Customers of one West Coast utility have several opportunities to pay their bills:

• They receive the regular monthly bill.
• Ten working days later, if the bill is not paid, a reminder notice is mailed.
• Twenty working days thereafter, if the bill is still due, a turn-off notice is sent, giving the customer five days to pay the bill.
• If no payment is received, a field collector hangs a notice on the customer's door, indicating that the customer has 48 hours to pay the bill.
• If the customer fails to pay, a field collector makes a premises visit to collect or to disconnect electrical service.

When focusing on ways to improve cash flow, the utility's credit manager and her credit staff focused on the 48-hour premises notice. "We had to find ways to improve cash flow within the boundaries of state law," she says. "After a brainstorming session in which several ideas arose, we decided to focus on customer payments made after they had received their 48-hour notice." Under the existing plan, customers could either mail their payments or make payments at authorized pay stations (e.g., pharmacies and check cashing facilities). "The process meant we actually had to wait seven days before initiating field action because we had to allow the payment to reach us through the mail," she notes. "We were losing valuable time and actually lengthening the time period given to us under the law."

48 Hours Is 48 Hours
To address this problem, the team opted to divide customers into two groups:

1. Unpaid accounts under $150: All customers who owe less than $150 can still make their payments either by mail or at one of the pay stations. If payment is not received within seven days, a field collector is sent out to get payment or shut off service.

2. Unpaid accounts $150 or over: Customers with unpaid bills for $150 or more are required to make payment within 48 hours at corporate or satellite offices. If payment is not received within this 48-hour period, the electric service is subject to disconnect.

"The cut-off point of $150 was chosen for a specific reason," the CM says. "The average household bill would probably not be over $150 if it was a single balance due." In other words, customers required to make payment at one of the offices are generally larger customers or those with two or more past-due balances. The average household late on a single bill would not be held to the stricter payment period.

Of course, the new program for large-balance customers has had a positive effect on cash flow, but it has provided other benefits as well:

• Reduced double billing. Large bills are usually paid before the next month's bill becomes delinquent. This reduces double billing. "It's always harder for customers to catch up once bills begin to overlap," he says.

• Increased personal touch. By paying at one of the offices within 48 hours, customers have the opportunity to discuss problems in person with a representative. Customers may reveal incorrect billing addresses, individual hardships, or other problems that stop them from paying in a timely manner. "Previously, simple problems escalated to major ones before customers made contact with us," he notes. Now, customers make contact much earlier.

Editor's Note: This article originally appeared in the Credit & Collection Manager's Letter.

Related Articles

·  Preventing Bad Checks ·  Training Collectors to Take a Customer-Service Approach ·  Interactive Bill Presentation and Payment ·  Collection Training: Developing Self-Management Work Teams ·  Validation Notice: A Violation of the Fair Debt Collection Practices Act? ·  Controlling the Credit Application Process ·  Interest on Security Deposits ·  Prime-Time Collecting