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TITLE: |
Consideration and Approval of Cooperative Contract: A Cooperative Purchasing Agreement with Invoice Cloud, Inc. to provide an electronic payment acceptance solution in an amount not to exceed $140,000, annually for five years, utilizing the City of Chandler Cooperative Purchase Contract. |
STAFF RECOMMENDED ACTION: |
- Approve the Cooperative Purchasing Agreement with Invoice Cloud, Inc. to provide an electronic payment acceptance solution in an amount not to exceed $140,000, annually for five years, utilizing the City of Chandler Cooperative Purchase Contract; and
- Authorize the City Manager to execute the necessary documents.
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Executive Summary: |
The Invoice Cloud, Inc. Cooperative Purchasing Agreement provides for the procurement of electronic payment acceptance solutions, including web-based payments and over the counter payment processing at various City of Flagstaff locations and software systems. The services provided by Invoice Cloud, Inc. are a necessity for the City to allow the Customer Service Section to continue to provide residents of the City with locations and payment options that are convenient and reliable. The Cooperative Purchasing Agreement will include pricing scenarios for a Convenience Fee (customer pays for services) and a Fully Absorbed (City pays for the services) model for various services using the payment processing services. |
Financial Impact: |
The Customer Service Section budgets most of the cost of electronic payment processing. There is $161,000 in ongoing and $178,000 in one-time budget in account 001-02-033-0124-1-4290. Current services are paid by a Fully Absorbed model and is estimated to cost the City in excess of $340,000 annually.
The proposed hybrid of the Convenience Fee and Fully Absorbed pricing models are projected at a yearly contract expenditure will be below $140,000. These proposed changes result in an estimated cost savings of $200,000 within the first year of the new proposed solution going live and increased cost savings over time as more residents adopt digital payments in subsequent years through enhanced technology offerings. |
Policy Impact: |
Staff recommends that the City begin using a Convenience Fee model for the majority of electronic payment processing transactions we manage. |
Connection to PBB Priorities/Objectives, Carbon Neutrality Plan & Regional Plan: |
Priority Based Budgeting:
- High Performing Governance:
- Serve the public by providing high quality customer service.
- Maintain the organization’s fiscal stability through strong financial policies and best practices.
- Implement and communicate innovative and efficient local government programs, new ideas,and best practices.
Carbon Neutrality Plan:
- Decreased Dependence on Cars, DD-6: Proactively invest to protect Flagstaff’s clean air status.
- Sustainable Consumption, SC-2: Encourage sustainable consumption.
Regional Plan:
- Climate Change and Adaption Goals and Policies: Goal E&C.2. Reduce greenhouse gas emissions.
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Has There Been Previous Council Decision on This: |
No. |
Background and History: |
The City of Flagstaff has been using our current provider to process electronic and various point-of-sale payments since 2017. The Customer Service Section is seeking a new contract to improve and expand our electronic payment services. Invoice Cloud, Inc.’s solution has proven to add significantly more benefit to the billing and collections process for local governments at over 25 other municipalities in the state of Arizona. Additionally, Invoice Cloud, Inc. has a strong partnership with Flagstaff’s core software provider, Harris ERP, which will solve key integration issues currently hindering the staff and customer experience. Invoice Cloud, Inc. has committed to providing the City with an online digital engagement solution for municipal billing, community development, and additional departments as stated within the Cooperative Purchasing Agreement. Their solution creates best-in-industry digital engagement results by offering a simplified digital experience that enables customers to sign up for paperless, autopay, pay-by-text in seconds without ever having to register an account. The City is looking forward to significant improvements within the customer experience while using a mobile phone, the IVR, and more through the Invoice Cloud, Inc. solution. |
Key Considerations: |
The ultimate goal of this cooperative agreement is to leverage the contracted provider to optimize the online experience that Flagstaff provides to its customers while focusing on creating cost efficiencies through changes in payment processing cost burden. Flagstaff customer service is focusing on increasing customer self-service enrollments that in turn streamline billing and collection procedures while decreasing associated costs with revenue collections, including costs for paper billing and postcard notifications. Additionally, Flagstaff plans to partner with the contracted provider to provide a consolidated, uniform online engagement experience for numerous departments across the city who accept payments which will enhance staff efficiency and productivity. |
Community Benefits and Considerations: |
InvoiceCloud has provided the City with options for an absorbed credit card fee model and a convenience model. The City currently operates under a fully absorbed model with credit card fees paid by the City for all locations and payment types. Staff is recommending changing to a convenience model for municipal service and miscellaneous accounts receivable (MAR) bills which constitute the highest volume of transactions. Payments made using autopay from a bank account will not have a transaction fee. Staff is evaluating the models for additional departments and if we implement the full convenience model be adopted for all departments; the estimated annual expenditure will be even further reduced. If an absorbed model is selected, the annual rises to approximately $402,000. InvoiceCloud offers the flexibility to choose the model per department and payment type. Staff recognizes a convenience model may not be preferred for every department.
The City of Chandler conducted a competitive and open procurement process through that resulted in City of Chandler Agreement No. MS2-920-4380 - City of Chandler Software as a Service Agreement Electronic Payment Acceptance Solution with Invoice Cloud, Inc. The City of Flagstaff Procurement department has verified the cooperative purchase contract as valid, would be in the best interest of the City, and would be advantageous to the City. |
Community Involvement: |
Our local community will enjoy new and improved functionalities which enhance the user experience for online bill payments. These include a simplified guest checkout with enrollment options, pay-by-text feature, and intelligent text and email reminders. Additionally, the community will benefit from real-time consistent platform enhancements and best-in-industry reliability, as Invoice Cloud, Inc.'s solution boasts a 99.99% system uptime. |
Expanded Options and Alternatives: |
Inform the community of the new payment processing services and new functionality benefits through the contracted provider. The contracted provider will also assist the City with these efforts as they provide marketing materials at no additional cost to the city. Staff will consult with the community of possible new customer service locations that may be established in the future, as wells as, methods of web-based payments to improve convenience. |
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