REPORT OF THE DIRECTOR OF CORPORATE SERVICES
TO THE: QUALITY AND PERFORMANCE SCRUTINY COMMITTEE
ON: 23rd SEPTEMBER 2002
TITLE: SUNDRY DEBTORS - ANALYSIS OF OUTSTANDING DEBT AT 31st
AUGUST 2002
SUMMARY:
There is a reduction in the overall debt outstanding in the quarter ending August 2002 of
£1.336M. This reduction is partly due to the collection of some high value invoices, and
the collection of £218K Environmental Services annual trade refuse accounts initially
raised in April.
Debt collection has been hampered slightly this quarter due to the problems allocating
Social Services accommodation charges payments to the relevant accounts. A change in
the way that Social Services clients are now invoiced has led to confusion by customers
who have continued to make monthly payments to the miscellaneous income code instead
of the invoice. This has meant that a number of fund transfers have had to be processed to
bring the accounts up to date, and whilst this process was being undertaken no reminders
could be issued. Measures have been implemented this month assigning daily tasks to
group members to speed up the clearing and recovery process, and enable reminders to be
run more effectively. The new automated recovery procedure has now been implemented
which should speed up the process of referring cases to Legal services or to the Debt
Recovery Agencies.
The total debt over 90 days old is £6.1M at 31.08.02, however 39% of this debt is the
legacy debt transferred from the previous debtors system, Radius. Further analysis
reveals that of the £2.39M from Radius: £749K is with Legal, £361K is land charged and
a further £17.6K is subject to payment by instalments.
This effectively leaves £1.26M to be collected. However, this is proving difficult to do
because of the unavailability of an archive database required to support the recovery of
this debt. This issue is currently being pursued with I.T. Net.
Of the £3.7M SAP debt that is over 90 days old, further analysis reveals that £1.89M is
‘blocked’ from further action, for example where instalments or payment arrangements
have been agreed, leaving £1.8M deemed as truly collectable. Social Services accounts
for 53% of this debt, and it is likely that discussions will take place shortly regarding
referring this debt to Legal, or charging back to the Directorate as agreed in the policy. It
should be noted that a proportion of this debt is regarded as ‘sensitive’. therefore key
decisions are required from Social Services as to future recovery action.
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This quarter has seen a reduction in overall debt for the majority of Directorates, with the
exception of Corporate Services, and Personnel. Corporate Services debt has increased
mainly due to one invoice raised to GM Police for £646,250 on 28th August 2002.
Personnel’s debt remains static due to a handful of accounts that have come to the end of
their recovery cycle, and decisions are to be taken shortly regarding either referring these
debts over to Legal services, Debt Recovery Agencies, or to charge back to the
Directorate budget.
As part of the group’s long-term strategy it is the intention to assign to team members
particular duties and responsibilities which will enable a more proactive debt recovery
approach to be taken. This will lead to a more efficient and effective bespoke service not
only to Directorates but also to customers. The action plan is to be issued to staff at the
next debtors team meeting.
It is also planned to reopen negotiations with schools in September to further improve
relationships developed over the past six months. Schools are also being provided with
regular statements, and have been provided with a dedicated officer for contact purposes.
Over the course of the next few months, it is also the intention to hold meetings with the
majority of Directorates to discuss those accounts that have proved to be irrecoverable in
order to reverse these transactions to the respective budgets.
CONTACT OFFICER: Tony Hennessy - Creditors & Debtors Manager
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1.
INTRODUCTION
1.1.
The Financial Support Group Debtors Section is responsible for the creation of
customer master records, the creation of customer invoices and credit notes, and
recovery action up to the point of referral to Legal Services.
1.2.
The section includes the equivalent of 11.5 staff, under the management of the
Debtors and Creditors Manager, as follows:
1 Debtors team leader
2 Senior billing and recovery officers
8.5 Billing and recovery officers
1.3.
The nature of business that Salford City Council raises invoices for, includes:
 Development Services - Commercial and ground rents
 Environmental Services - Trade refuse and grounds maintenance
 Social Services - Accommodation Charges
 City Leisure - Hire of sporting facilities
 Housing - Housing property recharges & service charges
 Education - Library fines, schools service level agreements & swimming
squad fees.
 Corporate Services - Supply of I.T. equipment and ex-employee charges
 Personnel - Provision of training courses
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2.
AGED DEBT ANALYSIS
2.1.
The aged debt report details the outstanding debt as at 31st August 2002 analysed
into various age categories as follows:
 0-30 days
 31-59 days
 60-89 days
 90-119 days
 Over 120 days
2.2.
The information is produced via SAP's reporting functionality and is utilised by
staff within the Financial Support Group debtor section and senior officers
within the respective Directorate to monitor outstanding debt.
2.3.
Meetings are taking place as scheduled with the more problematic debt raising
Directorates, notably Social Services and Development Services (Valuation and
Estates) together with Legal Services. Further meetings are planned with other
Directorates to discuss those accounts which have proven to be irrecoverable.
2.4.
Detailed overleaf is the aged debt analysis for the period ending 31st August
2002. Also supplied is a comparison against the aged debt analysis reported last
quarter. Overall the total value of outstanding debt has reduced from
£10,727,854 at the end of May 2002 to £9,391,359 at the end of August 2002.
This reduction is partly due to the collection of some high value invoices, and
the collection of £218K Environmental Services annual trade refuse accounts
initially raised in April 2002.
2.5.
As previously reported, details have now been provided to include details of part
payments against accounts, credit notes and accounts subject to blocked action as
land charges / property based charges. Unfortunately, it is not possible to assign
these credits against individual Directorate debt.
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AGED DEBT ANALYSIS BY DIRECTORATE AS AT 31st AUGUST 2002
Directorate
0-30 days £ 31-59 days £ 60-89 days £ 90-119 days
Over 120
£
days
£
Community &
560,300
160,864
123,343
324,159
1,043,488
Social Services
Environmental
86,774
62,038
55,708
53,524
216,625
Services
Chief
10,899
0
0
0
26,229
Executives
Development
281,873
330,273
19,924
118,594
266,231
Services
Commercial
141,912
16,740
300,421
11,102
705,953
Rents
Corporate
711,592
24,801
31,208
22,794
175,781
Services
Housing
112,999
133
970
4,643
217,041
Services
Personnel
1,128
0
0
237
5,474
Services
Education &
980,492
987,215
44,634
125,219
384,485
Leisure
2,887,969
1,582,064
576,208
660,272
3,041,307
Sub total - SAP
raised
2,397,148
Ex Radius debt
2,887,969
1,582,064
576,208
660,272
5,438,455
Sub -Total
Less part
payments /
credit notes
Less Land
Charges /
Property based
charges
Outstanding
debt total
Total
£
2,212,154
474,669
37,128
1,016,895
1,176,128
966,176
335,786
6,839
2,522,045
8,747,820
2,397,148
11,144,968
-861,678
-137,951
AGED DEBT ANALYSIS – GRAPHS
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-753,980
9,391,359
Aged Debt Analysis - Totals as at 31st August 2002
6,000,000
5,438,455
5,000,000
£
4,000,000
3,000,000
2,887,969
2,000,000
1,582,064
1,000,000
576,208
660,272
60-89
90-119
0-30
31-59
Over 120
Aged debt
3.
DEBT COLLECTED AS A PERCENTAGE OF DEBT RAISED
3.1.
Detailed below is the analysis as at 31st August 2002 showing the value of
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accounts raised for each debt category together with the amount collected in
value and percentage terms.
3.2.
The majority of Directorates have seen an increase in the % of debt collected
during this quarter and this is a result of staff working on reports of Directorate
debt and pursuing non-payers. The improved collection rate on Environmental
Services from 67.3% to 81.7% is largely due to the payment of trade refuse
annual accounts which were raised in April and were not due at the time of the
last report. Housing Services have improved from 60.6% to 85.5% and this is
largely due to the efforts of one team member currently chasing up non-payment
of Housing Management Service charges. Housing still have one high value
account for £139,500 which is land charged.
DEBT COLLECTED AS A PERCENTAGE OF DEBT RAISED – DIRECTORATE ANALYSIS
(Analysis only details SAP debt raised from 4.9.2000)
Directorate
Debt raised Amount collected Outstanding Debt
% Debt
% Debt
£
£
£
collected outstanding
Community & Social
Services
34,260,114
32,047,960
2,212,154
93.5%
6.5%
Environmental Services
2,590,272
2,115,603
474,669
81.7%
18.3%
Chief Executives
477,177
440,049
37,128
92.2%
7.8%
Development Services
17,885,150
16,868,255
1,016,895
94.3%
5.7%
Commercial Rents
8,895,918
7,719,790
1,176,128
86.8%
13.2%
Corporate Services
17,608,171
16,641,995
966,176
94.5%
5.5%
Housing Services
2,321,874
1,986,088
335,786
85.5%
14.5%
Personnel Services
109,377
102,538
6,839
93.7%
6.3%
Education & Leisure
87,296,546
84,774,501
2,522,045
97.1%
2.9%
Total
171,444,599
162,696,779
8,747,820
94.9%
5.1%
Sundry Debtor collection analysis as at 31st August 2002
5.1%
% Debt collected
% Debt outstanding
94.9%
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4.
TRANSACTION ANALYSIS
4.1.
The transaction analysis below details the number and value of outstanding
sundry debtor accounts below and above the value of £200 as at 31st August
2002.
4.2.
Directorates have been made aware that in future accounts below £200 will be
subject only to one reminder letter before referral to a Debt Recovery Agency.
The first cases have now been referred to Moorcroft Debt Recovery with the
second referrals to Controlaccount imminent.
4.3.
There have also been changes recently to the SAP recovery program, and invoice
terminology, which should lead to a more streamlined and effective recovery
process.
Directorate
Community & Social
Services
Environmental
Services
Chief Executives
Development Services
Commercial Rents
Corporate Services
Housing Services
Personnel Services
Education & Leisure
Sub - total SAP
raised
Ex Radius debt
Total
Less part payments /
credit notes
Less Land Charges /
Property based
charges
Outstanding debt
total
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Number of
invoices
raised under
£200
Total value of
invoices raised
under £200
£
Number of
invoices raised
over
£200
873
71,631
901
Total value
of invoices
raised over
£200
£
2,140,523
Total
£
636
64,950
519
409,719
474,669
3
464
623
69
99
3
1109
3,879
345
41,009
33.139
6,834
7,644
339
82,285
308,176
10
272
846
117
112
9
620
3,406
36,784
975,886
1,142,989
959,342
328,142
6,499
2,439,760
8,439,644
37,129
1,016,895
1,176,128
966,176
335,786
6,838
2,522,045
8,747,820
3,191
7,070
150,379
458,555
1,747
5,153
2,246,768
10,686,412
2,397,148
11,144,968
-861,678
-137,951
-753,980
2,212,154
9,391,359
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5.
ANALYSIS OF DEBTS BY ACCOUNT GROUP
5.1.
The information provided below details the outstanding debt as at 31st August
2002 by Account Group.
5.2.
The Account Group subdivides the debt into four categories namely:
I.
Individuals
II.
Companies
III.
Schools
IV.
Public bodies
Directorate
Individuals
0-30 days 31-59 days £ 60-89 days £
£
529,819
211,431
229,293
90-119 days Over 120 days Total
£
£
£
80,364
1,364,734
2,415,641
Companies
413,641
347,618
286,322
394,094
1,063,620
2,505,295
Schools
750,635
967,032
35,373
94,112
274,808
2,121,960
Public Bodies
1,193,874
55,983
25,220
91,702
338,145
1,704,924
Sub total SAP
raised
Ex radius
debt
Total
Less part
payments /
credit notes
Less Land
Charges /
Property based
charges
Outstanding
debt total
2,887,969
1,582,064
576,208
660,272
3,041,307
8,747,820
2,397,148
2,397,148
5,438,455
11,144,968
-861,678
-137,951
2,887,969
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1,582,064
576,208
660,272
-753,980
9,391,359
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6.
COMPARISON AGAINST PERFORMANCE INDICATOR OUTSTANDING DEBT OVER 30 DAYS OLD
6.1.
Detailed below is the comparison of the debt over 30 days old against the Best
Value Performance Plan target of a 9.75% reduction in the value of outstanding
debt as at 31st March 2003 compared to the position as at March 2001. This
equates to a target of £7,916,417 by March 2003. There has been a slight
increase this quarter due to an inability to recover some high value schools SLA
accounts due to the summer holidays.
COMPARISON AGAINST PERFORMANCE INDICATOR OUTSTANDING DEBT OVER 30 DAYS OLD
£10,000,000
£9,000,000
£8,000,000
£8,256,999
£7,916,417
£7,000,000
£
£6,000,000
£5,000,000
Debt greater than 30 days old
£4,000,000
£3,000,000
£2,000,000
£1,000,000
£PI Target 2002/3
August
Aged debt
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