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How local authorities can minimise collection costs

Government austerity measures mean local councils are having to do more with less. Maximising income collection and minimising the costs of collection are critical

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The poorest cities have been hardest hit by central government cuts, a report by the Centre for Cities, a think-tank has found. [1]

Northern city budgets have faced the biggest cuts. They have seen spending cuts of 20% on average compared to 9% for those cities in the South West, East of England and South East excluding London.

For example, day-to-day council spending in Barnsley has reduced 40% since 2009/10. Whereas Liverpool has seen the biggest per resident reductions - a £816 cut in funding for every person living in the city.

The cities most affected are economically weaker. They are less able to raise money locally, for example through council tax increases, while being more reliant on government funding.

More needed to fund social care

The growing demand for social care - personal care and practical assistance for children, young people and adults who need extra support - has added to the squeeze on cities' finances.

A decade ago, just four cities out of 62 spent the majority of their budget on social care. Now half of them do, according to the Centre for Cities report.

Maximising income collection has always been important. Yet when local councils are having to do more with less, minimising the costs of collection has become just as important - if not more so.

Top tips for minimising collection costs

There is a misperception that while businesses pay a transaction-based fee to accept cards, cash is free or almost free. This ignores what it costs to secure, insure, count and bank cash.

Payments should flow in the most cost-effective manner. Frequently this means digital payments, such as cards or direct debit, rather than cash or cheques.

Local authorities that already accept card and direct debit payment should encourage local residents and businesses to pay in the most cost-effective manner. Signage is available from your payment provider to use in cash offices, on the council website and in correspondence to show you welcome these payment methods.

Make the most of lower cost remote channels by encouraging residents and businesses to pay via your website. Target customers who pay by cheque. Reminding them that they can make regular or one-off payments via card or direct debit helps cut costs.

Recurring payments also maximise efficiencies for everyone as they happen automatically. Customers do not have to remember to make them, and councils do not have to issue reminders.

How CashFlows can help

Card and direct debit acceptance can streamline back-office processes and improve local authority collection costs. To find out more about the CashFlows proposition to local authorities, get in touch today.

[1] Austerity hits cities twice as hard as the rest of Britain, Centre for Cities, 28 January 2019, https://www.centreforcities.org/press/austerity-hit-cities-twice-as-hard-as-the-rest-of-britain/

 

Topics: Payments, Blogs, blog, card payments, fintech, Direct Debit, austerity, collections