recommended reading

Treasury urged to inform agencies about value of electronic payments

The Treasury Department should provide federal agencies with more information on the costs and benefits of submitting payments from citizens and businesses electronically to improve efficiency, according to a new report from the Government Accountability Office.

The department's Financial Management Service deposits funds sent to the government for taxes, duties, fees, sales, leases and loan repayments in the Treasury. FMS collected $509 billion from agencies that received such payments in fiscal 2009, not including the Internal Revenue Service.

According to the report, 87 percent of funds FMS collected in fiscal 2009 were submitted by electronic payment methods, such as wire transfers, credit cards or automated clearinghouse (ACH) transfers. The report noted electronic payments are preferable to cash or paper checks because processing is more efficient and less expensive.

"Electronic collections provide better accuracy, lower mailing and processing costs, and fewer delinquencies and defaults," GAO said. "When the Federal Reserve moved to electronic conversions of paper checks, work hours spent on check processing decreased by almost half and transportation costs associated with check processing decreased by about 11 percent."

The percentage of funds agencies submitted by traditional methods in 2009 was relatively low but still constituted more than $36 billion. The report also noted that nonelectronic payments often are smaller and make up a significant percentage of overall transactions. For example, only 2 percent of the $23 billion collected under the Minerals Management Service's Minerals Revenue Management program came in as checks. But those checks represented 77 percent of transactions.

Shifting remaining paper-based payments to an electronic method also can improve the accuracy and security of an agency's financial transactions, the report said. GAO studied five agencies and found that eliminating paper-based payments improved their internal processes.

"Officials from all five case study agencies cited a decrease in current or estimated future costs resulting from the use of electronic collection methods, but none of the agencies could fully quantify these savings," the study said. "For example, state government representatives agreed that for many organizations, paying by ACH transfer is preferred because paying by check is expensive in terms of the cost and time of printing, mailing and reconciling payments."

Despite the advantages of electronic payments, some agencies continue to use alternative methods, partly because FMS does not provide information about the costs of various payment methods, GAO said.

"FMS officials stated that FMS does not track cost of collection information by agency, but instead by collection method and bank," the report said. "FMS has this cost information and could provide it, but based on past practices, it generally has not."

Other agencies continue to use paper-based payments because of specific circumstances. Those processing payments from smaller vendors or remote locations, such as the Minerals Management Service or the National Park Service, often deal with customers who don't have the ability to submit or receive payments electronically.

GAO urged Treasury to share information on the costs of different payment methods, noting that agencies are making decisions about collection methods without that data. FMS officials agreed with the recommendations, and said they are working on a plan to address the issue and complete a review of reimbursement policy by April 2010.

Threatwatch Alert

Thousands of cyber attacks occur each day

See the latest threats


Close [ x ] More from Nextgov

Thank you for subscribing to newsletters from
We think these reports might interest you:

  • Modernizing IT for Mission Success

    Surveying Federal and Defense Leaders on Priorities and Challenges at the Tactical Edge

  • Communicating Innovation in Federal Government

    Federal Government spending on ‘obsolete technology’ continues to increase. Supporting the twin pillars of improved digital service delivery for citizens on the one hand, and the increasingly optimized and flexible working practices for federal employees on the other, are neither easy nor inexpensive tasks. This whitepaper explores how federal agencies can leverage the value of existing agency technology assets while offering IT leaders the ability to implement the kind of employee productivity, citizen service improvements and security demanded by federal oversight.

  • Effective Ransomware Response

    This whitepaper provides an overview and understanding of ransomware and how to successfully combat it.

  • Forecasting Cloud's Future

    Conversations with Federal, State, and Local Technology Leaders on Cloud-Driven Digital Transformation

  • IT Transformation Trends: Flash Storage as a Strategic IT Asset

    MIT Technology Review: Flash Storage As a Strategic IT Asset For the first time in decades, IT leaders now consider all-flash storage as a strategic IT asset. IT has become a new operating model that enables self-service with high performance, density and resiliency. It also offers the self-service agility of the public cloud combined with the security, performance, and cost-effectiveness of a private cloud. Download this MIT Technology Review paper to learn more about how all-flash storage is transforming the data center.


When you download a report, your information may be shared with the underwriters of that document.