Definition
Debt management constitutes the strategies, systems, and processes used by entities to manage its receivables. This includes the collection of outstanding amounts owed, such as taxes, overpayments, and other receivables.
Purpose
Effective debt management contributes to the fiscal stability and sustainability of the government and allows for efficient resource allocation to essential services and investments. Proper debt management builds public confidence through transparency and accountability.
The Debt Management capability is realised through:
- a coordinated and debtor-inclusive approach to the debt management lifecycle
- establishing a continuous feedback loop that utilises outcomes of debt activities to inform future pre-emptive detection/mitigation activities
- determining whether an overpayment is a legally recoverable debt
- raising, and either waiving or recovering, the receivable
- identifying and addressing controllable contributing factors to debts to prevent future debt causing circumstances.
Objective
The objectives of this Australian Government Architecture (AGA) content are to:
- ensure that debt management activities are undertaken in a way that is ethical, proportionate, consistent, and transparent, to maintain public trust
- ensure that all solutions are designed to align with operational efficiency, maintainability, and functionality
- ensure that new debt management solutions draw efficiency from preceding investments, implementations, and learnings to maximise re-use and minimise risk
- ensure strategic alignment of debt management features to the Australian Government’s data and digital goals
- meet compliance with legislation and regulation, government policies and standards, and any national or international agreements relating to debt management.
Whole-of-government applicability
The Data and Digital Government Strategy (DDGS) sets a vision for 2030 to deliver simple, secure and connected public services for all people and business, through world class data and digital capabilities.
Suitable handing of debt management as a capability supports the DDGS missions of:
- Simple and seamless services: Be digital by design, engage people proactively, and guide them to the services they might need.
- Trusted and secure: Build and maintain trust, engaging transparently and meaningfully on government data collection and use.
Policy Elements
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Comply with legislation
An entity must comply with legislation relevant to its circumstances.
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Align operational and technological needs
Proactive determination of business requirements and an understanding of the technological landscape enables the deployment of debt management solutions and measures that align to operational and technological needs.
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Undertake responsible debt collection
Appropriate system selection and deployment will ensure any debt recovery action is ethical, proportionate, consistent, and transparent.
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Proactively mitigate financial risks
Incidence of debt can be minimised through utilisation of strong forecasting and financial oversight tools, where possible stopping debts arising and avoiding the need for debt management entirely. Establishment of a continuous feedback loop where insights from debt recovery activities are systematically fed back into their financial management processes to further refine and strengthen preventive measures.
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Monitor for debtor and entity human risks
Monitoring of debt management systems will assist to ensure that any patterns of bias or unintended consequences are quickly identified and addressed.
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Adhere to reuse principles
Entities must give priority to the adoption of reuseable digital and ICT solutions, patterns, or knowledge, and, where necessary, design new solutions with a focus on future reuse.