How do your days of exposure compare?

The last Utility Information Pipeline analyzed the possible deposit refund or bad debt write-off, based on early results from the Days of Exposure tool featured a few issues ago. If you remember, 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.

Last week, a customer asked how their utility’s Days of Exposure compared to others who used the tool, so this issue reports those results. Thus far, 50 people have completed the Days of Exposure tool, 45 of which bill monthly, and those results are represented by the graph below.

The Days of Exposure tool doesn’t ask who is completing the page, but it does log the values for each entry. This means I don’t know which utilities are represented by the results shown here:

Days of exposure

The Days of Exposure for those utilities that bill monthly ranged from 53 days (1.77 billing periods of exposure) to 116 days (3.87 billing periods of exposure). The mean (arithmetic average) is 81.72 and the median (equal number of smaller and larger values) is 79.

Analysis of results

As described in the last issue, 53 Days of Exposure is impressive! I consider anything under 60 to be excellent (in order to complete the delinquent process before billing again). Anything over 70 is generally indicative of areas that can be improved or policies that need to be changed.

Of the 45 responses shown above, three were under 60 days, 11 were between 60 and 70, and 31 were greater than 70, as shown below:

Reasons for a high number of days of exposure can include excessive time between reading meters and mailing bills, the number of days between the due date and when bills are actually delinquent, long periods between the delinquent date and a final notice, and extended time before finally disconnecting for non-payment.

If you haven’t already done so, I invite you to take a minute and click here to calculate your utility’s Days of Exposure to see how your utility performs and determine if you are at risk for a potential bad debt write-off.

Holiday spending money

If you missed it in a previous issue, I’m offering two $50.00 Visa gift cards, one to a new subscriber and one to a current subscriber who refers a new subscriber.If you refer a new subscriber between now and 11:59 pm on Thursday, November 15, you will be entered once for each referral. For referrals from outside your organization, you will be entered twice for each new subscriber. Be sure to remind the people you refer to enter your name on the Referred By line when they complete the subscription form.

Are your days of exposure as low as they could be?

Are your days of exposure as low as they could be? To find out, please give me a call at 919-232-2320 or e-mail me at gsanders@logicssolutions.com to learn how you could benefit from a business review.

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© 2018 Gary Sanders

Why isn’t your security deposit enough?

I’m intrigued by the early results from the Days of Exposure tool that was featured two issues ago. If you remember, 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 had a suspicion most utilities don’t charge a sufficient security deposit, and the early results have confirmed that. Thus far, 40 people have used the Days of Exposure tool. Of those 40, seven don’t charge a security deposit, so this analysis is based on the remaining 33.

The Days of Exposure tool doesn’t ask who is completing the page, but it does log the values for each entry. This means I don’t know which utilities are represented by the results shown here:

Days of exposure

The Days of Exposure for those utilities that bill monthly ranged from 53 days (1.77 billing periods of exposure) to 116 days (3.87 billing periods of exposure). 53 Days of Exposure might be the lowest I’ve seen over the course of several years of using this calculation. In case you’re wondering, here’s how they arrived at 53 Days of Exposure:

Refunds vs. potential write-offs

As shown in the graph above, seven of the 33 responses (21.2%) charge a security deposit sufficient to cover their potential liability, based on their Days of Exposure. The remaining 26 responses (78.8%) risk potential write-offs ranging from a paltry fifty cents to a whopping $308.33!

Five of the 33 responses are within $10.00 of charging a security deposit that exactly covers their potential liability. Of these, two are refunds – $2.00 and $8.33 – and the other three are potential write-offs of $.50, $1.49, and $6.00. Kudos to these five utilities for doing a stellar job of determining their security deposit!

If you haven’t already done so, I invite you to take a minute and click here to calculate your utility’s Days of Exposure and determine if you are at risk for a potential bad debt write-off.

Holiday spending money

If you missed the last issue, I’m offering two $50.00 Visa gift cards, one to a new subscriber and one to a current subscriber who refers a new subscriber. If you refer a new subscriber between now and 11:59 pm on Thursday, November 15, you will be entered once for each referral. For referrals from outside your organization, you will be entered twice for each new subscriber. Be sure to remind the people you refer to enter your name on the Referred By line when they complete the subscription form.

Are your days of exposure as low as they could be?

Are your days of exposure as low as they could be? To find out, please give me a call at 919-232-2320 or e-mail me at gsanders@logicssolutions.com to learn how you could benefit from a business review.

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

© 2018 Gary Sanders

Want some extra holiday spending money?

Would you like a little extra spending money this holiday season?

As a way of encouraging more people to subscribe to the Utility Information Pipeline, I’m offering two $50.00 Visa gift cards, one to a new subscriber and one to a current subscriber who refers a new subscriber.

I will draw the winning entries on Friday, November 16 (in time to get the gift cards to the winners before Black Friday!) and will announce the winners in the November 20 Utility Information Pipeline.

New subscribers

If you subscribe between now and 11:59 pm on Thursday, November 15, you will automatically be entered in a drawing for one of the gift cards. If you are referred by someone, be sure to enter their name on the Referred By line of the subscription form.

Referrals

If you refer a new subscriber between now and 11:59 pm on Thursday, November 15, you will be entered once for each referral. For referrals from outside your organization, you will be entered twice for each new subscriber. Be sure to remind the people you refer to enter your name on the Referred By line when they complete the subscription form.

Days of exposure

If you missed the last issue, it included a link to a new Days of Exposure tool I’ve created. Days of Exposure is the total number of days of service a customer ends up owing for if they are cut off for non-payment and never reinstate service.

If you haven’t already done so, please take a minute and click here to calculate your utility’s Days of Exposure and determine if you are at risk for a potential bad debt write-off.

Webinar this morning

If you’re reading this first thing on Tuesday morning, you still have time to register for a webinar from the Environmental Finance Center at UNC this morning at 10:00 am EST. The webinar is entitled “Setting Financial Targets for Water Utilities – Beyond the Budget”. You can learn more about the webinar and register to attend by clicking here.

Do you have an idea for a future Utility Information Pipeline?

Do you have an idea for a future Utility Information Pipeline newsletter? If so, please give me a call at 919-232-2320 or e-mail me at gsanders@logicssolutions.com to let me know.

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© 2018 Gary Sanders

Calculate your days of exposure

If you’ve been a Utility Information Pipeline reader from the early days, you know I’ve written about days of exposure in one of the earliest issues and revisited itagain three years ago.

I feel like this is an important enough topic to not only write about it again, but to also create a tool so you can calculate your days of exposure. First, let’s review how days of exposure are calculated…

Components of days of exposure

Days of exposure is the total number of days of service a customer ends up owing for if they are cut off for non-payment and never reinstate service. It takes into account six specific time periods:

The sum of these six values results in days of exposure. Dividing days of exposure by the number of days in the billing period (days between meter readings) yields periods of exposure. Multiplying the periods of exposure by the average residential utility bill and then subtracting the security deposit arrives at the potential bad debt write-off (or deposit refund if the security deposit is adequate).

In my experience, taking steps to reduce days of exposure is an exercise that would benefit nearly all utilities, so I’ve developed an online tool to calculate days of exposure.

Calculate your days of exposure

If you’ve attended my Improving Revenue Collections for Utilities presentation at a utility conference, you’ve had the opportunity to complete a days of exposure worksheet. If not, or if you’ve forgotten what yours was, I’ve created an online, interactive days of exposure calculator.

You enter the number of days in each of the six stages, plus your average residential utility bill and residential security deposit, and the tool will calculate your days of exposure and potential bad debt write-off or deposit refund. To calculate your days of exposure, please click here.

Are you surprised by your days of exposure?

Are your days of exposure excessive or are you left with a potential bad debt write-off? 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 evaluate how to improve your days of exposure.

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© 2018 Gary Sanders

Why aren’t deposits included in the Utility Fee Survey?

The 2017 Utility Fee Survey is a tool for researching what fees different utilities charge and how much they charge for each fee. I was asked why the survey doesn’t include a question about security deposits.

Questioning

Beyond the obvious

Obviously a security deposit isn’t a fee because fees, by definition, are non-refundable and security deposits are refundable.

Rate increases are never popular, and the best alternative to increasing rates (which impacts all customers) is to charge equitable fees. Fees, such as an administrative fee for activating new customers or a disconnection fee for non-payment, are assessed only to those customers using the service covered by the fee.

Comparing what fees your utility charges, and how much you charge for each, to what other utilities charge is a useful exercise. Such comparisons provide a benchmark for determining if your utility is charging all available fees and if the amount of those fees is fair.

Security deposits, on the other hand, are a function of each utility’s rates, business practices, and customer usage patterns. I’ve written previously about why comparing your security deposit to other utilities is pointless. A better exercise would be to review your own business practices to find ways to reduce your days of exposure.

Complete the 2017 Utility Fee Survey

If you haven’t already completed the 2017 Utility Fee Survey, and would like to, 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@logicssolutions.com or call me at 919-232-2320.

I’m hoping for as much participation as possible in the survey, so please feel free to pass this on to your colleagues at other utilities.

Thank you in advance for your participation in the 2017 Utility Fee Survey.

North Carolina Rural Water Association presentation

If you, or any of your co-workers or board members, will be attending the North Carolina Rural Water Association Annual Conference, please be sure to attend my presentation on Improving Revenue Collections for Utilities at 8:30 am on Thursday, May 18.

Part of this presentation includes an exercise for calculating how much your security deposit should be, based on your days of exposure.

If you or someone from your utility does attend, please be sure to introduce yourselves!

Aging workforce seminar

A major issue facing management of all utilities, large and small, is an aging workforce. As more key employees approach retirement age, utilities across the country are having to face the issue of replacing the loss of institutional and operational knowledge these long-time workers hold.

Does your utility have a plan in place to deal with the aging workforce?

Upcoming seminar

The Utility Management Committee of the NC AWWA-WEA, of which I am a member, is sponsoring an Aging Workforce Issues – Best Practices Panel & Luncheon seminar. This seminar, originally scheduled for last October, has been rescheduled to Thursday, May 4 from 11:30 am to 1:30 pm.

If you are located within driving distance of the University of North Carolina at Chapel Hill, I encourage you to join us. If not, you can still participate in a live webcast of the seminar.

The seminar moderator is J.D. Solomon, PE, CRE, CMRP; Vice President of CH2M. The panelists are:

  • Rod Dones, Organizational Development & Learning Specialist, Charlotte Water
  • Tamara Byers, Human Resources Manager, Charlotte Water
  • Ed Kerwin, PE, Executive Director, Orange Water & Sewer Authority
  • Matt Bernhardt, Director of Public Works and Utilities, City of Gastonia
  • Courtney Driver, PE, Utilities Director, City of Winston-Salem

For more information, or to register for the seminar, please click here.

Need assistance?

If, after completing the 2017 Utility Fee Survey, you’re wondering if your fee schedule is up-to-date, or if you need to find ways to reduce your days of exposure, please give me a call at 919-232-2320, or email me at gsanders@logicssolutions.com for more information about how a business review could help you review your entire office operation.

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© 2017 Gary Sanders

Poll results and vacant accounts

The last issue revisited how the number of days between meter readings and sending bills can adversely contribute to increased days of exposure.

Poll results

That issue included a poll asking how many days pass between reading meters and mailing bills. Twenty utilities responded, and here are the results of that poll:

If you missed the poll, you can click here to take it.

If your utility is one that mails bills within two or three days of reading meters, congratulations, you’ve figured out how to do it efficiently!

If your utility falls in the four to seven day range, this is what I would call normal – there’s room for improvement, but it’s not excessive.

However, if your utility takes eight or more days, as the majority of the responses, I consider this to be excessive. I would encourage you to evaluate why it takes so long and see if you can find room for improvement. If you can’t figure out how to reduce the time between reading and billing on your own, please give me a call to see how a business review could assist you.

Reading inactive meters

While we’re on the topic of meter readings, let’s revisit reading inactive meters for vacant accounts, a topic I touched on briefly while discussing meter reading best practices.

From the best I can tell, in most cases the practice of not reading inactive meters is a symptom of the TTWWADI syndrome

From the best I can tell, in most cases the practice of not reading inactive meters is a symptom of the TTWWADI syndrome, dating back to when most utilities read meters on paper and entered them manually. Not reading inactive meters was thought to be a time saving tactic for both the meter readers and office staff.

With the advent of handhelds and automated meter reading systems, there is no reason not to read inactive meters. Reading inactive meters is your best tool for detecting customers who may have moved into a vacant home without properly initiating service. For water utilities, it’s also the best way to determine if there is a leak at a vacant property.

Do you read inactive meters?

Does your utility read inactive meters? Please take a moment to to take this quick poll and I’ll publish the results in the next issue.

Do you operate as efficiently as possible?

If you aren’t sure your utility is operating as efficiently as it could be, 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 your utility.

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

© 2015 Gary Sanders