have a serious impact on the Accounts Receivable Management (ARM) industry for all areas of accounts receivables ► CFPB, Consumer Financial Protection Bureau ► TCPA, Telephone Consumer Protection Act ► FDCPA, Fair Debt Collection Practices Act ► IRS 1075 security requirements and the focus on augmenting the collection process Compliance Management—The Evolving Landscape 5
© 2014 Fair Isaac Corporation. Confidential. ► Centralizing the debt collection process in conjunction with accounting and other debtor/constituent services ► Changes in technologies ► Increased ability to use newer communication channels—Instant messaging, Web portals, Web services, telephone dialers, IVRs, , Text Messaging ► Auto Fund withdrawals, improved payment processing methods ► Tax offsets will reduce basic costs to collect Automation in Collection Management 6
© 2014 Fair Isaac Corporation. Confidential. ► The Co-mingling of IRS FTI data vs. Non-FTI data is a significant challenge ► The labeling, masking and tracking the FTI to the database element is a necessary process ► Security is very important to all levels of Government ► State and local governments will experience increased demands on budgets to meet security demands of taxpayer/constituent to secure personal and business information IRS 1075 Security Requirements 7
© 2014 Fair Isaac Corporation. Confidential. ► Federal regulations, polices, laws, established by the IRS and or by state and local government continue to be implemented ► Increased business requirements for security as well as compliance standards that influence the profitability for collection agencies and law firms will result in increases in collection fees as well as reduced collection performance on various types of industry debts ► Receivables such as local government revenues, court fees, traffic fines, operational licenses and fees, permits, taxes Debt Collection At State Level—Regulations and Budgets 8
© 2014 Fair Isaac Corporation. Confidential. Implementing State of the Art ► IVR Inactive Voice Response systems ► Aspect Automated Dialer processing ► SAGE Accounting Systems and Ledger ► Customer Payment Portals ► Client and External resource portals ► Supply Chain Management ► Skip Tracing Services and Resources ► Reporting and Dashboard capabilities CIMS Roadmap—Increasing Debt Collection Through Automation 9
© 2014 Fair Isaac Corporation. Confidential. ► Trustee is known as the Treasurer in some states ► Banker ► Over $2.6 billion cash receipts/disbursements ► Investor ► Current portfolio—$467 million ► Bills and collects property taxes ► Represents 60% of the county’s $1.2 billion budget ► 2013—$758 million ► Collects for 6 other municipalities, including City of Memphis ► Collection Rate ► 95% of current year taxes for the 1st year ► 99% within three years More About Us… 10
© 2014 Fair Isaac Corporation. Confidential. Debt has long been a persistent reality for government agencies. Uncollected U. S. outstanding receivables now stand at an estimated $200 Billion and a significant portion of these accounts are as old as 12 years. In the meantime, budget gaps continue to expand by the billions and the demand on government services grows and revenues remain flat. ~ Governing Magazine September 2014 “Revenue Revival” Revenue Challenge
© 2014 Fair Isaac Corporation. Confidential. ► Collect more money with a declining tax base ► Reduce expenses Goals—Mission Impossible? 12
© 2014 Fair Isaac Corporation. Confidential. ► Collection Department ► No enterprise-wide system (Microsoft Access/Excel) ► Pre-Tax Sale/Tax Sale ► 4-6 tax sales per year ► Bankruptcy ► 2,500 active cases ► Collect $3.3 Million annually ► Legal ► Approximately 41,000 delinquent ► Sue 50%—$17.5 Million ► Collection activities Pre-Automation 13
© 2014 Fair Isaac Corporation. Confidential. ► What we believed ► Aggressive ► 18 collector positions on staff ► Outbound calls with follow-up ► What was occurring… ► Manual spreadsheet approach ► House efforts ► Minimal outbound calls ► Administrative support ► Legal activity was primary driver ► Bankruptcy Collection Activities 14
© 2014 Fair Isaac Corporation. Confidential. ► Affordable ► Integrate with our current system ► Simple importing/exporting of data ► Batch or Real-time ► Use in-house programming staff due to monetary constraints ► Convert data/Develop/Maintain/Upgrade ► Flexible due to constantly changing demands ► No forces dependency on vendor for business logic changes ► Use automation to touch more accounts Debt Management System 15
© 2014 Fair Isaac Corporation. Confidential. ► June 2011 ► Signed contract ► June 2012 ► Converted and balanced ► 2.4 Million receivables ► 11.1 Million transaction records ► June 2013 ► Workflow collection strategies ► Automated account assignments ► Monitor and track individual collection efforts ► Measure collection results The Age of Titanium (FICO ® Debt Manager™ solution) 16
© 2014 Fair Isaac Corporation. Confidential. The Age of FICO ® Debt Manager™ solution ► Professional Advice—FICO ► Operational Recommendations ► Data Driven Strategy—9 months out ► Results ► Added focus to 1st days ► Established dedicated group of collectors making only outbound calls ► Goals—monetary and call volume ► Measure and publish results ► Created incentives ► Different channels of communication (in order of priority) ► SMS Messaging—548% return ► ► Automated calls ► Snail Mail 17
© 2014 Fair Isaac Corporation. Confidential. ► Additional $6 million during first 120 days out of delinquency ► 80 basis point increase 2013 Revenue Impact 18
© 2014 Fair Isaac Corporation. Confidential. Forecasted Operational Impact 19
© 2014 Fair Isaac Corporation. Confidential. Refine: ► Compare new strategies to baseline ► Workflow automation ► Add Tax Sale Process ► Foster a desire to be part of the Elite Collector group ► Improve collector reporting/statistics ► Automate the different communication channels ► Now it is “Manual” Automation ► FICO Adeptra The Foreseeable Future 20
© 2014 Fair Isaac Corporation. Confidential. Questions 21
© 2014 Fair Isaac Corporation. Confidential. This presentation is provided for the recipient only and cannot be reproduced or shared without Fair Isaac Corporation’s express consent. Thank You! 22 Debra Gates Phone Michelle Burk Phone
© 2014 Fair Isaac Corporation. Confidential. Learn More at FICO World Related Sessions ► Collection Platform Success in a Transitioning Economy ► The New Normal: Adopting and Adapting to Drive Sustainable, Profitable Growth Products in Solution Center ► FICO ® Decision Optimizer ► FICO ® Debt Manager™ solution ► FICO ® Customer Communication Services: Collections Experts at FICO World ► Cheryl Miller ► Keith Hill ► Catherine Whitelaw ► Rob Robb White Papers Online ► Five Imperatives in a Shifting Collections Landscape ► Harnessing the Speech Analytics Advantage Blogs ► 23
© 2014 Fair Isaac Corporation. Confidential. Please rate this session online! Debra Gates Michelle Burk Ohio Attorney General Mike DeWine Columbus, Ohio 24
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© 2014 Fair Isaac Corporation. Confidential. This presentation is provided for the recipient only and cannot be reproduced or shared without Fair Isaac.
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Confidential. This presentation is provided for the recipient only and cannot be reproduced or shared without Fair Isaac Corporation's express consent.
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