Top 5 reasons not to give your customers more time to pay

If you’ve heard me speak at a utility conference or you’ve been a subscriber to the Utility Information Pipeline for any length of time, you know that I’m an outspoken proponent of assessing the cut-off fee to every account on the cut-off list as soon as the list leaves your office.

As I’ve started to analyze some of the results from the Utility Fee Survey that I’m conducting (if you haven’t yet participated in the survey, please click here to complete the survey), I’m surprised by the number of responses from utilities that still don’t charge the cut-off fee to every account as soon as the cut-off list leaves the office.

Of the 73 utilities that have responded so far, only 42 charge the fee to all accounts.  That leaves 31 (or 42.5% of the respondents) that still don’t charge the cut-off fee to every account when the cut-off list leaves the office. I find it surprising that so many utilities still follow this outdated practice.

Utility Information Pipeline #3 (you can read it here if you missed it), dealt with cut-off policies. That issue concluded with talking about why I believe utilities should follow the best practice of charging the cut-off fee to all accounts at the same time. Based on the Utility Fee Survey responses, I believe devoting an entire issue to the topic is merited, so here are the top five reasons why you shouldn’t give your customers more time to pay…

5. They are already extremely late, why give them several more hours to pay?

Customers who end up on the cut-off list are already seriously delinquent in paying their bill. They didn’t pay by the due date and they ignored any delinquent notice that you may have sent them. Why give them even a few more hours to pay before assessing the cut-off fee?

4. It’s not fair to customers who live closer to your office

It’s inherently unfair to give customers who live farther from your office more time to pay before being charged the cut-off fee. Inevitably, customers who live closest to your office are likely to be the first customers whose service is terminated each month. Why give those customers who live farther away more time to pay. Charging the cut-off fee to every customer on the cut-off list at the same time is, quite simply, more equitable to your customer base as a whole.

3. No negotiating with the field service technician

If each account has already been charged the cut-off fee before the service technician arrives to cut them off, the service technician no longer has to deal with customers pleading not to cut them off. This removes the service technician from the uncomfortable position of having to deal with a customer begging for time to get to the office to pay before cutting them off in order to avoid paying the cut-off fee.

2. Less work and confusion in the office

With a policy of assessing the cut-off fee to every account on the cut-off list at once, this becomes an automated process rather than having to add the cut-off fee to each account after the account has been cut off. Even if you currently add the fee to every account at one time, it still must be adjusted off from accounts who pay before the actual cut-off takes place.

Cut-off day is already a very hectic day in most offices with angry customers flooding the office to pay (and complain about being cut off). Why add to the noise and confusion in the office by having to radio the service technician each time a customer on the cut-off list comes in to pay?

1. More revenue for your utility!

If you charge the cut-off fee to every account on the cut-off list as soon as the list leaves your office, every account is assessed the fee, generating more revenue for your utility. Unless your utility is different from every utility I’ve ever worked with, this is a good thing!

If you aren’t already considering changing your policy to assess the cut-off fee to all accounts, hopefully the above reasons will help change your mind. If you have any questions about cut-off policies, or any other policies, please contact me to learn more about what a business review could do for your office. I can be reached by calling 919-232-2320 or e-mailing me at gsanders@logicssolutions.com.

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© 2012 Gary Sanders

Is it time you took a closer look…?

In previous issues of the Utility Information Pipeline, I’ve made mention of conducting a business review. Let’s take a look at what an outside business review entails and some reasons why you might consider conducting one.

Why should you consider an outside business review?

Does conducting an outside business review mean that your business office isn’t well run? Not at all!

A business review is not unlike a financial audit – just because you conduct an annual audit doesn’t mean there’s any monkey business going on with your books, it just insures that things are being done right.  In the same manner, conducting a business review is a way for management and your board to insure that your business office is functioning efficiently.

In general, utilities fall into one of two categories – those that are satisfied with their billing software and those that aren’t (or aren’t sure if they should be).

If you are satisfied with your billing software

If you are satisfied with your billing software, contact your software vendor to see if they have a consultant who is qualified to conduct a business review. Are there benefits if person conducting the review is affiliated with your software provider? I would argue “yes” – there are many things about your software that an outside consultant wouldn’t have intimate knowledge of. Some items to consider are:

  • Are you running the latest version of your software?
  • Are you taking advantage of all the features the software offers?
  • How long has it been since your staff has been trained by your vendor?

Software vendors publish updates and fix bugs in their software periodically, but not all businesses (not just utilities!) choose to install the latest update. Is it possible that something you have devised as a manual workaround to solve a problem has been fixed in a newer release of your billing software?

New software releases are often accompanied by release notes describing the bugs that were fixed and the new features were added in that release. Even if you have installed all the new updates as they became available, it’s very possible you overlooked a new feature described in the release notes that could save your office staff time and effort.

How long has it been since your staff has received training from your vendor? Utility Information Pipeline #14 addressed training new hires (you can read it here if you missed it) and what I call the “funnel effect”. If you have hired new staff since you installed your system, investing in some training is well worth it. Even if your current staff was all trained by your software vendor when the system was installed, refresher training is always helpful. Initial training tends to be focused on day-in, day-out processes and doesn’t always address other, more advanced features of the software.

If you’re unsure or not satisfied with your billing software

If you’re unsure if your billing software is doing all that it should for you, an outside business review provides an opportunity to learn how well it is meeting your needs.

If you aren’t satisfied that your current billing software can accomplish all that you want to do or that it doesn’t provide some of the latest features, conducting a business review can help make the business case to replace your software.

As a manager or office manager that has to convince a reluctant board that spending the money for new software is really worth the investment, an independent business review can be a great tool in helping make your case.

If you are a board member and you want to insure that your office is being run as efficiently as possible, what better way than to commission an independent, outside business review?

What should an outside business review include?

A quality business review should be performed by a qualified consultant with knowledge of utility billing best practices and current trends in the industry. The consultant should thoroughly review the utility’s current business processes, office practices and utility policies and procedures. The outcome of the business review should include recommendations as to how the utility can improve customer service and achieve better efficiencies.

Why not conduct a business review internally?

Human beings, by our very nature, are creatures of habit. When we become accustomed to doing things a certain way, we sometimes lose sight of the fact that other options exist. Conducting a review internally is often done from the perspective of how things have always been done, without benefit of seeing the bigger picture or realizing that other options exist. An outside consultant has experience with many other utilities and brings that perspective and knowledge to the table when conducting a business review.

Conducting an outside business review provides the utility with an unbiased, objective opinion from an independent source. Conducting an internal review is often done, unfortunately, from the perspective of preserving the status quo rather than recommending changes when change is merited.

There are no political implications of unpopular recommendations from an outside consultant. Perhaps, as a manager, you’ve tried unsuccessfully to get your board to change a policy or fee you know needs to be changed. Bringing the issue up again could land you in political hot water, but having an outside consultant make the same recommendation won’t get you fired. It may, however, get the consultant fired, but that’s the nature of what we do!

If you have any questions about conducting a business review or would like to learn more about what a business review entails, please give me a call at 919-232-2320 or e-mail me at gsanders@logicssolutions.com.

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© 2012 Gary Sanders