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.

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© 2019 Gary Sanders

Mitigating the cost of printing full-page bills

I recently saw a listserv post inquiring about the pros and cons of moving from postcards to full page bills, as well as asking about the costs associated with making the switch. In the same vein, I know we have customers who have resisted transitioning from postcards to full-page bills due to the increased costs, primarily postage.

Postal rate increase

A postage rate increase went into effect on January 27. You can see these new rates here. Using these new rates, let’s examine the difference in postage between postcards and full-page bills.

If you use an outsource printer, they will perform the CASS certification and presorting to qualify for the best possible discount. Under the new price structure, automated presorted mail sorted to the 5-digit ZIP code now costs $.383 per piece. This would include the majority of your bills that are mailed to local addresses. Bills mailed to out-of-town addresses will be slightly more, depending on how many are mailed to the same 3-digit ZIP prefix.

The best rate for a postcard is $.257 per piece, but you have to be using CASS certification software to be eligible for this rate. If you are just presorting by ZIP code, without using CASS certification software, the rate is $.28 per postcard. And if you’re not presorting at all, you’re paying the full rate of $.35 per postcard. For purposes of this illustration, let’s assume your software prints postcard bills in ZIP code sequence and that’s the only presorting you’re doing. Here is the comparison between postcards and first class postage:

Difference in price alone

The above illustration shows nearly a 27% increase in postage cost for switching from postcards to full-page bills. What this doesn’t take into account is the intangible benefit of being able to present more information on a full-page bill and being able to include a return envelope.

Most outsource printers include a window return envelope which allows your return address, with barcode, to show through the window. If your customer mails their payment, the inclusion of a bar-coded return address speeds the processing through the postal sorting facility over a hand-addressed envelope that must have a barcode manually applied.

Labor savings

In addition to the intangibles, using an outsource printer results in very tangible labor savings in your office. Your staff no longer needs to attend to a printer printing bills or prepare the bills for mailing. This is all handled by the outsource printer.

Ebilling alternative

Another way to offset the increased cost of first-class postage is to offer ebilling and encourage your customers to request ebills rather than receiving a paper bill in the mail. For each customer who opts in to ebilling, you save not only the cost of postage associated with mailing their bill, but also the cost of the paper stock and envelopes.

If you can convince 27% of your customer base to opt-in to ebilling, the switch from postcards to full-page bills will result in no additional cost! Depending on the demographics of your customer base, this percentage is not unreasonable.

Need help deciding?

Are you trying to decide if moving to full-page bills or outsourcing your bill printing would be cost effective for your utility? If so, please give me a call at 919-232-2320 or e-mail me at gsanders@logicssolutions.com to learn how a business review could help inform your decision-making process.

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© 2019 Gary Sanders

Happy New Year 2019!

Happy New Year 2019! With Christmas and New Year’s Day both falling on Tuesdays this year, welcome to a Wednesday surprise on your first day of work in the new year!

This issue marks the eighth anniversary of the Utility Information Pipeline. If you’ve been with me from the very beginning (and many of you have!), this is the 194th issue you’ve received!

In the beginning, I had all kinds of ideas for topics for future newsletters. Now, eight years later, inspiration for new content isn’t as easy to come by. Many times, a conversation with a customer, a prospect, or a recent listserv post will serve as the source for a newsletter. Other weeks, the ideas don’t come so easily. With that in mind, I’m always looking for new ideas to write about so, if you have ideas or suggestions for a future topic, please feel free to email me!

If you have co-workers or colleagues from other utilities you feel would benefit from reading this newsletter, please take a minute to forward this to them and encourage them to subscribe.

Looking back on 2018

2018 marked the completion of the second bi-annual Utility Staffing Survey. The Utility Staffing Survey, like the Utility Fee Survey in odd number years, has become a regular feature in even numbered years.

If you want a quick refresher, here are links to the two results issues from the Utility Staffing Survey.

In 2018, I updated my personal website – www. garysandersonline.com. This includes the Days of Exposure Calculator which has proven to be a valuable resource for utilities to determine if their security deposit is sufficient.

Listed below are the top five most frequently viewed blog posts in 2018, regardless of when the post was published:

  1. How much is your late fee?
  2. What are these barcodes on my bills?
  3. What is your leak adjustment policy?
  4. Do you have a cash handling policy?
  5. What’s a compound meter?

Here are the top five posts published in 2018:

  1. Are you tracking non-revenue water?
  2. Calculate your days of exposure
  3. 2018 Utility Staffing Survey Results – Part I
  4. How do you justify an automated meter reading system?
  5. Do you separate your base charge…?

Looking ahead to 2019

This year will include the 2019 Utility Fee Survey which will be the fourth survey of the various fees utilities charge. Previous Utility Fee Surveys were completed in 2012, 2015, and 2017.

2019 will also mark the 200th issue of the Utility Information Pipeline, so I’ll try to come up with something special for that issue!

Is this a good time to consider a business review?

When things in your office slow down a little is sometimes the best time to conduct a business review. If you’ve been considering a business review as an internal check-up, or would like to know more about what you could gain from a business review, please give me a call at 919-232-2320 or e-mail me at gsanders@logicssolutions.com to discuss it.

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© 2019 Gary Sanders

Looking back on 2017 and ahead to 2018

As 2017 winds to a close, let me be one of the first to wish you and yours a Happy New Year for 2018!

This issue marks the seventh anniversary of the Utility Information Pipeline! About seven and a half years ago I had the crazy idea of writing a newsletter to share some of my collected wisdom and experiences from my then nearly 30 years of working with utility business offices.

With encouragement from co-workers and, most importantly, my wife, the Utility Information Pipeline was launched. Here we are, seven years and 171 issues later!

When I first started, I had a ready supply of ideas to write about. Now, seven years later, I’ve used all those ideas (and more!) and have to work a little harder to find inspiration. Some weeks, a conversation with a customer or prospect or a recent listserv post will serve as the source of that week’s newsletter. Other weeks, I have to dig a little deeper. So, if you have ideas or suggestions for a future topic, please feel free to email me.

If you have co-workers or colleagues from other utilities who you feel would benefit from reading this newsletter, please take a minute and forward this to them and encourage them to subscribe.

Looking back on 2017

Listed below are the top five most frequently viewed blog posts in 2017, based on page views:

  1. How much is your late fee?
  2. What are these barcodes on my bills?
  3. Do you have a cash handling policy?
  4. What is your leak adjustment policy?
  5. Intelligent Mail barcodes – are you ready…?

The top five posts from 2017 include:

  1. Invitation to participate in 2017 Utility Fee Survey
  2. Have you considered a third party convenience fee?
  3. 5 easy ways to get more bank draft customers
  4. What should your customer service policy include?
  5. 2017 Utility Fee Survey Results – Part III

Looking ahead to 2018

The coming year will bring about the second bi-annual Utility Staffing Survey. The Utility Staffing Survey, like the Utility Fee Survey in odd number years, will become a regular feature in even numbered years.

As time permits, I continue to update my personal website – www. garysandersonline.com. I’m hoping to unveil some new tools for utilities there this year, as well.

As always, If you have ideas or suggestions for a newsletter topic, please feel free to email me.

Is this a good time to consider a business review?

The dead of winter is sometimes the best time to conduct a business review, when things tend to slow down some. If you’ve been considering a business review as an internal check-up, please give me a call at 919-232-2320 or e-mail me at gsanders@logicssolutions.com to discuss a time that’s convenient for you.

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© 2017 Gary Sanders

Should you accept echecks…?

So you’ve got your online bill pay system in place and now you’re faced with what payment methods to offer. This includes which credit cards to accept and, more importantly, whether or not to accept echecks.

What is an echeck?

Echeck payments provide your customers the opportunity to enter their bank routing and account numbers and submit a payment to be electronically transferred from their bank account. This process is essentially the same as a bank draft, except the customer initiates the process rather than your office sending an ACH file to the bank.

Advantages of echecks

First, let’s examine why you might want to accept echecks. For starters, transaction fees are generally lower for echecks than credit cards. This means, if your utility absorbs the cost of processing online payments without charging a convenience fee, it costs you less to process an echeck than a credit card payment. If you charge a third party convenience fee, your customer will pay less than if they were to pay using a credit card.

Another reason to consider accepting echecks is some customers have checking accounts but no debit card so, without the echeck option, they wouldn’t be able to pay online.

Disadvantages of echecks

As was posted last week on one of the listservs I follow, echecks are subject to being returned if the customer incorrectly enters the echeck information.

This is because, unlike credit cards, there is no validation of the routing or account numbers as your customer is entering the payment. Likewise, there is also no verification of funds availability.

What this means is, unfortunately, echeck transactions are subject to honest mistakes in entering the information or, in some cases, outright abuse. I have had utilities tell me they are certain they have had customers intentionally enter erroneous echeck payments just prior to cut-off day to avoid being disconnected. This can work to the customer’s advantage if your returned check fee is less than your cut-off or reconnect fee.

The only real solution is to not accept echeck transactions and encourage your customers to use a debit card to pay from their checking account.

A reminder for North Carolina utilities

If you work for a North Carolina water utility, you should have received an invitation from the Environmental Finance Center to participate in a Utility Management Survey conducted by the EFC and North Carolina League of Municipalities.

If you, or someone at your utility, didn’t receive this invitation, please email the EFC directly at efc@sog.unc.edu and they will provide you with the specific survey link for your utility.

Should you offer additional payment options?

Do you ever wonder if your office should offer additional payment options? If so, please give me a call at 919-232-2320 or e-mail me at gsanders@logicssolutions.com to learn how a business review could benefit your utility.

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© 2017 Gary Sanders