Baltimore Recovers $1.4M After Audit Exposes Failures In Debt Collection

City says a broader $14.5 million improvement reflects both new recoveries and a cleanup of inaccurate receivables—but more than $33 million remains outstanding.

Baltimore’s Department of Finance says it has brought in $1.4 million in new collections since a May audit exposed major deficiencies in the city’s ability to track, pursue and accurately report money owed to it. The department reported a total $14.5 million improvement in unpaid-bill balances, though officials said the large majority—$13.1 million—came from administrative cleanup rather than cash recovery.

The distinction matters for collection professionals: the audit did not simply reveal delinquent accounts that needed a stronger recovery strategy. It also revealed weaknesses in receivables governance, including invoices left on the books despite a low probability of collection, canceled bills without documented approval, and no formal citywide write-off policy.

Audit exposed control gaps

The city audit reviewed Finance Department controls over accounts receivable and found that unpaid invoices were not consistently escalated or resolved. As of Dec. 31, 2025, outstanding balances exceeded $8.5 million, with more than $3 million in balances auditors considered unlikely to be collected.

Auditors also found that 2,774 invoices totaling more than $82 million had been canceled during the audit period. The underlying system did not require a documented reason or approval for those cancellations, creating an obvious accountability problem for a public entity managing taxpayer-funded operations.

Baltimore officials had previously said the broader review uncovered tens of millions of dollars in uncollected revenue across fiscal years 2023 through 2025. The receivables included obligations related to utilities, permits, leases, loans and other city services or agreements.

Recovery effort underway

Finance Director Michael Mocksten told the Board of Estimates that the city intends to pursue every dollar reasonably recoverable. In June, the Bureau of Collections issued approximately 1,100 final-bill and legal notices covering $15 million in unpaid invoices.

The city has also begun referring outstanding bills to the Law Department—described as a first for the Department of Finance’s delinquent-account process. That escalation is particularly notable because the audit and subsequent public discussion showed overdue accounts could remain unresolved without a clear referral protocol.

Deputy Finance Director Yoanna Moisides said the department had completed the corrective actions it committed to on schedule, while officials cited staffing, procedural and system improvements as part of the response.

More than collections work

Baltimore’s reported $14.5 million improvement should not be read as $14.5 million in newly collected revenue. Of that figure, only $1.4 million represents new collections; the remaining $13.1 million reflects the identification and removal or correction of amounts that apparently should not have remained classified as debt.

That is an important lesson for municipal and commercial receivables programs alike. A collection operation cannot be judged only by gross dollars recovered. It also needs controls that answer basic questions:

• Is the invoice valid and supported by documentation?

• Is the balance assigned to the correct debtor and revenue category?

• Has the account been reviewed for collectability?

• Is there a documented escalation path before an account becomes stale?

• Are adjustments, cancellations and write-offs approved and auditable?

Without those controls, a receivables ledger can overstate collectible revenue while masking failures to pursue valid debts promptly.

What remains

Despite the recent actions, Baltimore still reported more than $33.8 million in outstanding amounts to collect. Officials said the city collects 98% of all revenues, a rate they characterized as near the top among U.S. cities, but City Council President Zeke Cohen cautioned that Baltimore still needs consistent, agency-wide billing and collection practices.

The Finance Department plans to deliver a progress report to the city auditor by mid-September. Its longer-term reforms include restricting invoice-cancellation authority, formalizing cancellation procedures, requiring management review, establishing a write-off policy, reviewing account accuracy and strengthening collection documentation and tools.

For the credit and collection industry, Baltimore’s experience underscores that recovery performance begins well before a file reaches a collector or legal desk. Accurate account setup, disciplined aging management, authorized adjustments, documented referral triggers and auditable write-off standards are all essential to preventing revenue leakage—and to ensuring that reported receivables represent money that can actually be collected.