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Why utilities need to digitize their collections notices

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While paperless initiatives top the list of digital transformation goals for most utilities, many have yet to adopt this philosophy for collection notices. 

Utilities are still sending out the same paper-based collection notices they have for decades, missing out on a simple change that could save costs, get payments faster and reduce the debtors' book. 

Research by Mckinsey shows that people are 12% more likely to pay in early delinquency when sent digital collections notices, instead of  paper notices, and 30% more likely to pay in the event of late delinquency.  

If every other form of communication sent to a customer is digital, why not do the same with collection notices? 

The move to digital communications should incorporate all types of organizational communications sent to customers.

Eliminate complexity 

Digitizing collections notices will result in a much more consistent customer experience when all other communication is also digital.

Bills have been the priority digital communication for many years, so it makes no sense to send a paper notice to these paperless customers if they’ve  missed a payment or even forgotten to pay - which is the case for many customers in early stage collections. 

Also worth noting that, if you send your collection notice via text or email, it’s almost guaranteed to land on a device that the customer has on them at all times,unlike physical mail, which goes to their physical residence. 

Then consider the collection notices that go unseen because the account holder is either traveling or they were mailed to a different residential address.  

Research has shown that 97% of people open every single text message they receive, and that emails are now opened more regularly on mobile than on desktop.    

Another benefit of digitizing collection notices, whether by text message, email, or a combination of the two, is that the immediate payment of the outstanding amount can easily be facilitated. 

Customers can simply click on a link in a text message, or a button in an email and be directed to a payment page. 

Customer experience and the bottom line 

For an organization the size of a typical utility, collecting payments faster from early and late delinquents can represent a significant amount of revenue. Importantly, this is revenue that can be recouped without having to engage the services of a debt-collection agency.

It’s obvious then that digitizing collections notices is no longer a nice-to-have, but should be a critical part of every utility’s wider customer communication strategy. 

 

Mia Papanicolaou's picture

Thank Mia for the Post!

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Discussions

Matt Chester's picture
Matt Chester on July 8, 2019

It is interesting that the utilities would be eager to go digital in one area, recognizing all the benefits, but lag behind in another. Mia, do you have any insight into why digitizing the collections aspect of the business seems more slow moving?

Mia Papanicolaou's picture
Mia Papanicolaou on July 8, 2019

Hi Matt,

Generally speaking it's as simple as a siloed approach to communication. The collections department tends to have set processes (and regulations) around the collection of overdue fees and often when a paperless strategy is put in place at a utility, we've seen the focus is always on the bill - as consent is quick and savings immediate. 

So collections is left out of the initial strategy and then more often than not, just never brought the fold once the digital strategy and communication is up and running. 

Matt Chester's picture
Matt Chester on July 8, 2019

I suppose the fact that the issue is so simple is encouraging-- means the solutions should be simple enough as well!

Mia Papanicolaou's picture
Mia Papanicolaou on July 10, 2019

Yes, the solution should be simple... a cohesive strategy across the enterprise is often more difficult to implement 

Will Etson's picture
Will Etson on July 9, 2019

Having worked with a utility that offeres digitital collection notices, there are some additional complications. Regulated monopolies can be subject to at fault complaints if customers are not served notice of a potential cut out. While the US mail system has provisions for guaranteed delivery, email and text messages don’t have similar provisions. Utilities should analyze the legal risks for these options carefully and clearly understand their obligations regarding notices from their regulators. Providing digital options are good for utilities and customers but legal issues need to be addressed which might mean a paper notice is sent as well.

Matt Chester's picture
Matt Chester on July 10, 2019

Do you think it would undercut the benefits of digital collection notices that Mia lays out to have a system that utilizes both-- email notices as well as paper notices to cover the legal requirements?

Will Etson's picture
Will Etson on July 10, 2019

Using both will close the gap on failure to notify, but my caution was intended to be about understanding the utilities requirements to serve notice. Some regulators may be more felxible than others.

Mia Papanicolaou's picture
Mia Papanicolaou on July 10, 2019

Hi Will,

Agreed that there are regulations around serving a mail notice of a potential cut out. We work with a number of utilities on the early stage collection notices (before the notice of cut out) and those are the ones that are most effective in the digital space, as many customers pay immediately on receiving that notice and reduce the amount of potential shut down notifications required. 

We also have a couple of utility clients that send out disconnect notices over email a few days before the mail version is scheduled to go out and have a good success rate of collecting unpaid fees from those before the regulated communication is required to go out.

 

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