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The Secret to Self-Sustaining Violation Processing

By Rick Hurst

June 16, 2015

secret-self-sustaining-violation-processing

Violation processing often results in a percentage of unpaid tolls becoming uncollectable. This is a result of image review code offs, bad mailing addresses, and customers who won't respond to their bills and subsequent violation notices. Some agencies consider incorporating the expected uncollectable tolls into the overall tolls paid by everyone when establishing toll rates. But is it unfair to make paying customers offset the losses caused by violators?

Agencies can take the following five steps to ensure the violation process is self-supporting.

  1. Establish the costs involved with processing the violation notice (image review, correspondence, mailing, returned mail, etc.)
  2. Estimate the percentage paid at each step of the process (first notice, second notice, collections, administrative hearings, roadside enforcement, etc.)
  3. Estimate the revenue associated with each notice issued
    1. Estimate what percentage of tolls are not collected by facility
    2. Calculate the amount of unpaid tolls
    3. Establish the number of transactions per invoice
  4. Analyze the collections process success rate. What portion of the outstanding violations is collected and what portion becomes eligible for administrative hearings. Of those that become eligible, what portion can the hearing process handle? Of those not sent to hearing what portion is negotiated and what portion becomes uncollectible?
  5. Establish a contingency to offset losses that may result from under estimating the success rate of your bill, notice, and collections process.

Once this information is developed, it can be structured to establish the fees at each stage of the violation process. It also clarifies the different processes involved with collecting tolls and makes each stand on their own. The revenue collected on the roadway becomes a defined process with an established revenue stream and violations likewise become a separate process with a distinct revenue stream. Costs can be managed to ensure each process is working as effectively as possible.

The result is a stronger overall toll policy with a fair process for the fees charged that both the financial staff and customers can support.

Topics: Insights, Transportation, Tolls & Managed Lanes, Transportation Industry News

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About the Author

As an industry leader in Toll Systems and Operations, Rick continues to focus on ensuring clients maximize system expenditures and operational cost control. He has more than 30 years of transportation experience, including serving as a Project Manager for the design of customer service centers, toll manuals, transaction processing, and more.

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