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

Are you staying abreast of the latest trends…?

Two years ago, I wrote about the 2012 Fiserv Billing Household Survey and offering your customers payment choices.

2014 Billing Household Survey

In December, Fiserv released the updated 2014 Billing Household Survey slideshow. Below is an infographic highlighting several key points from the 2014 Survey. Clicking on the infographic will open a larger version from the Fiserv website.

Billing and Payment Options Positively Impact Customer Satisfaction and Loyalty

In this article, I’ve recapped some of the highlights of the 2014 Survey.

Multiple payment methods

According to the survey, the average household uses three different payment methods each month (slide 5) and offering multiple bill payment options increases customer satisfaction (slide 7).

Customers paying with a mobile device increased 69% from 2013 (slide 12). Over half of all tablet owners have used their tablet device to pay a bill (slide 16) and the most common way to pay a bill by mobile device is your website (slide 15).

What this says to me is, if you’re not offering your customers online bill pay, they aren’t going to be happy with you.

Late payments

36% of customers pay bills late for several reasons, and second only to cash flow problems is forgetting the due date (slide 8). Over 75% of customers say due date reminders increase customer satisfaction (slide 17).

Offering due date alerts can increase the chances of those same customers adopting e-billing (slide 18).

If you aren’t alerting your customers of an impending due date (and I’m not talking about old-fashioned printed second notices), you’re missing out on an opportunity for improved customer service.

Paperless billing options

Almost a quarter of all U.S. bills are sent electronically with no paper bill produced and nearly half of all customers indicate that receiving paperless bills increases customer satisfaction (slide 19).

Almost a quarter of all U.S. bills are sent electronically                                                                                                                                                       

As could be expected, the youngest customers are most interested in doing away with paper bills (slide 20). However, nearly half of all bill payers choose to receive a combination of paper and e-bills (slide 21).

Knowing the demographics of your customer base can help predict the adoption rate of offering paperless billing.

Need assistance?

If you have questions about offering additional payment options or improving the way you communicate with your customers, please give me a call at 919-232-2320 or e-mail me at to learn how a business review could help your utility.

Still time to complete the 2015 Utility Fee Survey

Just a friendly reminder – if you haven’t yet participated in the 2015 Utility Fee Survey, there is still time to do so. 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 or call me at 919-232-2320.

I’m looking 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 Utility Fee Survey.

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© 2015 Gary Sanders

How do you notify cut-off accounts?

Recently, in one of the listservs I subscribe to, the question was asked about how other utilities notify customers after they have been disconnected for non-payment. I found that to be an intriguing question, because it’s not one I’ve heard asked before.

A few responses answered how they notify accounts that are subject to being cut off, but only one other response directly addressed notifying customers after they have been cut off.

Notification options

My observation has been that utilities do one of two things to let a customer know they have been cut off – leave a door hangar or do nothing at all.

Do you have a legal obligation?

Some states require a utility to leave a door hangar, or other notice, alerting a customer that their service has been disconnected. Other utilities feel that it’s a good customer service policy to leave a door hangar.

If you do leave a door hangar and it can be distinguished from a door hangar you would leave for any other reason, you may want to consult with your attorney. I know of one utility that used a brightly colored door hangar for disconnects and a white one for all others. They were sued for a privacy act violation and, as part of the settlement, agreed to use a white door hangar for all situations.

Avoid confrontations

In the other camp are utilities trying to avoid potential confrontations with angry customers. These utilities simply have the service technician terminate the service and move on to the next account on the cut-off list without any further notification.

After all, you’ve let the customer know they are in jeopardy of being cut off, either with a second notice or on the original bill, so what more notice should you provide them?

Quick poll

How do you notify customers after they have been cut off for non-payment? Please take this quick poll.

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© 2014 Gary Sanders

Do you offer third party notification…?

Two issues ago, I wrote about offering more convenient due dates for senior citizens. Another customer friendly service you might consider offering is third party notification. Third party notification allows someone other than the customer (and the utility, thus the term “third party”) to be notified of bills and delinquencies.

Duplicate copies of bills and delinquent notices

If your billing software allows you to do so, you can mail a duplicate copy of the bill to a third party, such as a child or caretaker of an elderly customer. Many utilities, in states where the landlord is ultimately responsible for payment of the bill, mail a duplicate copy of the bill to the landlord.

Of course, this means you will incur additional costs in the form of postage and forms cost, unless you offer paperless billing as a third party option.

Call list before cut-off for non-payment

Another, more common, option for third party notification is to call the third party as you are reviewing the cut-off list.

If your billing software offers a third party notification call list, you can call from that. But even if it doesn’t, it should be easy enough to enter a comment on the account with the third party name and phone number. If customer comments print on your cut-off list, you can use this to call from.

Even if you can’t print customer comments with your cut-off list, it should be easy enough to cross-reference your cut-off list with a separate third party call list.

Avoid a public relations nightmare

Nobody wants to work for the utility that makes it on the 6:00 news for turning utilities off for a homebound senior citizen. Offering third party notification is one way to be sure you don’t work for that utility.

If you have questions about third party notification or other customer friendly initiatives, please give me a call at 919-232-2320 or e-mail me at

© 2012 Gary Sanders

Are you still sending second notices?

Do you send second notices to delinquent customers?

If your answer is “Yes”, do you have a statutory requirement that requires you to send a second notice to accounts before you cut them off for non-payment?  If not, I would encourage you to take a good look at what your payback is for sending delinquent notices.

If your late paying customers behave like their counterparts at most utilities that I’m familiar with, they become conditioned to not paying their bill until they receive a delinquent notice. This type of customer essentially ignores the utility bill and waits for the second notice to arrive before they think about paying their bill.

Some utilities have decided that mailing second notices is too costly for the benefit of so few customers. In this issue let’s take a look at how to determine the real cost of mailing second notices and examine some other options…

What does a second notice cost you?

Have you ever stopped to calculate the cost of sending delinquent notices?

I’ve referenced the Government Finance Officers Association’s (GFOA) Committee on Governmental Budgeting and Fiscal Policy’s Best Practice for Measuring the Cost of Government Service in two previous issues – Issue 3 and Issue 10. At a minimum, the direct costs involved in preparing and mailing second notices include:

  • Staff time to prepare the list of delinquent accounts to receive second notice
  • Paper and consumables to print working copies of the delinquent list
  • Forms and consumables to print the second notices
  • Postage and envelopes to mail the second notices
  • Staff time and vehicle expenses to deliver the second notices to the Post Office

If you haven’t stopped to calculate these costs recently, I encourage you to do so. You may decide, as other utilities have, that the costs outweigh the benefits when it comes to sending second notices.

If you would like assistance preparing a cost/benefit analysis of sending second notices, please give me a call at 919-232-2320or e-mail me at

Are there other options besides mailing second notices?

If you are contemplating no longer sending delinquent notices, you may be wondering what other options are available to remind your customer. Options beside mailing second notices include:

  • Clearly stating on the utility bill that no second notice will be sent
  • Printing the amount due with penalty on the utility bill
  • Placing a reminder phone call

Let’s take a closer look at each of these options…

Clearly stating on the utility bill that no second notice will be sent

It’s always a good practice to include useful information on the back of your utility bill. This includes such information as office hours and phone numbers, ways your customer can pay, late fee and cut-off policies and, if you don’t send second notices, verbiage that clearly states that.

Many utilities that don’t send delinquent notices also print a bold message on the front of the bill such as “NO SECOND NOTICE – THIS IS THE ONLY BILL YOU WILL RECEIVE”. I can’t speak to how many customers actually pay attention to such a statement. However, when customers complain that they weren’t notified that their bill was late, showing them that statement on the bill absolves you of any blame for not notifying them.

Printing the amount due with penalty on the utility bill

If your response to not sending delinquent notices is “But we need to send a second notice to let our customers know how much they were penalized”, there are other ways to accomplish this. One such way is for the utility bill to show both the amount due if paid by the due date and the amount to pay, including penalty, if paid after the due date. For example, if your customer’s bill is $50.00 and is due on September 20 with a 10% penalty on September 21, your bill might look something like this:

Utility Bill Payment Dates and Amounts

A number of Logics customers print utility bills that include something similar to this rather than sending second notices.

Placing a reminder phone call

If you are still interested in alerting your delinquent customers that their due date is approaching or just passed, one option is placing a reminder phone call. For some smaller utilities this could be accomplished by a person, but for larger utilities it likely means using an automated system to place the calls. Such systems are sometimes called Interactive Voice Response (or IVR) systems.

Outbound IVR systems can be installed as in-house systems or they can be totally web based in the Software as a Service (SaaS) model. Logics markets a product called Logics Notify that is a fully web based outbound IVR solution. All that is required is to upload a list of names and phone numbers and enter the message that you want delivered to your customer. At the scheduled start time, Logics Notify begins calling each phone number in the list. A record of the time the call was placed and how the call was received – answered live, answered by voice mail, no answer or out of service – is logged.

If you are considering implementing automated courtesy calls, I encourage you to consult with your attorney as to any privacy act restrictions in your state that might limit how much information you can divulge in a courtesy call.

If you have any questions about second notices or would like more information about Logics Notify, please give me a call at 919-232-2320 or e-mail me at

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© 2011 Gary Sanders