When most people think of debt collection, government debt collection isn’t the first thing to come to mind. When you picture collection agencies you’re thinking about late credit card payments or missed mortgage payments, not government debt. However, in the current difficult economy, the government has cash flow problems the same as any other business. Making sure that all fees owed them come in helps continue the programs that people rely upon. For this reason, government debt collection is a growing concern.

Some people don’t even consider the fact that the government has debt collection concerns. However, they have income they rely on to keep running just the way ordinary businesses do. If the incoming receivables stop, the government can not run smoothly.

Parking tickets and traffic violations have a built-in system to ensure prompt payment. The scofflaw who ignores them will find himself or herself in jail eventually. However, when it comes to utility bills, debt collection can prove more of a challenge.

There are other areas where government debt collection is more of a challenge, such as unpaid utility bills or unpaid taxes. Since local governments receive about one third of their operating funds from the state, one third from the federal government, and the rest from these local sources of income. Municipalities have faced challenges as federal aid and state aid have diminished due to economic hardship. Government debt collection is now an important source of revenue.

Payment plans on delinquent accounts save the municipality time and money. It requires labor and materials to shut off utilities, and to reconnect them when the account is brought current. It’s far better to work out creative payment options, like installment plans. This will both keep a positive cash flow and reduce extraneous cost for the municipality.

Alternatively, you can hire collections people who do the billing for you right at the start of the process. This is a good option for municipalities, since having a third party company do collections for you saves both time and money. Should an account go into default, the agency can start collections techniques immediately.

A collections agency that specializes in government debt issues will use the most proven techniques to recover money before steps are taken such as turning off utilities or foreclosing on property due to taxes. For the municipality, it’s preferable to make money on the account without having to get involved in expensive prospects like foreclosures or expend labor on turning off utilities and then having to turn them back on again.

Another advantage to handling government debt collection this way is the reduction in operational costs such as phone and mailing. Debt collectors who specialize in government clients get major volume discounts in these areas. They pass the cost savings on to you and are able to get more money back more quickly at lower cost to you. The best part about this is that you don’t even have to pay them until they recover anything. Their fee is usually taken out as a percentage of whatever recovery they accomplish. If government debt collection touches your area of responsibility, you should definitely consider hiring a specialized collection agency that understands government collection sooner rather than later.

John Carmichael has been a distinguished market sector coach, organisation specialist and also contributor about collection agencies offerings for three decades. He gives several other necessary tools and solutions on business debt collection.