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 to learn how you could benefit from a business review.

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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 to learn how a business review could help evaluate how to improve your days of exposure.

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© 2018 Gary Sanders

What are your repayment plan policies?

Once again, one of the listservs I subscribe to provided the subject matter for a newsletter. This time it was a town manager asking about policies allowing repayment plans.

Due Date

A previous Utility Information Pipeline described the distinctions between extensions, installment services, and payment arrangements. This issue will examine some of the requirements many utilities impose on customers requesting a repayment plan.

Limited number of repayment plans

Most utilities impose a limit on the number of repayment plans a customer may have within a given timeframe. For example, only allowing two extensions per calendar year or twelve month period.

The rationale for this is, under normal circumstances, your customers should be able to pay their bill by your established due date. Customers who habitually request additional time to pay are abusing the system.

No history of dishonored payment plans

For most utilities that offer repayment plans, failing to honor a previous payment plan automatically makes a customer ineligible for future payment plans. If your customer failed to live up to their agreement, why allow them to take advantage of you again?

Signed agreement

Perhaps the most important part is to require a signed agreement stating the repayment terms and consequences of failing to honor the agreement.

This signed agreement should include promised payment dates and amounts, along with any interest or finance charge to be assessed. As with any legal document, it’s always wise to consult with your attorney when drafting the document.

2017 Utility Fee Survey

The 2017 Utility Fee Survey is still open. If you haven’t already completed it, and would like to participate, please click here to complete the survey. It should take less than five minutes to complete. For an idea of what to expect from the survey, here are the results of the 2015 Utility Fee Survey:

If you have any questions, please feel free to e-mail me at 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 this Thursday, May 18 at 8:30am.

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

Need assistance?

If you’re considering offering payment plans or are unsure if your delinquent account policies are adequate, please give me a call at 919-232-2320, or email me at for more information about how a business review could help you review your entire office operation.

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© 2017 Gary Sanders

Are you doing all you can to protect against fraud?

The last Utility Information Pipeline dealt with your Red Flags Rule policy and if it is up-to-date. Today, we’ll take a look at applying the Red Flags Rules at various phases of the account lifecycle.

The graphic below is from LexisNexis and identifies key areas in the life of a utility account where potential identity theft and fraud, two key areas addressed by the Red Flags Rule, can occur. If you’re not familiar with LexisNexis, many utilities use their services to research and validate social security numbers. Your utility may already use their services if you operate in a state with a debt set-off program and need to locate social security numbers for bad debt accounts.

For most utilities, the infographic below is primarily relevant for the Account Opening process, but can also apply to Account Management and Account Collections:


Account opening

When a new customer applies for service, you should insure the applicant is who he or she claims to be. The two best ways to do this are to require photo ID and proof of residency (lease agreement or closing documents) for the address for which they are applying for service.

You should also perform a bad debt search using relevant identifying information (name, driver’s license number, social security number and date of birth) to see if the applicant is a previous customer with possible unpaid bills.

Finally, if you base your security deposit on the applicant’s credit rating, insuring the applicant is who they claim to be is vitally important.

Account management

Insuring the person you are talking with is indeed the account holder is important before divulging any financial information for an account. If the customer is in your office, their identity can easily be verified by comparing their face or current photo ID to the photo ID on file.

Customers on the phone aren’t as easily verified, so many utilities require the caller to provide either the last four numbers of their social security number or answer a security question.

If a customer who previously had no history of delinquencies suddenly appears on your cut-off list, do you have a policy in place to insure they have an adequate security deposit?

Account collections

The key to collecting final bills is to be diligent and have an aggressive program in place to follow up with unpaid final bills. Waiting until the end of your fiscal year, just before writing off bad debt accounts, is too late to follow up. You should actively pursue unpaid final bills after each billing.

Is it time to reexamine your processes?

If you aren’t doing all you can to protect against identity theft and fraud or to collect bad debt accounts, please give me a call at 919-232-2320 or e-mail me at to learn how a business review could help you evaluate how to improve your effectiveness.

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© 2016 Gary Sanders

How do you handle bankruptcies?

What happens when one of your customers files for bankruptcy? Do you have a procedure in place to be sure you comply with the law? This issue takes a look at some best practices for dealing with bankruptcy accounts.

Automatic stay

When a customer files for bankruptcy, you will receive a Notice of Bankruptcy from the bankruptcy court. The Notice of Bankruptcy invokes an automatic stay, meaning you may not take any measures to collect any outstanding amounts owed by the customer. In fact, the Notice of Bankruptcy will state “If you attempt to collect a debt or take other action in violation of the Bankruptcy Code, you may be penalized.” or words to that effect.

Close the account and open a new one

The best way to handle the automatic stay is to immediately close the existing account and open a new one. Be sure not to send a final bill, as this would violate the automatic stay.

Any debts (in your case, any new utility bills) incurred after the bankruptcy filing are not subject to the bankruptcy protections. This means the new account can be billed, charged a late fee, or cut-off for non-payment just like any other account.

Flag the closed account to not be penalized

You will want take the necessary steps to insure no late notices are mailed or penalties are charged to the account in bankruptcy. Depending on how your billing system works, you may need to move the account to a different billing cycle or set flags so the account isn’t subject to delinquent notices or late fees.

Change the mailing address

This is a tip I picked up from a customer, and it’s a great idea. Change the mailing address for all bankruptcy accounts to be your office mailing address. That way, if you miss another step in the process and a late notice is mailed, it won’t be delivered to the customer. Likewise, if you use an automated, outbound IVR system for calling delinquent customers, changing the phone number to your office number may be a good idea as well.

Need assistance?

If you have questions about how you handle bankruptcy accounts or any other aspect of your office operation, please give me a call at 919-232-2320 or e-mail me at to learn how a business review could help your utility.

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© 2015 Gary Sanders

2015 Utility Fee Survey Results – Part II

This is the second of three consecutive Utility Information Pipelines reporting the results of the 2015 Utility Fee Survey. 106 utilities, representing 19 states, ranging in size from 83 to 90,000 active accounts participated in the survey.

Last week’s issue summarized the demographics of the survey respondents as well as water and sewer tap and impact fees. Today’s issue deals with delinquent fees and policies. Next week the third and final survey results issue will recap all remaining fees.

If you’re interested, here are the results from the 2012 Utility Fee Survey:

2012 Utility Fee Survey Results – Part I

2012 Utility Fee Survey Results – Part II

2012 Utility Fee Survey Results – Part III

Late fees

Of the 106 participating utilities, 104 charge a late fee. As shown by this graph, charging a late fee as a percentage of the bill is the most popular method (clicking on the any of the graphics will open a larger image in a new window):

Type of Late Fee Charged

Surprisingly, compared to the 2012 Utility Fee Survey, utilities charging a percentage is down just over 10% (57.7% vs. 67.8%), while those charging a flat amount is up nearly 9% (32.7% vs. 24.1%).

Utilities that assess the late fee as a percentage charge from 1% to 10%, with 10% being by far the most popular, as this graph depicts:

Late Fees Percentage

Late fees range from $2.00 to $45.00 for utilities that charge a flat amount. (The utility that charges $45.00 does so in lieu of charging a reconnect fee.) This graph illustrates the late fee flat amounts:

Late Fees Flat Amount

Eight of the utilities charge a hybrid late fee – a combination of a percentage with a minimum amount. Here is a graph showing what they charge:

Late Fees Percentage with Minimum

Cut-off fees

Seven of the 106 utilities do not cut off for non-payment. All of the 99 that do cut off for non-payment charge a cut-off or reconnect fee as a flat amount, ranging from $10.00 to $150.00 as shown below:

Cut-Off Fee Amounts

Of the 99 utilities that cut off for non-payment, 71 of them (representing 71.9%) assess the cut-off fee as soon as the cut-off list leaves the office. I’m pleased to note that the percentage of utilities charging the cut-off fee immediately is up 10% from the 2012 Utility Fee Survey.

Cut-off fee terminology

As more utilities adopt this best practice of charging the cut-off fee as soon as the cut-off list leaves the office, many are finding that terms such as “cut-off fee”, “disconnect fee” or “reconnect fee” are becoming outdated. For that reason, the survey asked what each utility calls its cut-off fee. The results are displayed in the following chart:

Cut-off Fee Terminology

For the number of responses, including the 22 terms included in the “other” category, please click here.

As you can see, reconnect fee and cut-off fee are still the most popular terms, but many utilities have adopted terms that do not refer to cut-off or reconnection. Calling your cut-off fee “delinquent fee” or “non-payment fee” or any of the other terms that do not imply cut-off or reconnection helps to avoid the inevitable arguments with customers who must pay the fee but have not been cut off.

After hours reconnect fees

Of the 99 utilities that cut off for non-payment, 51 of them (representing 51.5%) will reconnect after hours and charge a fee for this service.  41 of the 51 utilities (or 82.4%) will reconnect anytime after regular office hours. The remaining 10 utilities will only reconnect during selected time periods as shown below:

After Hours Reconnect Times

After hours reconnect fee amounts range from $15.00 to $250.00 as shown by the following graph:

After Hours Reconnect Fees

Next week’s issue

Part III – August 18, 2015

Next week’s final survey results deal with any remaining fees, including application, returned check, meter reread, meter tampering and convenience fees.

A special offer

I’m offering a special offer to the first five Utility Information Pipeline readers who respond. If you are one of the first five to respond, I will conduct a personalized fee consultation for one-third off the regular price! That’s $1,000 rather than the usual $1,500 price for this service.

I will review your utility’s current fee schedule and conduct an in-depth phone assessment to learn more about your fees. You will receive a presentation quality document illustrating how your fees compare with other utilities. Also included will be my recommendations for revising any existing fees and suggestions of new fees you should consider charging.

If you are interested in this special offer, please contact me by calling 919-232-2320 or e-mailing me at Remember, the discounted special offer is only available to the first five people who respond.

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© 2015 Gary Sanders