REVENUE AND DEBT COLLECTION POLICY Approval Date: 18 June 2014 Review Date: May 2018 Author: Responsible Officer: Manager Finance Director Organisation Support 1. PURPOSE The purpose of this policy is to ensure the efficient and fair collection of revenue and general debts in accordance with documented processes. 2. SCOPE This policy applies to all staff who are involved in collecting revenue and general debts. 3. REFERENCES Part 8, Division 2, Local Government Act 1989 Sections 156(6), 170, 171and 171A Local Government Act 1989 Infringements Act 2006 4. DEFINITIONS Act means the Local Government Act 1989 CEO means the Chief Executive Officer of the Council CIV means Capital Improved Value General debtors means all debts owed to the Council except rates Infringements Court means the administrative division of the Department of Justice that makes orders to enforce the payment of fines MVR means Motor Vehicle Report from Vic Roads (vehicle ownership details) PRN means Penalty Reminder Notice 5. RATES The City of Greater Bendigo (CoGB) operates a computerised rates billing system which records financial information on a transactional basis and maintains debtor information in accordance with established principles of rating in local government. Annual rate notices will be issued not less than one month prior to the due date of the first instalment. Subsequent instalment rate notices will be issued not less than 14 days before the due date of payment. All notices will be clear, concise and provide sufficient information to enable the debtor to be aware of their obligations. Returned mail will be investigated to a stage whereby the debtor has been given every opportunity to be made aware of their obligations. 1
Interest CoGB will charge interest on rates and charges in accordance with s.172 of the Act. The interest percentage charge is a predetermined rate and is set by the Attorney-General and gazetted each year. This rate will be confirmed each year in the declaration of rates and charges. Collection Accounts outstanding after the due date will be issued with a final notice which contains sufficient information regarding the original debt, any interest penalties imposed and proposed action to be taken by the CoGB should the account remain unpaid after a further 14 days. The debtor will be given the opportunity to dispute the amount owing or make alternative arrangements for payments within that 14 day period. Those accounts still outstanding after the 14 day final notice period will be referred to a debt collection agency chosen by the CoGB. The collection agency will issue a final demand at the negotiated cost. Unless an arrangement for payment has been approved by the Manager Rating and Valuation Services, accounts still outstanding after the expiry of the final demand letter will be recovered through court proceedings, where the legal costs to be incurred at the time legal action is instigated, do not exceed the outstanding amount of rates, charges, fire services levy and interest. All legal costs incurred as a result of instigation of recovery through court action will be allocated to the debtor s assessment. Waiving rates, interest and charges Rates are a first charge on the property pursuant to the Act and will generally not be waived. Charges are a cost to CoGB and will generally not be waived. Interest may be waived in accordance with the financial hardship provisions. Any legal costs incurred will generally not be waived. Financial Hardship CoGB may provide alternative payment arrangements for property based debts to assist ratepayers deemed to be under financial hardship. For the purposes of this policy financial hardship means a situation where a ratepayer is unable, reasonably, because of prolonged illness or unemployment, or other reasonable cause, to discharge their financial obligations to the Council and the ratepayer reasonably expects to be able to discharge those obligations if payment arrangements were changed. Hardship assistance will only be granted to individuals experiencing hardship, with regard to the rates on their primary residence. 2
Financial hardship means an inability to fulfil a financial obligation, not an unwillingness to do so. The hardship may be short or long term. Cases of financial hardship will be considered on an individual basis and always with a view to the ratepayer re-establishing financial capability and, wherever possible, meeting their financial obligations. Ratepayers may apply to the Manager Rating and Valuation Services to have rates, interest and charges deferred, in whole or part, subject to the following conditions: (a) the ratepayer must be able to demonstrate financial hardship. For example, a statutory declaration from a person familiar with the applicant s circumstances (family doctor, bank officer, financial counsellor); (b) for a debt exceeding $500 the ratepayer will be expected to provide a confidential statement from a recognised financial counsellor, or similarly qualified person, in support of the application for relief; (c) the ratepayer must enter into an alternative arrangement with CoGB to pay the debt and meet the terms of such an arrangement; and (d) if interest has been waived and the ratepayer defaults on the agreed terms for repayment, the interest waiver may be withdrawn and interest will then accrue under normal payment arrangements. If deferment is approved the following will occur: (a) the property will be flagged as a deferred property; (b) rates and interest will still accrue (although interest may be waived); and (c) no debt recovery action will be taken while the terms for payment are met. Deferment will be withdrawn if: (a) the ratepayer advises financial hardship no longer exists; or (b) the ratepayer ceases to own or occupy the property; or (c) the ratepayer has defaulted in meeting the agreed terms for payment of the debt; or (d) the ratepayer has provided false or misleading information in support of the application for relief. If an application for relief is refused, the applicant may seek a review of the decision by the CEO. If an application for relief is approved, the Manager, Rating and Valuation Services will implement and monitor the agreed plan for alternative payment. Reporting The Manager, Rating and Valuation Services will prepare a quarterly report for the Finance Committee detailing all outstanding rates income. The report will include details of any special circumstances or arrangements. Sale of Land to Recover Debt CoGB shall utilise the sale provisions of the Act in the following circumstances: (a) where all other recovery attempts have failed; and (b) where at least 3 full years rates and charges remain unpaid; and 3
Preparation for sale of property should commence: (a) as soon as permitted under the Act in all cases apart from owner occupied dwellings. (b) where 5 years rates and charges remain unpaid for owner occupied dwellings. CoGB must ensure outstanding rates, legal and other costs never exceed the Capital Improved Value (CIV) of the property, except in cases where a property has a valuation of less than $10,000. Schedule of Rights and Responsibilities Customers' rights: Be treated respectfully, sensitively and non-judgementally Have their cases individually considered and their circumstances kept confidential Receive prompt information on alternative payment arrangements Nominate the amount they can afford and the frequency of instalments of their preferred payment plan Re-negotiate the amount of their instalment if there is change in their circumstances Receive information about free independent and accredited financial counselling services Receive a language interpreter service free Be shielded from legal action and additional debt recovery costs, whilst they continue to make payments according to an agreed schedule, or an agreed altered schedule of payments Where possible speak with a person at City of Greater Bendigo (or their agent) who is familiar with their situation in order to re-negotiate their payment arrangement if a payment has been missed or is likely to be missed. Customers' responsibilities: Advise City of Greater Bendigo (or their agent) of their financial difficulties as soon as practicable Be reasonable in their negotiations with City of Greater Bendigo staff (or their agent) in pursuit of a mutually acceptable outcome Be honest and realistic in their assessment of their capacity to pay Seek independent financial advice or representation where appropriate Maintain any arranged payment plan and advise City of Greater Bendigo (or their agent) if they are unable to meet a scheduled payment Advise City of Greater Bendigo (or their agent) if their circumstances change as soon as practicable. Maintain contact with City of Greater Bendigo (or their agent). 6. GENERAL DEBTORS CoGB operates a computerised debtor accounts system which records financial information on a transactional basis and maintains debtor information in accordance with the principles of commercial business. 4
CoGB will issue monthly accounts for money owing, or on a time basis which is applicable to that debtor class (eg. Aged Care 4 week cycle). The tax invoice will contain sufficient information so that the debtor can recognise the transactions included on the invoice and reconcile the debt if required. Seasonal user debtors will receive an invoice at the start of its season. Seasonal users will have 60 days to pay the debt in full before further action is taken by CoGB for collection. The account shall be due and payable within 30 days of its issue except for seasonal users of CoGB s recreation facilities who have 60 days. Interest CoGB will not charge interest on any general debtor accounts unless permitted under specific legislation. Collection The procedure for collecting outstanding general debtor accounts is 30 days invoice is due for payment, a grace period of 5 days is allowed only for non-recurring overdue debtors. 35 days duplicate invoice is sent with a friendly reminder sticker requiring payment within 14 days. 49 days duplicate invoice sent with a final notice sticker requiring payment within 7 days. 59 days Debt collection agency final notice is sent to the debtor explaining the debt collection procedure. A follow up phone call will be made to major debtors as a courtesy reminder that the outstanding debt is being referred to a debt collection agency. Referral to debt collection agency Before referral to a debt collection agency, the Accounts Receivable Officer must compile a list by category of those debtors being referred for review by the Manager, Finance. A memo will be sent to the responsible Manager and Director notifying them of the intention to refer the debt for collection. The manager is encouraged to make contact with the debtor to see whether the outstanding debt can be paid. There are two exceptions to this collection procedure: Aged Care debtors must first be presented to the Manager, Aged and Disability Services for review, and only those approved by the Manager or the responsible Director will be referred to a debt collection agency; and the collection process will begin after 60 days from the date the invoice was raised for seasonal users of CoGB recreation facilities. 5
Arrangements on default of a general debt CoGB will consider all requests for alternative payment arrangements. However, full payment of the debt in the shortest reasonable time is preferred. An application form confirming the alternative arrangement will be completed in all cases except: (a) where the debt will be paid in full within one month; or (b) where a sale has occurred and a settlement date is provided. Deferment CoGB will consider an application for deferment of an outstanding amount. CoGB will not take any action against a debtor if deferment has been approved. All deferments will be subject to a timetable for periodic review. Waiving a general debt General debtor accounts will only be waived with the approval of the CEO on the recommendation of the Director, Organisation Support. Reporting The Accounts Receivable Officer will prepare a monthly report for the Manager, Finance at the end of each month. The report will contain the reconciliation between the General Debtors ledger and the Debtors Trial Balance and break the amount outstanding into terms of current, 30 days, 60 days and 90+ days. The General Debtors reconciliation will also contain a schedule detailing follow-up action for those outstanding debtors exceeding 120 days and the status of any special arrangements currently in place. 7. HERITAGE LOANS INTEREST FREE The Heritage Advisor will prepare a report on each application for financial assistance for consideration by the Heritage Advisory Committee. The Council will resolve whether to approve the application on the recommendation of the Committee. If the Council approve the application for financial assistance, an interest free loan to the value of half of the cost of the project will be provided to the applicant and is repayable over a five year period. The schedule of repayments is agreed to by the applicant and the Manager, Finance when the agreement is prepared. If the loan is $5000 or greater, CoGB will require a form of security (usually a caveat or mortgage) over the property to ensure repayment of the loan. If the property is sold during the loan period, all funds will be required to be repaid to CoGB at sale. The property, subsequent to works being undertaken, is to be maintained to a satisfactory standard during the five year period. Failure to maintain the property would result in the cancellation of the agreement and require the immediate repayment of the loan. 6
Repayments for the loan will be raised on the Sundry Debtors system. 8. COMMUNITY LOANS INTEREST FREE CoGB may provide financial assistance to community groups to allow various community based projects to be carried out. A detailed report from the responsible Director will be provided to the CEO for approval of each loan application. If the CEO approves the application for financial assistance, an interest free loan will be provided to the community group and is repayable over an agreed period (no longer than 5 years). The schedule of repayments is agreed to by the community group and the Manager, Finance when the agreement is prepared. Repayments for the loan will be raised on the Sundry Debtors system. Each repayment instalment is to be of equal value and the repayment frequency agreed to by the Finance Manager, Finance and the community group. 9. PARKING AND ANIMAL CONTROL The collection of outstanding Parking and Animal Control infringements is governed by regulation. The collection policy and related procedures are separately maintained by the Parking and Animal Control Unit. The General Debt collection process for Parking and Animal Control is as follows: fine issued on the spot client has 28 days to pay (according to the ticket), however Council allows clients 35 days before further action. fine issued and sent by mail client has 42 days to pay. The extra 14 days is to allow 14 days for service per the Infringements Act 2006. MVR obtained update takes 1-2 days. PRN issued is generated and sent to the debtor who is given 42 days to pay: 28 days plus 14 day service.\ after the 42 days, the infringement is referred to the Infringements Court. Courtesy letter notices and Infringements Court extracts are run at least fortnightly. Reporting On a quarterly basis, a report detailing the outstanding infringement debtors will be prepared and compared as a percentage to total infringement revenue. Monitoring of the percentage and amounts outstanding will be undertaken by the Manager, Finance to ensure the collection of infringement debts appear reasonable. 7
10. RECEIPTING Official receipts for payments will only be issued in the following instances: (a) where payment is made in person. (b) where the customer requests a receipt in writing. (c) where payment is made at a CoGB designated payment agency. (d) where cash is sent through the mail or not paid in person. Other than for cash payments, official receipts will not be issued for payments made through the mail or not made in person. 8