Does your agency have a Revenue Book and someone assigned as Revenue Czar? The Revenue Czar is charged with knowing everything there is to know about every revenue source your agency receives, and the Revenue Book catalogs that information. Or, in the alternative, are these revenue responsibilities autonomously decentralized throughout the organization with the people that are most knowledgeable about them?
There are some benefits to each method and as finance staff you will have to learn to work hand in glove with line staff to maximize those benefits. Line staff members often are the ones to find grants specific to their area of expertise (i.e. street and road grants) or are responsible for unusual revenue sources and have to be depended upon for that information.
Let’s take as an example a federally-funded $100,000 flood control project that will be financed by your agency but only reimbursed at completion of the project. Sounds simple; one merely budgets and appropriates the $100,000 project with the $100,000 from the federal government listed as the revenue source. Then reality sets in and the project may start late in your fiscal year, take months to construct, inspect and accept before the final reimbursement is issued, thus dragging that $100,000 reimbursement well into a next fiscal year. There is also the factor of paying the contractor monthly payments with a 10% to 15% retention to be paid after the final inspection and acceptance. Does all of this sound familiar? The project cost is relatively immediate but the reimbursements will most likely take many more months. Certainly no one in Finance could know all of this without adequate communication with the line staff, but it is important cash-flow information nonetheless.
Clearly someone in engineering will have the best knowledge about the revenue flow of this project. However this does not reduce the responsibility of central management staff to be aware of this source and make sure proper reimbursement occurs. Keep in mind that line department staff have other responsibilities, such as providing direct services to the local citizens and business community. They are good at that but maybe not as good at keeping track of the financing issues, so problems can ensue if you do not support them.
In my early government central management employee years, one of the things I did annually was to look through the City’s many revenue sources for any errors or omissions. I figured it wouldn’t hurt my chance of continued employment if I “found” revenue equal to my annual cost. One year I came upon the fact that over a number of years the city had forgotten to invoice some contiguous cities for their proportional share of traffic signal maintenance and power costs for some shared traffic signals. The engineering technician with the long-term responsibility for this process had moved on to another agency and no one noticed it and thought to assign it to someone else, since the revenue was merely assigned to a very broad Miscellaneous Reimbursements category. I also suggested that since there is typically room for 999 revenue account codes that perhaps a few more to highlight some more obscure revenue sources wouldn’t hurt. I always found that finance types did not like to add accounts. Anyway, I learned that mistakes can and will be made, that right hand – left hand thing seems to be too true.
I then went to a larger agency with a commensurately larger finance operation and was quickly assigned maintenance of that City’s Revenue Book. This document identified every revenue source in the City and important information such as the application, timing, process, who in the organization was responsible for it and any other pertinent information necessary for a full understanding of that revenue source.
It can be a daunting task to keep such a book updated, but someone in your agency simply has to have a precise understanding of each and every agency revenue source, not just the Property, Sales and Hotel/Motel tax pool revenues. The Book, as we simply referred to it, took time to keep current, but I know that those of us in central management never missed a revenue source deadline or revenue collection opportunity. You, the finance specialists, are charged with making sure that all revenues owed to the City are identified and collected as rapidly as possible. In addition the finance operation has the responsibility to report revenue collection exceptions (i.e. changes from when you originally anticipated collection) via a periodic (I suggest monthly) analysis to see if revenues come in as estimated and expected. No city manager wants to hear at the end of the fiscal year that sales taxes fell short of what were predicted. They don’t like surprises.
No one likes surprises or errors. A revenue book assigned to a revenue czar with the authority to quiz anyone about revenue information could help to eliminate problems and surprises. Even if it is hard to find the time to create and maintain a revenue book, having one will probably save you time, money and the occasional red face.