Meeting documents

To be presented by Matt Strevens – Corporate Finance Business Partner.

The Chairman welcomed Mr M Strevens who presented the update report and informed Members of the following:

·         There had been a continued focus on improving the effectiveness of the Debt Management Strategy since the last report to the Committee on 3^rd February 2016.

·         Finance officers had been working closely with individual Business Units to understand their specific debt management issues given the different types of services being delivered.

·         Work had been going on to create better metrics to be able to report outstanding debt in a more clear and concise way and increase visibility of the current debt position.

·         There was still a need to improve debt reporting from the invoicing and debt management system SAP and a number of improvements were being undertaken including changing the age profile of debt to clearly identify that which was over one year old.

·         There was a challenge in classifying debt that had been raised and therefore showed as outstanding but which was not yet due for payment, for example Section 106 money.

·         An ongoing review of historic aged debt and unallocated income was being undertaken. It was thought that once this work was completed, outstanding debt could reduce by £1m from the amount currently being reported.

·         From September, mandatory debt management training for cost centre managers would be rolled out and improved help and information for officers would be available on the intranet.

·         Whilst early action in recovering debt was the responsibility of the Business Unit, after 90 days the Finance Operations Team would offer help to Business Units in recovering debt.

Mr Strevens went onto explain some of the revised reporting metrics that had been developed to gain a better understanding and visibility of debt.  These included:

·         Data on the amount of invoices raised to help put into context the increasing amount of debt outstanding. This included information split by individual Business Units to identify peaks and troughs in amounts being raised at particular times of the year to gain an understanding of the reasons for these.

·         Profiling debt into high, medium and low risk of recovery.

·         Revised data for One Council Board shown in a single table including the value of debt outstanding categorised by risk of non-recovery, age of the debt and amount written off shown against bad debt provision.

·         Over time, data would be available to show the direction of travel against these metrics to help understand whether actions taken on debt recovery were having an impact.

·         Improved understanding of risk of non-recovery to help ensure the correct amount of bad debt provision.

·         Data to help manage debt more commercially which showed debt as a percentage of total sales raised.

There was further discussion about raising Section 106 invoices which were not due for payment until sometimes a number of years ahead and whether it was possible to either classify these differently to stop them appearing as debt or delay raising the invoice. Mr R Ambrose acknowledged that, over time, this issue would become more significant and that currently these debts were not identified separately in the outstanding debt reports. Mr Ambrose noted that it would be useful to revisit the process around this in future to see whether invoicing could be delayed.

Mr Strevens acknowledged that there was no real understanding yet of how much it cost to chase and write off outstanding debt, although work was being undertaken in this area.

Members asked that the following information be brought to a future Committee meeting:

·         The current and proposed future position regarding the cost of chasing and writing off outstanding debt in the next debt management report.

·         A more detailed report on the amount and management of very old debt for which currently there was no transparency.

·         Data on "Overdue Unsecured Debt as a Percentage of Annual Invoicing" to include previous year information to be able to monitor trends. 

·         Further information about the updating of the finance intranet pages.

ACTION: Mr M Strevens to provide this information in the next report to the Committee

RESOLVED

The Committee AGREED:

1.    That the changes and improvements within the report are endorsed and given time to ‘bed-in’.

2.    That Business Units are invited to present their local debt management approaches and performance to the Committee once this ‘bedding-in’ period has been completed.

3.    That the aged debt report is brought to the Committee on a six monthly basis.