11.30.10Holly Merrill, Director, BillingTree

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By adopting new technologies, utility companies can eliminate costly and slow paper cycles, improve their cash flow by integrating e-billing with mobile text notifications, and reduce the element of risk by offering customers pre-funded accounts and a range of payment options. At the same time, these new technologies enable them to become more environmentally friendly and improve their customer service by interacting more directly with their customers.

Utility companies have been slow to adopt new billing and receivables technologies. Billing for utilities is still mainly carried out on paper -- a huge 63 percent for electricity providers, 64 percent for gas and 73 percent for water, according to a recent PayItGreen Survey, significantly lagging behind their counterparts in cell phone, financial services and Internet provision markets.

The cost of issuing these paper bills can currently amount to as much as $2 per statement, a figure that can be more than halved by introducing more direct channels -- text-n-pay through SMS costs less than a dollar!

Eliminating the paper cycle through the introduction of e-billing and e-payments, and exploiting mobile and text applications also matches the expectations of the tech-savvy 'Generation Y' group of homeowners, who are already used to e-billing and e-payments for Internet and cell phone use, and are happy to pay for power and water in the same way. Add to this the fact that over the next ten years, half of all American households will have a Smart Meter installed in their homes (figures from the Edison Foundation), and it is clear that utilities need to start preparing themselves to be able to deal with these new payment alternatives.

This new generation of Electronic Bill Presentment and Payment solutions enables utility companies to improve business operations in three distinct ways:

The First is Through Improving Cash Flow

Other industries have already shown that through the use of new billing technologies, Days Sales Outstanding (DSO) can be significantly reduced. Where the average DSO for a customer receiving a paper bill is approximately 45 days, e-billing and payment solutions have the potential to reduce this timeframe by up to 70 percent.

Add to this the strong possibility of the US postal service ending Saturday mail deliveries and the DSO for the paper billing cycle should be set to grow even further.

With e-billing technology comes the ability to add alternative payment receivable methods, giving customers more flexibility to choose how they pay their bills or how they are processed: over the phone, by check, credit card, check 21 or cash. SMS text payment reminders and payments can be integrated into an e-billing solution -- all having a dramatic effect on improving cash flow.

Secondly, Reduced Risk

Utilities can tailor their EBPP processes to individual payment plans for different customers, according to the customer's individual payment preferences and also to an assessment of their payment history. Utility companies can further reduce the risk of an unpaid bill by introducing pre-funded accounts for particular customers and integrate strategic check re-presentment options into their collections processes.

For example, in order to optimize collection rates for Non-Sufficient Funds (NSF) items, utilities can choose to re-present checks on strategic days such as likely paydays rather than successive days, in order to increase the likelihood funds are available, thereby increasing the probability of funds being collected on the second or third try.

And Finally, Improved and More Immediate Interaction With Customers

The convenience, ease of use and reduced waste from an e-billing and payments system attract consumers to this channel: 62 percent of respondents in a recent survey conducted by NACHA, the Electronic Payments Association, highlighted 'easy access to bills' as one of their top reasons for switching to an automated system. The same research showed that twice as many 25-34 year olds are now adopting paperless billing methods, and consumers who have switched to an e-billing and payments system were reportedly more satisfied than those who continue to use paper-based methods.

Texting is not just for payment reminders and payment authorization; it provides utilities with the opportunity to communicate with their customers about any upcoming issues that they need to be aware of -- helpful information on planned power cuts or possible power outages due to maintenance work is easily and conveniently sent via SMS, and would be happily received by the customer who can then plan their activities and energy usage accordingly. Jupiter research shows that customer engagement triples when you integrate mobile platforms into customer service.

The e-technology is there and the time is ripe for utilities to grasp these new technologies and integrate them into their business processes. And they can present a greener face to their customers. It's no secret that switching to an e-billing and payments system can significantly reduce the impact which we have on the environment. If only 20 percent of American households switched from paper to electronic billing and payment, a staggering 151 million pounds of paper, 100 million gallons of gas and 2 million trees would be saved annually (NACHA figures).

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Reader's Comments

Date	Comment
Malcolm Rawlingson 12.14.10	Good article Holly. Lots of things on the positive side. But the negative side is that good ole US post will not have anything to deliver leading to even more unemployment. Automation is great. The unemployment it creates is not so great. It would not be so bad if utilities actually considered passing their savings onto the customer. They don't of course. The customer does all the work - the utility reaps the rewards - same old story. Same happened with ATM's. Did anyone notice the cost of their banking going down. Loads fewer tellers needed - lots of salary costs and benefit plans saved but reduction in bank fees - no - they went UP. Quite frankly Holly I am so fed up with my electricity bill going up and up and up that it is becoming economic to make my own power. The new technology the power industry really needs to wake up to is solid oxide fuel cells. They are silent, run on methane gas at 85% efficiency, produce electricity AND hot water, and need very little maintenance. With over 200 years of gas supplies already known in North America this one is a no brainer. When that technology hits the streets in the next few years who needs an electricity bill. Malcolm
Bob Amorosi 12.15.10	Well said Malcolm, I would suggest your views are shared by a growing percentage of consumers everywhere. One comment in particular should serve as a wake-up call to our electricity system planners: "I am so fed up with my electricity bill going up and up and up that it is becoming economic to make my own power." If solid oxide fuel cells are as promising as you suggest, count me in too. They sound far more attractive than roof-top solar PV or small wind generators. Some internet links to this technology would be useful if you can provide us some. Electricity bills are set to escalate far greater than general inflation over time. In Ontario alone our provincial government has admitted publicly that rates are set to jump by nearly 50% over the next 5 years. I'm sure similar rate hikes are in store for many other jurisdictions in North America, perhaps a bit behind Ontario but eventually they will do the same. Switching to making your own power will become increasingly attractive to homeowners, indeed there will be growing business opportunities to help consumers buy and install make-your-own energy systems. For those customers that choose to stay with the grid and electricity bills, the electronic communications this article talks about will, in my opinion, evolve into real-time communications to enable customers stay on top of their growing electricity bills. Utility companies should consider providing this because if they don't, they will risk losing more customers to make-your-own power.
Len Gould 12.20.10	Well... "make you own power" CHP with SOFC's and N Gas is of course a great idea PROVIDED you can figure out how to justify running the fuel cells 24 / 7 / 365, otherwise present technology simply can't stand up (seals break with thermal cycling). Better is a simple rugged piston engine w/ silencer, set to run only during daytime peaks, and fairly compensated for the excess electricity provided back to the grid. HOWEVER, we know that "fairly compensated" isn't going to happen, anytime soon if ever.

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