Why this isn’t a relevant question…

It seems I get asked the same question with each Utility Fee Survey, “Why aren’t deposits included with the Utility Fee Survey?”.

For starters, the obvious answer is a security deposit isn’t a fee. By definition, fees are non-refundable and security deposits are, of course, refundable. For some utilities this is after a sustained period of good payment history, for others not until the account is closed.

Additionally, I don’t believe comparing deposits between utilities is a useful exercise, which I’ll explain.

Comparing fees

The results of the Utility Fee Survey provide a useful tool for utilities to compare themselves to other utilities to determine if their fees are up-to-date and reasonable. I’ve had several utilities tell me they’ve implemented new fees, or increased existing fees, based upon learning what other utilities are doing.

Periodically reviewing your fee schedule, and comparing it to other utilities, is a useful exercise. Because fees are assessed only to customers who are provided a specific service, they generate additional revenue without raising rates across the board. And, as any utility knows, generating increased revenue without raising rates is a good thing!

Not a relevant question

Periodically, on some of the listservs I follow, someone will ask what other utilities charge as a security deposit. Presumably, this question, much like the question in the opening paragraph, originates from trying to determine if the utility asking the question is charging a fair deposit, compared to other utilities.

The reason for charging a security deposit is to ensure your utility gets paid the final bill when a customer closes an account. A fair and adequate security deposit depends on several factors, including your rates and delinquency policies.

Trying to compare security deposits between utilities without taking into consideration the difference in rates, customer usage patterns, and business practices is pointless.

Is your security deposit adequate?

To assist utilities in determining if their security deposit is adequate, I’ve developed a formula I call Days of Exposure. Days of Exposure is the total number of days of service a customer ends up owing for if they are disconnected for non-payment and never reinstate service.

I’ve developed a online tool to calculate your utility’s Days of Exposure. If you’re interested in finding out if your security deposit is sufficient, please click here to calculate your Days of Exposure.

No takers!

No one stepped forward after the last Utility Information Pipeline to volunteer to track the time involved in taking various types of payments.

If you remember, my premise is that taking cash and check payments isn’t “free” and I’m looking for a few utilities to gather real data to help me analyze the true cost of taking payments.

If you’re willing to participate, please email me and I’ll give you a call to discuss the process in more detail.

There’s still time to complete the 2019 Utility Fee Survey

If you haven’t yet completed the 2019 Utility Fee Survey, please click here to complete the survey. It should take less than five minutes to complete.

If you have any questions, please feel free to e-mail me at gsanders@edmundsgovtech.com or call me at 919-232-2320.

Please feel free to share this survey with your peers at other utilities.

Thank you in advance for taking the time to complete the survey and for sharing it with other utilities.

Unsure if your security deposit is adequate?

If you’re wondering if your security deposit is adequate, please give me a call at 919-232-2320, or email me at gsanders@edmundsgovtech.com for more information about how a business review could help you find out.

Click here to subscribe to my free, bi-weekly email newsletter...

© 2019 Gary Sanders

Is that really the case…?

A common reason many utilities offer for why they charge a convenience fee for accepting credit card payments is, “It’s not fair for all of our customers to pay for a few who want to use a credit card”.

But is that really the case? Certainly, cash and check payments don’t incur a fee from a merchant processor, but are they really “free” as these utilities seem to think?

Let’s take a look…

Cash payments

Cash payments require entering the payment, printing a receipt, and making change at the time of the payment.

Then, at the end of the business day, someone has to count and balance the cash drawer, and prepare a deposit. Someone then has to take this deposit to the bank. If, for some reason, the cash drawer doesn’t balance, the discrepancy must be researched, and that takes even more time.

Check payments

Check payments, if they are received in the mail, require opening the mail and entering the payment, unless you’re using a lockbox and there’s definitely a cost for that. Check payments at the counter or drive-up window must be entered and a receipt printed. Checks must also be balanced and a deposit made, whether that means scanning them for remote deposit capture or running an adding machine tape or listing them on the deposit slip, all of which take time.

None of this takes into account if the check bounces! If a check is returned for insufficient funds, you might have to research which account was paid by the check. Then you have to contact the customer and add the bad check amount and (hopefully) a returned check fee back to the account.

Credit card payments

Credit card payments, on the other hand, especially online and IVR payments, require minimal personal intervention compared to processing a cash or check payment.

If you have a fully integrated online bill pay or IVR system, the payments are immediately logged in your system and there is no need to import a file the next day. Even if your online bill pay system isn’t fully integrated, importing a file of credit card payments takes far less time than entering cash or check payments.

Balancing the day’s credit card payments is as simple as comparing the total in your system to the merchant processor’s website or the total from your third-party online bill pay provider.

And, of course, no bank deposit is required for credit card payments.

Some utilities don’t accept payments in person

I know of at least three utilities who, for various reasons, don’t accept cash or check payments in person. And I know of one other that accepts checks and credit cards in person, but no cash.

Admittedly, the three who accept no payments in person are all privately owned utilities. I completely understand the ramifications of a public utility not accepting payments in person.

However, this does underscore the fact that some utilities have acknowledged how costly accepting payments in person can be, and, consequently, they’ve opted not to.

How much does it really cost to process payments?

Obviously, there are costs associated with accepting cash and check payments, especially in person. But how much are these costs and can they be quantified?

This is where you can help!

I’m looking for a few utilities who are willing to invest the time and effort into logging the amount of time the aforementioned activities entail.

If you decide to participate, you will be provided a link to a Google spreadsheet where you can log the number of payments received each day and the amount of time required for each activity.

In exchange for maintaining this log for a month, I will provide you with a detailed analysis of how your utility compares to the other participating utilities. I will publish the results (without identifying the participating utilities) in a future Utility Information Pipeline.

If you’re willing to participate, please email me and I’ll give you a call to discuss the process in more detail.

Have you completed the 2019 Utility Fee Survey?

If you haven’t yet completed the 2019 Utility Fee Survey, please click here to complete the survey. It should take less than five minutes to complete.

If you have any questions, please feel free to e-mail me at gsanders@edmundsgovtech.com or call me at 919-232-2320.

Please feel free to share this survey with your peers at other utilities.

Thank you in advance for taking the time to complete the survey and for sharing it with other utilities.

Unsure what payment methods you should offer?

If you’re wondering if your utility is offering the best possible payment options, please give me a call at 919-232-2320, or email me at gsanders@edmundsgovtech.com for more information about how a business review could help you find out.

Click here to subscribe to my free, bi-weekly email newsletter...

© 2019 Gary Sanders