Municipalities have for a long time been taken as just another office in government, thereby diminishing their true role.

In fact, a municipality is thought of as the lowest tier in the hierarchy of government, of which the national tier is the highest followed by the provincial tier.

This has led to the gross neglect of the local government tier, which has been deprived of a reasonable share of the tax revenue.

Of the national and provincial budget, local government receives less than 12% of the tax revenue of over R1-trillion per annum that is collected through SA Revenue Service.

A municipality receives an equitable share and various grants from National Treasury.

This leaves a municipality with the daunting task of raising revenue by rendering services. A municipality - like a business - manufactures or purchases products to sell to its customers.

In the case of a municipality, it purchases electricity and water to sell to its consumers. It also has to collect waste or outsource the service at a cost and render sanitation services such as purifying water and treating sewerage.

It must generate sufficient revenue to close the gap between the allocation it receives from the fiscus and the budget that it sets out for service delivery.

If a municipality is like a business, then it must be run like one.

Any business must have a revenue model in place to determine how its income is generated and to detail the make-up.

It is important to understand this revenue is generated and the key levers of the revenue value chain that must be managed closely.

Like any business, understanding the product lines and the sales thereof is a key requirement of ensuring that the sales plan is executed and that the revenue is generated accordingly.

A municipality has five revenue line items account for 60% to 80% of its revenue.

It is imperative that the underlying intricacies of how these line items generate income and how they should be rendered optimally must be clearly understood, to avoid making financial losses.

A municipality must ensure that tariffs for each revenue-generating service are cost-reflective, to ensure that each service contributes its own surplus, thus optimising revenue.

Customer data is perhaps the most valuable asset for any business which earns income from providing a service.

The inevitable changes in customer data such as the property owner, the number and type of municipal services they receive, their contact details, and so on, must be monitored and updated as soon as it changes.

The continuous updating and cleansing of data should perhaps be one of the biggest preoccupations of municipal administrators and to put proper systems in place.

Billing can be a very complicated exercise for a number of reasons. It requires that all services be metered accurately; that the underlying data used to produce the bill is correct; and that the billing engine used is robust and agile enough to deal with inevitable data discrepancies.

In simple terms, if billing is disrupted for whatever reason, the generation of revenue is impacted negatively, as it cannot be billed in full.

It has become the norm that people prioritise their other bills over the municipal bill. They would rather pay for their DSTv or clothing accounts before paying for municipal services.

Municipalities have to employ plausible strategies that keep them top of mind and wallet when it comes to payments.

They must model their costs and know their obligations to creditors at all times. This is true even for us as individuals and more so for businesses.

Many people have taken advantage of the poorly managed indigent registers in municipalities, thus receiving free services that are meant for the poor, causing huge losses in revenue to municipalities.

There are cost-effective ways of monitoring indigent registers through lifestyle audits using data from information from various sources.

It is also important to monitor the level of consumption of free basic services by those who are approved as indigent so that they consume within the allowable threshold to avoid non-payment for rendered services. A happy customer is a paying customer.

It is vital for a municipality to keep open and warm relations with its customers. When customers are kept close, they tend to have empathy towards the suppliers and develop an affinity towards them. It is this affinity that will stir the urgent need to pay the invoice or statement the moment it reaches the customers.

The municipality can build this relationship between itself and its customers by responding expediently to their service needs, resolving any queries, making it easy for customers to pay the municipality and if necessary, reminding the customer to pay their bill.

A municipality must create a partnership with its customers, because this will result in a symbiotic bond.

Mabunda and Holeni are partners at Ntiyiso Consulting, management consultants that have worked with the Tshwane, Ekurhuleni and Umhlathuze municipalities