Are you using vouchers…?

I’ve written about many forms of payments in the past; however, one I haven’t touched on is vouchers from charities.

Does your utility deal with social service agencies and church groups that make arrangements to pay utility bills for customers who are struggling to pay their bill?

Do these agencies and charities provide notification (preferably written) that they will pay all or part of a customer’s bill, but don’t send a check immediately?

If the answer to both of these questions is “yes”, then you know it can be a hassle to keep track of which accounts have received a promise to pay. You don’t want to cut an account off for non-payment if their bill is going to be paid by a reputable social service agency.

Does your billing software have a way to handle this?

Some billing systems offer vouchers as a payment method. When you post a voucher payment to an account, the system reflects that a “payment” has been made to the account in the form of a voucher (the promise to pay from the agency).

By posting the voucher to the account as if it were a payment, the account won’t be subject to late penalty or cut-off for non-payment. This is certainly much easier than maintaining a separate list and manually checking accounts to be penalized or cut off against the list.

But, we haven’t actually received payment yet

So you’re probably wondering how the voucher can be posted as a “payment” when you haven’t actually received any money?

In addition to posting the voucher as a payment against the account, the system will also record the voucher as a charge to the agency that provided the voucher.

For a typical payment where cash is received, the general ledger entry is a debit to cash and a credit to accounts receivable. In the case of a voucher payment, where no cash is received, the general ledger entry is a debit to vouchers receivable and a credit to accounts receivable. The effect of the voucher payment is to exchange one receivable for another.

When you do receive a check from the agency

When the agency sends a check, sometimes paying multiple vouchers with one payment, the check is posted against the outstanding vouchers. At any time, you can run a report of outstanding vouchers to see what is still owed by any agency. You can use this report to insure you receive payment for every voucher.

Is it time you started using vouchers?

If you aren’t currently using vouchers, ask your software vendor what you need to do to get started.

If you have questions about vouchers or other forms of payments, please give me a call at 919-232-2320 or e-mail me at gsanders@logicssolutions.com.

© 2012 Gary Sanders

What’s up with partial payments…?

Every now and then I hear someone from a utility say, “we don’t accept partial payments”. Just last week I was reviewing a prospect’s wish list for new software and one of the items stated “Would really like for us to be set up where our computer doesn’t allow partial payments.”

My first response when I hear something like this is always “What…?”  You have a customer wanting to give you money and you don’t want to accept it? That just doesn’t make sense!

In a perfect world no one would make partial payments

I totally understand that in a perfect world, everyone would pay their bill in full each month. In that same perfect world, everyone would also pay by the due date and you wouldn’t have to charge penalty or cut them off for non-payment, either.

But the reality is – we don’t live in a perfect world! Customers will be late and they will find themselves in position where they can only pay part of what they owe.

Something is always better than nothing

Your mission, beyond providing a quality utility service (water, sewer, electric, natural gas or some combination thereof), is to operate your utility efficiently. In keeping with that mission, getting paid for the service you provide in paramount.

If you have a customer who owes you $100 and all they can pay today is $60, why would you refuse to take their payment? Sure, if they don’t pay the remaining $40, they will incur a penalty and ultimately be cut-off. But why turn away $60 today when you have no assurance that the customer will pay the full $100 in the future?

Treat the cause, not the symptom

I understand a partial payment is not as convenient as payment in full. I suspect that, for utilities who don’t want to accept partial payments, this has more to do with how their software functions than anything else. The reality is, how your software functions (or in this case, doesn’t function) is no reason to turn away a customer who wants to pay you money.

If the reason you don’t want to accept a partial payment is based in how your software handles partial payments, perhaps you should reevaluate your software…

If you find yourself doing things that don’t make sense or working around your billing software in some way, give me a call at 919-232-2320 or e-mail me at gsanders@logicssolutions.com. I would welcome the opportunity to discuss how a business review could benefit your utility.

© 2012 Gary Sanders