This revenue enhancement strategy is a combination of bringing about additional revenue streams and also increasing revenue within existing revenue streams. This strategy includes immediate and short-term revenue enhancement goals, medium term and long-term goals. Develop and implement a revenue enhancement strategy which will serve as a strategic framework for addressing revenue management challenges of the Municipality.
The objective is to identify opportunities, prioritise these and allocate approaches [and responsibilities] to ensure that the desired revenue enhancement outcomes are achieved and sustained. The goal of the REW would be to implement the interventions indicated in the Revenue Enhancement Strategy and to closely monitor and manage the achievement of the set goals, objectives and benefits. The objective of the REW is to ensure that this strategy is implemented successfully in accordance with the required timeframes and to monitor the performance of all stakeholders.
Change management is as an integrated and strategically developed process/schedule of activities and messages involving officials who have a stake in the change(s) being proposed through the Revenue Enhancement Program. Review, update (if necessary) and align existing policies to business needs and legislation to support the revenue enhancement strategy. To ensure that policies and procedures are continuously improved and updated to give effect to the revenue enhancement strategy; to ensure practical implementation; and to support credit control initiatives.
Ensure register kept of all policies detailing the date of the last review, the reviewer(s), and a summary of amendments.
Communication and interaction
Consumer deposits
The Amathole District Municipality performs the function of water services, including sanitation services for the whole of the ADM area. They therefore maintain a billing database of all such consumers and raise services charges on a monthly basis. This is an important source with valuable customer information that is not being utilised to facilitate the accuracy and completeness of the municipality’s billing database also the valuation roll and the deeds office can be used to verify ownership and accuracy of the information on the system.
Liaise with the Amathole District Municipality’s billing sections to obtain copies of their consumer database which include Raymond Mhlaba’s consumers. Reconcile this database against the municipality’s customer database; investigate the anomalies/exceptions; authenticate and rectify to ensure accuracy and completeness and reconcile the valuation rolls with system annually. We noted that the integrity, completeness and reliability of information reflected in the Venus billing system and the municipality’s consumer database may be questionable and is not being assessed and verified on an on-going basis.
The valuation roll contains properties listed as unknown and unregistered, this may affect the collectability of revenue from these properties. Check ID numbers against external data sources such as Deeds to update the consumer database. Eskom supplies pre-paid electricity directly to the rural areas, being the greater part of Raymond Mhlaba.
The municipality provides Eskom with a list of indigent consumers qualifying for the free basic allocation. Eskom’s database may be under-stated and may not reflect the actual indigent consumers qualifying for free basic electricity in terms of the municipality’s records. Council may not be fulfilling its social and legislated responsibility to provide free basic services to indigent consumers.
Further to this, the municipality may not control and therefore limit Eskom’s charge to the actual free basic electricity provided, resulting in a potential financial loss to the Municipality. Eskom’s database of consumers being afforded free basic electricity should be reconciled on an on- going basis with the municipality’s database to ensure that all registered indigent consumers are recognised as such by Eskom. Furthermore, controls should be implemented to ensure that Eskom’s charges are limited to the actual free basic electricity provided.
Meter reading errors
FMS maintenance and support
Although possibly indicative of the status quo but follow-up on electrification losses need to be strengthened in order to enhance revenue collection. Conduct random meter inspections to determine instances of meter tampering, by-passed meters and illegal connections. Ensure measures in place to monitor electricity purchases which may be indicative of tampering [monitor sales variance reports to detect anomalies, such as high/low purchases].
Ensure reporting and monitoring protocols in place between Finance and Infrastructure to ensure instances reported are addressed in a timely manner [see recommendation under Query Tracking System]. An in-depth analysis of the outstanding debt to be conducted to establish what can realistically be recovered, etc. Analysis of debt to determine realistically recoverable debt versus non-recoverable debt [debt to be written off].
Analyse ‘quick wins’ – the debtor category that should/can pay their accounts and determine and implement sustained credit control actions against them to recover outstanding amounts. The municipality is currently actively supported by external debt collection agencies and also internally by an extremely limited debt management staff complement. The Municipality will have to enter into a contractual arrangements with rental and property agencies in the area to evoke section 28 and 29 of the MPRA.
The Municipality should be considered to initiate contractual arrangement with rental and property agents to evoke section 28 and 29 of the MPRA.
Ineffective use of FMS credit control and debt collection system functionality
Agreements with employers for payment of municipal accounts
The Municipality has a shortage of technical staff to cover the entire Municipal area and there is the risk that consumers are by-passing meters and receiving free electricity thereby resulting in a financial lost to the Municipality. Ensure reporting and monitoring protocols in place between Finance and Technical Departments to ensure instances reported are addressed in a timely manner. The Municipality’s master vending station is located in and administered from the finance head office located at the Municipal offices in Fort Beaufort Adelaide and Bedford.
The municipality’s prepaid electricity consumers can purchase electricity during normal office hours at this venue or at a vending station located at the petrol stations or other. The municipality is not utilising a mechanism at its disposal to detect faulty prepaid electricity meters, which may result in revenue due to the municipality not being collected and, ultimately, a financial loss. It was noted that there are no mitigating controls in place to monitor, identify and address the possibility of meter tampering.
This weak control environment makes the prepaid vending system susceptible to fraud and error, resulting in a potential direct financial loss to the Municipality.
Utilisation of prepaid electricity for debt recovery
Monitoring of councillor and official’s municipal debt
The Municipality has no municipal rental policy in place to provide guidance and regulation to the processes of municipal rentals. The data cleansing exercise that all property lease agreements and/or memorandum of understanding be standardised to ensure efficient monitoring of the lease’s terms and conditions. Ensure that all lessees of the leased properties are included in the billing database with all the terms and conditions guided by the actual lease agreements (e.g. payments of deposits, and registration of Notarial Deed of Lease).
Ensure that all property leases more than 10 years are registered as Notarial Deed of Lease to ensure that both parties are secured from litigation. The municipality will conduct a due diligence study and a market analysis for possible development and/or sale of these properties for development purposes. Once the property has been developed, this will ensure a sturdy income on assessment rates levied by the Municipality on such properties.
This may also apply to properties already under a municipal property lease (with a structure) where a due diligence or market analysis conducted may show potential revenue generation. Financial information stored on the server and these backups represents the entire financial history of the Municipality and it could not be sufficiently established whether the Municipality can be assured of uninterrupted business continuity in the event of an IT disaster. The Municipality may not be prepared for the whole or partial loss of IT capability that is essential for its day-to-day operations potentially resulting in an inability to provide basic services to its customers.
A weak control environment could further make the billing system susceptible to fraud and error and may result in revenue due to the Municipality not being recorded or recovered. A database maintenance plan can help ensure that the Server's databases perform adequately and, if there should be a problem, provide the necessary backups to minimize the loss of any data. Another benefit of implementing a database maintenance plan is that it helps to prevent, or to catch early, many different kinds of database-related problems.
We have noted that the municipality offers settlement discount to customers who settle their debt before end of December. The percentage discount offered by the municipality is, however too little to make a significant difference to the debt book of the municipality. This settlement discount offer should be extended to a period of 12 months and should be properly communicated to all the customers of the municipality.
CONCLUSION
The above strategies have been lifted from the main strategy and the purpose being that, these are the strategies that could be implemented immediately in order to unlock cash collection which could be utilised by the municipality. Settlement discount offer of 50% on debt over 120 days, this will unlock immediate cash to the municipality. Changing of conventional electricity meters to prepaid meters, this will also unlock immediate cash to the municipality while at the same time giving rise to a tool to be used for revenue.
Writing -off of interest for the period of 4 months starting in April 2020 to July 2020, this will contribute towards measures of alleviating the strain of Covid-19 to our customers.
