Case study: Improving the payment process at the Junta de Andalusia, Spain, in the late 1980s

In 1939 the National forces, headed by General Francisco Franco, defeated the Republicans in the Spanish Civil War. In the following about 40 years Spain was ruled by a dictatorship that centralised political powers and administrative functions in the state. After Franco’s death in 1975, King Juan Carlos appointed Adolfo Suárez as prime minister. Within a few years Suárez led the country to the transition to democracy. As part of this process regions of Spain started to claim autonomy from the central government in Madrid. 

In 1982 the first government of the region of Andalusia, called the Junta, was formed. The Junta slowly grew in scope and size. More and more departments were established, from Economy and Planning to Agriculture and Fishing, from Education to Urban Development.

The regional administration started performing new functions, including the payment of its bills. The department of Finance of the Junta hired some experienced bureaucrats from the national Ministry of Finance, who set up procedures for the payment process similar to those in place at the central government. 

The payment of bills took place at the Treasury division of the Finance department of the Junta. After receiving the invoices to be paid from every other department, the Treasury division issued validated transfer orders to banks. The Junta held accounts in different banks in the region, which would then make payments to the vendors.

The payment process did not work well, however. Vendors complained that the payments took too long, up to weeks or months. The Junta received more than 250 phone calls and dozen visitors per day who asked for information about delayed payments. Sometimes, vendors had received a payment but asked to which invoice or contract it corresponded. Staff members of the Treasury division spent much of their time attending to such inquiries. Sometimes, they told that the Treasury division had made the transfer, while the bank of the vendor denied that it had been received.

Your task

You play the role of Alberto Ramirez Lomo, who joined the Finance department as the new Head of the Treasury Section in 1985. Your assignment is to fix the payment process and make it work in a fast, accountable and efficient way.

In the chat below, you meet the Head of Finance to discuss the payment process.

1) First, greet the Head of Finance (just type something like “Hello”)

2) Then, please pose questions until you have an accurate understanding of how the payment process works. Please try and ask as many questions as you like about the activities that are performed to process the invoices, about the parties that are involved, and about the sources of dissatisfactory performance. When you believe that you fully understand how the payment process works, say goodbye to the Head of Finance.

3) Finally, you should analyse how the payment process works and think how you would improve it in order to make it work faster and more efficiently. Solutions will be discussed in the class.

(The case study originates from “Paying the Bills at the Junta of Andalusia” written by Prof. Michael Barzelay for the Kennedy School of Government, 1988)