By Peter Chawaga
With rising regulatory and infrastructure costs, it’s more important than ever for water and wastewater utilities to collect what they’re owed from ratepayers. But how can they go about improving collection?
Water utilities are in a tough spot. They’re asked to provide a crucial service, one that can even be considered a miracle of modern engineering, and yet they are constantly struggling to collect payment for these services from those who benefit.
WaterSmart Software wanted to help. The technology company provides engagement and analytical tools that utilities can use to communicate with ratepayers and stay on top of payments. It recently hosted a “WaterSide Chat” webinar to provide utilities with best practices they can employ to improve collection performance.
“As you go through, think [to] yourself, ‘Am I penny-wise and pound-foolish by not investing in my collection process or finding out why my collection process is not as effective as I want it to be?’” Tom Hulsebosch, the presenter and a senior manager with West Monroe Partners, a business and technology consulting firm, told attendees. “We’ve seen collection issues upwards of 10 percent at some utilities. That’s a lot of revenue that can pay for a lot of staffing.”
Am I penny-wise and pound-foolish by not investing in my collection process or finding out why my collection process is not as effective as I want it to be?
From there, Hulsebosch moved on to enumerate the six primary ways that utilities can improve their collection processes and hopefully put more revenue toward the vital work that they do.
1. Collect And Maintain Customer Data
A natural first step for improving collections is to know who you are collecting from.
“One of the key things … is making sure that you’ve got your customers uniquely identified,” Hulsebosch said. “Not the brother of someone, but your actual customer identified, and that you can actually do a credit check on.”
When customer service agents act as the go-between for utilities and ratepayers, it’s important to make sure they are on the same page when it comes to collecting payment.
“We’re always incentivizing our customer agents for something,” Hulsebosch said. “What you want to make sure you’re not doing is accidently incentivizing them to help the client find a way around paying the bill on time. Helping them to find ways to resolve past payments, as well as old debts, is really important.”
Lastly, Hulsebosch stressed the importance of keeping utility systems in sync and making sure all the data points they are collecting align.
“This is a really tricky one, and it gets trickier as we add more technology to our water network,” he said.
2. Utilize Premises-Based Billing
It sounds simple, but it’s critical to ensure that the person who owns a property is the one who is accountable for its water bill.
“We see a very big difference between water utilities that practice premises-based billing and those that do not,” Hulsebosch said. “[Utilities that do not are] trying to go after, if you will, the renter or the tenant, as opposed to the building owner. Those that have this concept of premises-based billing, where in the end the owner of the building is primarily accountable for the bill, well, it turns out they really don’t have a problem. This can go from one of your biggest headaches to not so big a headache.”
3. Employ Customized, Risk-Based Processes
Some innovative utilities employ customized processing that segments customers and improves collections, according to Hulsebosch.
“I like the idea of segmenting your customers, looking at the potential impact of taking that deposit or not taking that deposit, especially for low-risk customers, and then making the determination of whether that’s really an effective way to get people to pay their bill,” he said.
Hulsebosch also encouraged attendees to consider rethinking how they approach customers who have missed a payment.
“Do you go after them too aggressively when they miss a bill payment, or do you send them a nice, friendly reminder?” he asked. “I would recommend the friendly reminder.”
4. Keep Customers Satisfied
Hulsebosch cited a poll he conducted on behalf of a utility, in which he found that the correlation between customer satisfaction and how easy it was to complete a payment was nearly one to one. He found that if customers are satisfied, they will more readily make payments, even in the face of higher costs.
“Regardless of the type of service or transaction, we saw that if it was easy, they were happy,” he said. “This particular utility was not the lowest-cost utility in the area. It was the most expensive, actually. We tend to think that it has to be low-cost — ‘cheap’ — and that’s where the satisfaction with the customer comes. But that’s not what the data showed us.”
5. Leverage State Laws And Local Ordinances
Perhaps the best way that utilities can empower themselves to collect payments is to become familiar with the local rules that are in place to help them. For instance, some municipalities prevent property owners from selling if their water bills aren’t paid.
“Taking a look and thinking about what the opportunities are within your municipal code that you can enforce makes it easier to do business,” Hulsebosch said. “Being predictable and enforcing the boundaries that are in your existing ordinances actually makes it easy [for customers] to predict how they should do business with you.”
6. Make Yourself Accessible
Similar to his points about knowing customers and keeping them satisfied, Hulsebosch emphasized the efficacy of customer assistance programs that let ratepayers know that utilities want to make it easy for them to pay their bills on time.
“Making it easy for your call center agents or your billing and collection folks to follow up with customers … is really helpful, because not everyone knows about [customer assistance programs],” he said. “Then, once you interface with the customer who has some payment challenges, make sure it’s easy for that customer assistance program to pay on their behalf.”
Hulsebosch also emphasized the importance of reducing the number of delinquent customers.
“This is one that can become a real challenge if you don’t have a dashboard showing what percentage of your customers are latepaying,” he said. “Keeping an eye on all of those [delinquent] customers and trying to use the appropriate mechanisms to move people off that late-pay list is really important.”
But Hulsebosch’s parting advice to attendees was an amendment to his six-part list as a whole.
“Don’t fight everything off at once,” he said. “This is a roadmap. This is a multiyear process, but hopefully this will help you think through some tactics and plans to improve your payment performance.”
About The Author
Peter Chawaga is the associate editor for Water Online. He creates and manages engaging and relevant content on a variety of water and wastewater industry topics. Chawaga has worked as a reporter and editor in newsrooms throughout the country and holds a Bachelor’s degree in English and a minor in Journalism. He can be reached at firstname.lastname@example.org.