A comparison of credit management practices within revenue generating directorates

Abstract

The essay looks into the situation of credit management in the Maltese public service and it also explores international best practices. It does this within the context of the sometimes conflicting roles of government issuing from its managerial responsibilities and its social responsibilities, the latter forming its core responsibilities. The study finds that there is scope for improvement in the collection of monies due within the Maltese public service. Various approaches that could contribute to improving credit management in the local public service are put forward. There are approaches, such as Good Practice Protocols and Formal Policies, which could be adopted by the different revenue generating departments individually. Credit risk management methods were also proposed. However, it was observed that, if implemented on their own, these tools would likely lead to an imbalance in the deployment of resources within the department, given that the credit risk is highlighted while other risks are ignored. Hence, the study underscores the importance of the strategic implementation of risk management within and across the local public service. Credit risk management then will necessarily have to form part of such a strategy. Departing from the concept of factoring, the study goes on to explore the possibility of instituting a government credit management agency that will centralise credit management within the local public service. A primary concept underpinning its operational objectives is to trade-off those roles of government that are sometimes conflicting in order to provide solutions that are equitable to defaulters while at the same time promoting the common good. The author then goes on to recommends that further studies are necessary particularly if risk management is to be introduced across the local public service. The government credit management agency will also require thorough planning and preparations, including adjustments to legislation.