January 17, 2022

Should I accept payments for incomplete applications and renewals?

Ask the Geek

Our Ask the Geek column shares the payment process solutions to do so.

Q: Should I accept payments for incomplete applications and renewals?

A:  The answer to this question can usually be determined by an agency’s financial management process. Financial management may not always receive the attention it deserves within agencies, but a poor financial management system can, and has in the past, led to audits from the Secretary of State. General requirements are in place, requiring that state agencies manage their payments the same as all other agencies to avoid any theft of funds, loss of payments or any other various, unfavorable scenarios.

Depending on specific state legislatures, agencies are typically expected to receive payments from their licensees or applicants, process the payments through a deposit, and issue a receipt of the payment to the Individual that submitted the payment. This process is expected to be completed within a few business days after a payment is received. When speaking with several agencies, we discovered that most, if not all of the payment process, was handled and managed by a single employee within an agency. This is unfavorable for many reasons. If the employee is out of office for a few days for a vacation, then who will manage the financial responsibilities? If there is a large influx of applicants and an unexpected, sizable number of payments are submitted to the agency, what happens if the lone financial manager cannot keep up with the demand? Consider making changes to avoid these issues—along with a potential audit from the Secretary of State.

We do believe that you should accept payments for incomplete licenses or applications, but only if you are prepared to, or already have implemented one or more of the payment process solutions listed below.

Payment process solutions:

Share the payment process responsibilities among multiple employees

One system assigns one employee to each responsibility as follows: one employee receives the payments, another separates the paperwork/forms from the payment, another employee fills out the deposit slips and deposits the payments, and another employee issues receipts. It is essential that each employee is trained in each step of this process. This practice is beneficial for many reasons. It allows for more accountability in your accounting. It is much harder to make simple calculation errors when you have three other coworkers that can double check your math. It also can help eliminate the potential for employee dishonesty. If funds are handled by multiple people within your agency, it will make the process of making payments ‘magically disappear’ much more difficult. We recommend implementing this change as soon as possible if you’re agency has not done so already.

Consider passing an administrative rule

Some agencies have enforced rules regarding refunds, as they can be expensive, tedious, and slow to process. If your agency is required to pay any additional fees to issue a refund, then why not place a minimum refund amount and automatically deduct the amount needed to process the refund? An administrative rule can help you here. Alternatively, you can advise the Individual requesting a refund to keep the payment with the agency to be used as credit for another application or license in the future, and have the full amount carry forward, rather than having the Individual lose a portion of their submitted funds.

Use a software system to track your licensing information and payments.

A software system can allow for smoother implementation of the solutions proposed above. Entering payment information into a system will allow for easier tracking and reporting for financial information. Say we take the scenario from the previous solution and say that we have a licensee that submits the full payment for their license one year, but then has to withdraw their request for a renewal of the license. Should that individual decide to leave the payment with the agency as credit for the following year when they attempt to renew again, then it is much easier to locate the amount of submitted funds the Individual has on their record within a software system, rather than locating old, paper files from endless filing cabinets to find the same information.

Transition to an online application and renewal format for your applicants and licensees.

A renewal/application website requires that the workload for applying for or renewing a license is transitioned to the applicant or licensee, rather than this burden being placed on agency employees. It requires that the applicant or licensee to submit all their required documentation, provide answers to regulatory questions, and even submit their payment via credit card or any other virtual form of payment. This works in tandem with the software system proposed above. When payment is received, it is automatically reported in the software system, eliminating the need for agency staff to manually enter data regarding all payments, documentation or other required information.

 

Ultimately, our aim is to ensure that our readers are informed of the risks of utilizing a poor financial management system, so please let us know if this article was informative or helpful for you and which solution you have found to be the most successful for your agency.

Have a question for Government Geek? Please send us an email at governmentgeek@glsolutions.com.

References:

https://www.law.cornell.edu/cfr/text/7/247.27

https://www.oregon.gov/osbn/Documents/Policy_Refunds.pdf

 

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