Transforming a municipality’s financial management

In a context of increasing demands on public resource management and greater scrutiny of local government efficiency, a Portuguese municipality decided to transform its financial department with the aim of improving the agility, control, and transparency of its processes. Faced with challenges in revenue collection and expenditure management, the municipality took a structured approach based on digitization, indicator monitoring, and the restructuring of its internal processes.

This case study demonstrates how the combination of technology, management discipline, and a focus on continuous improvement can generate significant efficiency gains and strengthen financial sustainability in the public sector.

The municipality and its commitment to excellence in public management

A Portuguese municipality recognized for its commitment to providing excellent services to its citizens was facing significant challenges in its financial management. This municipality is characterized by a balanced combination of rural areas, hills, and coastline, and has established itself as an attractive place to live, benefiting from its proximity to the capital and a peaceful and sustainable lifestyle.

With a wide range of responsibilities, including economic, financial, and asset management, this public entity sought to optimize its processes to promote inclusive, smart, and environmentally sustainable growth, in alignment with its competencies established by the local authority’s law.

The need to modernize processes

The municipality’s financial department, comprising several organizational units, was facing challenges in revenue collection and in the purchase process. There was a recognized need for improvements in the issuance of revenue documents, the control of receipts, the streamlining the recording of expenses, and the efficiency of payments to suppliers.

The main goal was to achieve greater efficiency with a tangible impact on results, reducing average collection and payment times and decreasing the amount of accounts receivable.

The modernization and financial restructuring strategy

To tackle these challenges, the municipality adopted a multifaceted strategy focused on implementing technological solutions and restructuring internal processes:

Design and implementation of PowerBI dashboards

To improve the management and monitoring of key performance indicators (KPIs), specific dashboards were developed and implemented, facilitating team meetings and data-driven decision-making.

Implementation of dynamic meetings and team management

Introduction of digital tools for weekly team management routines, focused on monitoring KPIs and implementing improvement actions.

Improvements in the revenue process

Automation in the cross-referencing of credit notes with invoices, and the implementation of monthly monitoring routines for debts older than 120 days were some of the improvements made to optimize the revenue process. The education area and various licensing processes benefited from specific automations, aimed at the efficient notification of outstanding amounts and the automatic issuance of credit notes.

Improvements in the expense process

From eliminating unnecessary stages in the contracting process to the automatic integration of invoices, efforts were made to simplify and streamline the expense process.

These initiatives reflect a deep commitment to innovation and efficiency, and the approach adopted demonstrates a successful combination of technology and strategic management, establishing new standards of excellence in public administration.

Results achieved through financial modernization

The modernization strategy adopted by the municipality generated significant results, demonstrating a substantial advancement in its operational efficiency.

The reduction of the average time taken to receive invoices from 8.8 to 1.7 days, showed an improvement of 81%. Concurrently, the average time to make payments to suppliers was reduced by 44%, from 9 to 5 days, which optimized relationships with suppliers and contributed to a more dynamic economic cycle. Additionally, the outstanding debt decreased by 13%, reflecting more effective credit management and an assertive approach in debt recovery.

Figure 1 – Summary of results obtained

These results highlight not only the effectiveness of the solutions implemented but also the municipality’s commitment to continuous improvement and efficient management of public resources. This case study serves as an inspiring example of how the adoption of technology and the restructuring of processes can lead to disruptive improvements in the financial management of public entities.

We are committed to respecting our clients’ confidentiality. While we have altered or omitted their names, the results are genuine.