How well are you doing collecting final bills…?

A previous issue dealt with improving final bill collection rates. So how do you know if your efforts are paying off?

In the final issue of last year, looking back at 2013 and looking ahead to this year, I solicited ideas for newsletter topics. Thanks to a couple subscribers, I got several good ideas. One of those asked about benchmarking collection rates for final bills.

Review your aging report

Provided your billing software offers an aged trial balance, or some other aging report, using the totals from this report can provide an effective way of tracking the success of your final bill collection rate.

If your utility bills monthly, and you have any semblance of a cut-off policy, it’s safe to assume any outstanding balances over 60 days old are final billed accounts that haven’t paid.

Do you have balances over 60 days old that are still active accounts? If so, you may want to review your utility’s days of exposure.

Calculate your delinquent receivables percentage

Calculate the percentage of your accounts receivable that is delinquent by dividing the sum of 60 day and 90 day arrears by the total accounts receivable:

Delinquent Receivables Percentage

Track your trends

If you compute your delinquent receivables percentage over the course of several years, you can plot this on a graph and observe the trend line.

If it is trending downward, congratulations! Your final bill collection rate is improving.

Take write-offs and debt set-offs into account

If you write off seriously delinquent accounts on a infrequent basis (for example, once a year) be sure to take this into account. For obvious reasons, your delinquent receivables percentage will drop significantly immediately following a write-off.

Likewise, for utilities in states with debt set-off programs, if you are aggressive in pursuing debt set-off collections, you will see a sizable increase in delinquent collections in March and April.

Following the trend over the course of several years will help offset the impact of write-offs and debt set-off collections.

Are you satisfied with the results?

Is your final bill collection rate as good as you would like it to be?

If not, it may be time to review your policies and procedures. Please give me a call at 919-232-2320 or e-mail me at gsanders@logicssolutions.com to learn more about how a business review could assist you with improving your final bill collection rate.

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© 2014 Gary Sanders

How do you handle payment plans…?

From time to time, usually due to leaks or personal financial situations, customers end up with extremely high bills. If your utility is like most I work with, you likely offer customers in this situation the opportunity to set up a payment plan.

Are you tracking them manually?

Unless your billing software has the ability to track payment plans, you probably do this manually. Usually, this means keeping a list of customers with payment plans and checking the cut-off list on cut-off day. If the customer has paid their monthly installment, you delete them. If not, you leave them on the list to be cut off.

Pretty tedious, isn’t it?

Is there a better way?

Of course there is!

Why not adjust the total amount of the payment plan off the customer’s account and bill the monthly installment back to their account each month?

No need to check the cut-off list each month

Your customer no longer has a large outstanding balance and they must pay the full amount due each month, eliminating the need to scrutinize the cut-off list for accounts with payment plans.

This means creating a new service for installment payments and adding that service to each account with a payment plan. Ideally, your billing software provides the functionality of an installment service that automatically becomes inactive after the final installment is billed.

Even if it doesn’t, your manual list becomes a list of installment services to deactivate each month rather than checking every payment plan against the cut-off list.

Are you doing too many things manually?

Is your office doing too many things manually? Give me a call at 919-232-2320 or e-mail me at gsanders@logicssolutions.com to learn how a business review could assist you with identifying processes that could be improved.

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© 2014 Gary Sanders