Client The Office of the Shelby County Trustee David Lenoir, responsible for property tax and other receivables collection and management for Shelby County, Tennessee.

Challenge Improve current and delinquent property tax collection despite a limited budget; respond to the county’s falling real estate values and subsequent decline in property tax values by increasing collections without adding overhead.

Solution FICO® Debt Manager™ solution

Results An increase in receivables collections by an overall 80 basis points, resulting in an additional $6 million in revenue within the first 120 days of delinquency; improved collector assignments and strategies based on data-based insight on taxpayers, and on collectors’ performance; developed a merit-based program to drive greater collector motivation and results.

success story: collections & recovery

Shelby County Boosts Tax Collection Productivity with FICO® Debt Manager™ Solution

The office of Tennessee’s Shelby County Trustee operates with a progressive perspective on how technology can help it connect with taxpayers and improve collections. One public example is the electronic kiosks the office has set up in the lobbies of bank branches and other government offices, influencing and making it convenient for property owners to pay their taxes. But it’s behind the scenes—with development of a sophisticated accounts receivables platform and its integration with FICO® Debt Manager™ solution—where the county’s technological innovation is having a major impact in reaching and drawing payments from taxpayers.

Shelby County is home to more than 940,000 residents, and includes the city of Memphis. According to Debra Gates, the Chief Administrative Officer for the County Trustee, it’s critical today for the office to improve how it reaches out to the county’s commercial and residential property owners, and increase the number of contacts it makes.

“Property taxes make up more than 60% of the county’s $1.2 billion budget, and it’s always important to ensure timely collections,” Gates says, adding that the county collected $758 million in property taxes and related interest in 2013. “But with declining real estate values since

2008, like a lot of governments we’re challenged with a reduced tax base. That necessitates that we reach and collect from a higher number of delinquent taxpayers at a faster rate. But it also means that, with less revenue, we need to find ways to do more with less—we have to improve collections with less operational funding.”

» Refining Systems Over TimeSince joining the County Trustee’s office in 1990 as a collections director, Gates has helped direct the office’s evolving technology infrastructure, which inherently must exceed the scope of the county’s property tax collections. The Trustee’s office serves the county in a treasurer or banking role, with responsibility for managing all the county’s revenues—approximately $2.6 billion per year of which property tax is a portion. Back in the 1990s, it purchased its STAR (Shelby Trustee’s Accounts Receivables) software system for managing all property tax revenues. However, the integration of peripheral technology with STAR, including a system to support the county’s property tax collectors, proved more challenging. Gates explains how the office ran into unforeseen shortcomings, but also how the experience would become valuable years later in the selection of other software.

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“We purchased a collections system that helped our efforts to a degree, but in time two problems emerged,” Gates says. “It wasn’t flexible enough to remain compatible with any modifications or upgrades we made to our STAR system. And it didn’t have the extent of functionality we needed, particularly in its ability to strategically assign accounts to particular collectors, and to monitor and track results.”

In 1999, the Trustee’s office abandoned its use of the collections software. To make matters more challenging, other budget priorities precluded it from purchasing another system until 2011. In that period, Gates says that the office was forced to rely on a manual, spreadsheet approach to monitoring collections activities, resulting in aggregate team information and no support for monitoring the effectiveness of individual collector efforts.

“Our paper-based approach was not helping us improve the number or quality of contacts we were making with delinquent taxpayers, which became a bigger problem with declining revenue from falling real estate values,” Gates says. “We didn’t capture sufficient information on individual performance that would have helped us develop more effective assignment strategies. For example, we weren’t able to know how many calls an individual collector was making, or the result of their individual work. We knew what the house was collecting, but had no information on dollar amounts by individual collectors. We also couldn’t distinguish the difference between how much revenue was received from delinquent taxpayers’ voluntary payments from incoming calls, versus collectors’ outgoing calls.”

However, based on the office’s ongoing development of the STAR platform, what Gates, Director of Delinquent Collections Bobby Stephenson, and other office leaders did have by this time was years of technology experience and sophisticated knowledge of systems, as well as specific insight on their current and future technology needs. That paid off in 2011.

» Selecting Technology Based on Experience

Although the collections team received funds to purchase a software system in 2011, it was a limited amount. The office’s initial inclination

was to award a contract to the vendor it had worked with back in the 90s, but it nonetheless put out a request for proposal. That’s when it was introduced to FICO® Debt Manager™ solution (which at the time was a system named Titanium from CR Software Group, now a part of FICO Debt Manager).

FICO Debt Manager offers accounts receivable management services based on advanced analytic and decisioning capabilities accessed through an easy-to-use interface. It enables collections teams to achieve a deeper understanding of customers, intelligently reallocate key resources to ensure the right agents work the right accounts, and automate outbound communications.

“We were favorably surprised with the cost of the solution, especially given its breadth of functionality,” Gates says. But the office was also won over by another key attribute of the solution. “We were impressed with its flexibility, which we considered an essential quality. With the technological insight we gained from the development of our STAR system, we were able to see that the solution could grow with us and accommodate any changes we make to our accounts receivables platform.

“In fact,” Gates adds, “beginning in April of 2014 we’ll be replacing STAR with another accounts receivable system, and we’ve determined that Debt Manager solution’s open architecture and flexibility won’t limit the scope of changes we want to make.” Gates credits the Debt Manager solution’s data Extract-Transfer-Load feature for having made it easy to integrate data to and from the STAR platform, and knows that it will also support data integration with the new accounts receivable system. “The interfacing code between the systems will need to be rewritten, but we know it will be much easier than it was with our former collections system. Plus, the system’s design allows us to make the changes—between that and FICO’s expert consulting we can expedite the modifications.”

After putting out its bid for proposals in May 2011, the office awarded the contract to the former CR Software only a month later. Gates says that implementation of the system was completed by the end of the year, and by June 2012 the office completed its conversion of 2.4 million receivable records and 11 million transaction records into the system.

» Solid Results in ProductivitySince implementing the solution, the Trustee’s Office has put several FICO Debt Manager solution features to use in helping its 14 collectors reach and draw payments from more delinquent taxpayers.

Gates says a portion of this increase can be attributed to the staff’s greater ability to collect on current and delinquent receivables through the use of specific functionality in FICO Debt Manager. “With the FICO system we can reach more delinquent accounts without having to add more collectors,” Gates says. “It’s helping us leverage new and existing data, which provides direct support to our collectors, as well as helping management make better collection assignments.” Gates also points out how much more collectors are engaged in their work.

» Truly Motivated, Empowered Collectors

FICO Debt Manager solution is driving a higher level of enthusiasm from the team’s collectors, Gates says, adding that staff members are now more motivated to try to improve individual performance and results. “With Debt Manager, we’ve been able to peel back the layers and actually see what our collectors are producing through their own efforts, whereas in the past we had no way of determining any one individual’s contributions,” Gates explains. “That alone has made a big difference. Our collectors are now more competitive about their results. It wasn’t the case prior to Debt Manager, but now they check the reports and make sure that their collections are counted!”

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In the year prior to completion of implementation—July 2011 through June 2012—the office collected 94.23% of all receivables (the amount of taxes owed). In the year after implementing FICO Debt Manager, the office increased collection of receivables to 95.03%—an increase of 80 basis points that resulted in an additional $6 million collected during the critical first 120 days of delinquency.

FICO, Debt Manager and “Make every decision count” are trademarks or registered trademarks of Fair Isaac Corporation in the United States and in other countries. Other product and company names herein may be trademarks of their respective owners. © 2014 Fair Isaac Corporation. All rights reserved.

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With its new ability to monitor and track individuals’ work, the office is fortifying staff motivation with the creation of an Elite Collector Group, a merit-based program that rewards the team’s five most productive collectors. The Elite Group, which identifies members on a highest call volume and highest dollar collected basis, gives the office a means to assign productive collectors to accounts with the most revenue potential while also providing privileges and perks. For example, in addition to time off and other benefits, Elite collectors are exonerated from taking incoming calls, helping each maintain focus on working delinquent accounts with high revenue potential.

FICO® Debt Manager™ solution is giving the office the ability to:

• Have collectors easily place an unlimited number of data informational tags assigned to parcels—for example, that a parcel owner is in bankruptcy—right on work screens, aiding in prioritization of accounts.

• Link multiple properties to a single owner so that one collector can work directly with a taxpayer and the taxpayer’s total amount owed, rather than having multiple collectors contact the taxpayer for multiple properties.

• Monitor each collector’s success rate (by percentage of collections per calls) to help drive supervisor and collector effectiveness.

• Develop data-based rule sets and decision trees for improving workflow collection strategies such as prioritization of accounts or optimal collector-account assignments. Gates says that FICO strategy consultants have helped the office analyze nine months of payment data to segment taxpayers by likelihood to pay higher amounts on taxes owed. “This is an extremely exciting next step for us,” says Gates, adding that in March of 2014 the Office plans on implementing a data-driven strategy that FICO consultants delivered in the previous fall. “We’re excited to put the recommendations to the test and see how much we can increase our collection percentage using the new segmented data, and a derived strategy for each segment.”

• Implement additional communications channels with taxpayers, including SMS messages to taxpayers via their phone and other devices which provides a link to the Office’s website for making payments online. A recent sample of the text messages showed that the Office has received a 548% return on investment from the communications channel.

• Automate its tax sale process, from the start of a lawsuit through the sale of a property, by using the Debt Manager solution’s flexible business rules to take action based on informational tags placed on a property’s file.

» Improving the Taxpayer Experience

The Office isn’t only concerned with the support that Debt Manager is providing to its collectors. “We know how important taxpayer satisfaction is in helping improve collection of not just delinquent receivables, but also current receivables,” Gates adds. “Debt Manager is helping us provide exemplary service to taxpayers. In government, it’s not unusual for a constituent to spend far too much time speaking with several representatives to find an answer to even a basic question. Debt Manager solution’s ability to provide immediate on-screen access to taxpayer information and its processing power are helping us provide a one-stop service to taxpayers.”

» Driving Additional Monetary Streams

The Trustee’s office has also driven revenue for the county by providing tax collection services to municipalities within the county. To some degree, Gates credits FICO Debt Manager solution with helping it land a contract in 2013 with the county’s largest municipality, Memphis. “Over many years we’ve been providing collection services for six cities, but we’ve been trying to get a contract with Memphis for 20 years. Adding Debt Manager helped to instill confidence in the city of Memphis.”