Given the fact that municipal governments in the United States are owed approximately $40 billion in delinquent receivables, the market for ARM companies to assist these entities in collecting their debts is both geographically and financially immense.
In April of 2007, Kaulkin Ginsberg published an executive brief, Facing the Budget Crunch: Creative Strategies for Municipal Collections*, which reviews how communities – from large cities like San Francisco, Ca., to small towns like Wilton, Ct. – are now employing third-party agencies and law firms to improve their collection programs. For example:
- Parking violations represent a significant amount of revenue for the city of Chicago – $161.3 million in total in 2005. To improve return on these fees, the city now uses an agency to collect a portion of its overdue parking fines.
- Communities, such as Dallas, Texas; San Leandro, California; and several towns in Augusta County, Virginia, are using collection agencies to help collect overdue library fees.
- San Francisco utilizes collection law firms to settle outstanding restitution and other unpaid court judgments, resulting in millions of dollars in revenue.
While many technology vendors, collection law firms, and contingency agencies are already providing ARM services to cities and towns across the country, many opportunities exist for penetration into this expanding market.
If you are looking to enter the market for municipal collections, or you are already involved in the sector, we conducted a Municipal Collections Teleseminar on Thursday, May 17, 2007. This teleseminar provided valuable “real-world” insights into the current state of municipal receivables management. The recording is available for purchase in the insideARM.com bookstore.
Panelists for the teleseminar will include Patrick Scott, East Coast Director of Client Services for MuniServices Company, headquartered in Fresno, California. MuniServices has partnered with more than 260 cities throughout the United States to enhance and manage their municipal revenues. We will were also joined by Michael Vallandingham, a Partner with Linebarger Goggan Blair & Sampson, LLP. Linebarger Goggan, which sponsored both Kaulkin’s municipal executive brief and this teleseminar, has more than 30 years experience assisting government clients in collecting their receivables through more than three dozen offices across the country. In addition, Renee Linnabary, Senior Vice President of AllianceOne, shared her company’s expertise related to municipal collections. AllianceOnce has served the government and court sector of the ARM industry since the early 1980s and has a client base of more than 500 courts and government entities.
In the face of budgetary shortfalls and reductions in federal funding over more than two decades, U.S. cities are tasked with finding new approaches to recovering the bad debt — from past due taxes, library fines, parking tickets, etc. — that is owed to them. The growing demand for municipal collections represents a clear opportunity for ARM firms interested in serving these types of clients.
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