Automatic Revenue Control – Fact or Fiction

May, 2008

Parking revenue control is not very different from retail sales. In retail sales, it is expected that inventory is managed, sales staff do not give merchandise away, every sale transaction is accurate and the sales staff turn in the revenue (all of it) at the end of the day. Parking only differs in that the inventory changes in real time so that inventory management is more difficult.
Most parking facility owners and operators view parking revenue control in terms of the quality of the equipment they use in the facility to collect either cash or electronic payments. There are several other issues that influence the amount collected. First, the facility must be designed to prevent entries and exits other than through a controlled point. Frequently, entry points, exit points and sometime other locations within the facility (unused driveways that have a cable that is not secured) are poorly designed and allow unauthorized entry or exit.
Second, at each entry, there must be a transaction for each vehicle entering the facility. The transaction can be identified by the issuance of a ticket, acceptance of a credit card acceptance of a contract parking card, or an RF transponder. The date, time, facility code, and entry point must be part of the entry transaction. Ideally, the vehicle’s license number should also be associated with the entry transaction. This can be accomplished with most equipment systems available today, but frequently the operator or owner will allow facility staff access to the equipment (keys) and vehicles will enter or exit without being identified.
The rule for entries applies to exits. There must be a transaction for each vehicle that exits the facility. Some systems on the market today will show an exit transaction for each gate vend. This is valid as long as there is a gate vend for each exit. If the gate has been broken, a vehicle can exit without a gate vend allowing an opportunity for loss revenue. It is important to have an exit count from the exit loop system to compare with the transaction records of the revenue control system to avoid problems.
Third, the business rules for the facility must not allow decision making by individuals responsible for collecting parking fees. The most frequent abuse of this rule is the allowance of exits with validated tickets where the validation is in the form of a signature. Far too often the signature is not readable and the customer is allowed to exit without payment. Other types of business rules involve entry and exit by authorized vehicles. Without a clear business rule (must have a valid entry/exit card, RF transponder, etc.), the decision to enter or exit should not be made by facility staff.
Fourth, the control of contract parking accounts must be maintained. The easiest (but possibly the most expensive) way to do this is to make sure that non facility staff invoicing and collecting the contract fees (monthlies), records the status of the accounts into the parking revenue control system.
There are several ways of accomplishing the task with minimal effort. Since most customers make regular payments to their accounts, staff maintaining the accounts can simply invalidate cards for those accounts lacking payment. Once the cancellations have been completed, management staff should have the ability to run a report that compares the valid contract accounts from the revenue control system to a list of valid accounts kept by those accepting payment.
Management of expenses impacts net revenue. However, for the purposes of this discussion, the expense side of the ledger will not be addressed. Instead, let’s take a look at the expectations of revenue control systems and their use.
In the good old days, parking facility operators and/or owners had to edit each ticket cashiered to determine if the rate was calculated correctly and to determine if any tickets were missing. This method was almost fool proof except for one minor point, it was rarely done. In most cases, a sample was taken and when there was a serious drop in revenue, a complete audit would be done in an effort to close the gate before all the horses got away.
Owners and operators longed for a better system. Vendors responded by providing fully automated systems. Cashiers no longer had to calculate fees and there was a plethora of reports detailing everything that happened in the facility. On rare occasion when a ticket fails to be read by a ticket reader or something else happens which changes the amount due, the cashier has to enter the information manually. Since the automated system is not used in these cases, exception transactions are created and a report generated for the boss. Owners and operators only have to audit the exception transactions to determine if everything was being done properly. These systems are almost fool proof except for one minor point, they are rarely used properly.
Parking system technology has progress significantly over the manual systems of old. Parking operators and owners need to progress with it. They must get past the point of feeling good that they have purchased the most recent technology and then ignoring how it is used (or not used). A major manufacturer of parking systems did a recent study and discovered that only about 7% of the features in their system are used regularly. Parking consultants reviewing parking operations find the same thing and often it leads to missing revenue.
An operator of a parking facility must be able to know, on a daily basis that for every vehicle that passed over the exit loops, there exists a transaction in the parking system database. Once finding that to be true, the validity of the transactions must be challenged. All completely automated transactions require little examination. They should be reviewed after a rate change to assure the change is producing what was expected. The non automated transactions are those where there was human intervention (cashier, supervisor, etc.). These must be audited daily to assure they comply with the policies and procedures in place for the facility. In addition to a daily audit of exception tickets, reports should be generated showing where the exceptions occurred (lane, cashier, etc.). Often reviewing these reports can indicate cashiers needing more training or they can indicate a possible violation of rules leading to theft of revenue.
Credit card numbers should never be entered by a cashier. In a review of a regional airport parking system, it was discovered that cashiers were using credit card information they got from customers to substitute a credit card payment for a cash payment. The abuse was so flagrant that a local large employer refused to let traveling personnel pay for parking using a company credit card.
Since a supervisor or lead worker must be able to solve credit card problems in the lane, management should be monitoring reports listing the transactions daily looking for trends that could be leading to trouble.
It’s not only employees that find ways to cause problems in parking systems. Customers also find them. They usually show up as lost tickets. Reports indicating lost tickets along with the information collected at the time of the exception transaction could be an indication of abuse. Sorted properly, repeat offenders can easily be seen and investigated.
Preventing theft will not necessarily prevent loss of revenue. If the rate structure is not correct, the facility may not be maximizing revenue. Reports should be reviewed that show occupancy trends allowing rates to be adjusted to create more customers resulting in higher revenue. Systems can be designed to let you play “what if” with the data to show what the revenue might be under different rate schemes. Studying exit trends will allow you to make decisions regarding staffing. Efficient staffing can affect revenue.
Owners that hire an operator to run their facilities often walk away from the project feeling comfortable they have done their duty. Operators sometimes use only the information they get from the system that allows them to submit that information to their headquarters in the format they desire. The rest of the information is often ignored.
When a vendor is attempting to sell a parking system, the buyers must remind themselves that the primary product of any system is information. Data collected in the lanes is of very little value until it is formatted, filtered and displayed in reports that turn it into information. If owners or operators fail to examine the information for every potential problem, they are cheating themselves.
Tim Phillips is a consultant with Wilbur Smith – He can be reached at tphillips@wilbursmith.com.