Exus Blog Article
8 signs your utility company needs debt collections software
Debt collection is a complicated game. In the utility sector, it also happens to have something of an image problem. Global concern surrounding energy prices continues to mount, and utility companies are cast as the bad guys in a situation they can’t control.
It doesn’t help that there has been a 60% rise in bad debt levels across energy firms over the last five years, with water utilities not far behind with an increase of 44%.
Retail banks have an arguably more straightforward job in reclaiming debt, while utility companies face some unique challenges. Still, the solutions to these challenges could be aligned with existing retail banking sector practices. One of the more affordable and least disruptive of those debt recovery practices is the efficient utilization of centralized debt collections software.
But what signs should companies be looking for that highlight how they should be pursuing this more cohesive, safe, and useable approach?
1. You don’t have a definitive strategy in place
Simply put, if your accounts are not generating revenue and too many customers have fallen behind on their payments then something has to change. For utility companies to capture more revenue from existing businesses, they are going to need to improve their collections practices. By utilizing the power of debt collections software, they can test various strategies without missing a beat and settle on a strategy that functions as the perfect middle ground approach.
The ability to test, measure and refine a strategy is one of the key benefits of any centralized software suite. It affords users the power to make quick changes to a system on the fly without major disruption. Those changes will also have a domino effect on the rest of that system.
2. Data is badly organized
Until recently, it was quite common for all collections strategies to be based around several confusing and needlessly convoluted Excel spreadsheets, such as the technology available at the time. However, the idea of using a bare-bones Excel spreadsheet to keep track of the valuable information utilized by the average utility company is like using a steam engine to power a bullet train.
Spreadsheet software such as Excel was simply not built to withstand the kind of complexities that come with utility debt collections - and when it is put under too much strain it is liable to crash, which could prove disastrous. Specialized debt collections software is an absolute necessity for these companies, like all documents, data, and insights are stored in one centralized system that allows you to manage debts and identify credit risks quickly and reliably.
3. You’re losing track of contact records
Without a reliable system in place, it can be easy to forget to update customer information and lose track of them as a result. For a collections operation to function smoothly, billing information (names, addresses, phone numbers, email addresses, etc) needs to be kept up to date. Given that the proportion of UK renters alone has doubled in the last 20 years, people are also more likely to move more often, which means customer information is likely to become outdated faster. For utility companies that have an incredibly diverse customer base and provide services that people quite literally could not do without, this should be a major concern.
Debt collections software instigates checks at regular intervals to ensure that customer information is up-to-date and that all repayment obstacles are being overcome. Ultimately, the more you know about your customers, the more successful your collections are going to be and debt collections software is a wonderful way to get to know your customers and their changing habits with greater clarity and efficiency.
4. Customer risk scoring is inconsistent
Sophisticated debt collections software allows the use of more streamlined operations at every stage of the collections cycle. The more insight and intelligence a company can glean from its customers, the more powerful that software will be.
Customer risk scoring is an important part of that activity and collections software makes it so much easier to assign scores based on bill payment records so that points can be added or removed when collections fall behind. These scores can be used to reassess the risk of delinquency and preserve customer relationships.
5. You’re not competing with the new boys
Green energy is perhaps the most disruptive element in the utility sector right now. Online-only banks (or ‘Neobanks’) are way ahead of the game here when it comes to eco-friendly practices and retail banks need to adapt to the standards set by these new players if they want to avoid dying on the vine.
The market is changing, with renewable energy set to represent 20% of the energy consumed within the EU by 2020. Green energy companies are not hamstrung by the same legacy systems and antiquated ideas that blight many traditional utility companies and are more nimble as a result. Consider using collections software to organize collections, re-think collections strategies and create new tactics that can compete directly with the new boys on the block.
6. Your strategies are not customer-centric
Customers are the lifeblood of the business and the cost of acquiring new customers is particularly high in the crowded utility market. To keep existing customers and entice new ones, customer-centric practices need to be put into place at every stage of the collections cycle. This includes utilizing social media to remain in constant contact with your customers and make sure you respond to concerns before they become complaints.
Keeping track of shifting risk scores, personal information and statuses can be confusing without the right system in place, of course. Collections software that provides data, insight, and ease of use could be the secret weapon in helping utility companies sustain customer relationships.
7. Customers accuse you of being unsympathetic
Despite the rise of more regulated collections agencies, write-offs and outstanding debts are on the rise: GoCompare revealed that 1.4 million people in the UK have outstanding utility bill debts. Only 11% of these debtors have contacted their supplier and as many as 16% felt the company had been unsympathetic to their plight. 15% of consumers, meanwhile, said they were made to feel pressure to repay their arrears by their utility companies.
This creates a strained relationship between supplier and consumer and puts the former in a difficult position where if it acts badly, it could push the customer into the open arms of a competitor. To mitigate this risk, utilizing debt collections software and self-service solutions, where customers are offered more agency over their own accounts, will help make your company seem more transparent and more sympathetic.
8. Digital transformation is an important part of your growth strategy
Digital transformation should be a part of every modern utility company’s growth strategy. It doesn’t, however, necessarily come easily - at least, if you’re not willing to work at it. If you can’t quickly and easily make changes to the parameters of your existing system without IT or the software provider getting involved, then your existing CRM is outdated and inflexible.
In debt collections software solutions such as the EXUS Financial Suite (EFS), it’s quick to make alterations on the fly with drag and drop simplicity and this means more flexibility when it comes to adapting to the changes that the world of fintech might be catalyzing in the utility world. Digital transformation is about a transformation from the top down and collections are a central pillar of any utility company. So what better place to start your digital transformation journey?
Starting the journey today
Tech isn’t the only way to make collections better and easier – a good collections strategy is key too. The right tools certainly help though and a powerful and flexible tool like EFS Collections Software can be an invaluable piece of the puzzle.
According to Stephen Tebbett, director of PwC’s working capital team: “If utility firms are to successfully tackle the challenge of bad debt, they must invest in a high tech and tailored approach to collections – a move that will not only reap much better returns but strengthen customer relationships and boost stakeholder trust.”
This means utilizing a multi-channel strategy that recognizes different customer dynamics and responds with the most effective communication method - from text and email for the tech-savvy to field visits for more vulnerable customers. This will improve engagement and response rates and it’s a strategy that will only be possible with the help of a dedicated debt collections software suite.