Debt management is one of those topics that doesn’t get a lot of air time. And we appreciate why; it’s not shiny, it’s just one of those parts of business that has to be done. But, debt management is a very important aspect of business - according to the Energy Information Administration in 2019 electric utilities companies spent an average of 2.8% of their total operating revenue on customer billing and collections expenses, highlighting the resource-intensive nature of managing credit and debt receivables. And the delivery of debt management processes can be significantly improved or hindered by billing technology. Let’s take a look.
Good debt management keeps the train on the rails
The debt management process is one of the most obvious sources of revenue leakage. Where an efficient debt management process should keep both debt and the costs associated with its management and collection under control, inefficient technology systems and human error can do the opposite. And that’s because debt management can be incredibly complex. You think about all the different scenarios and pathways that can be taken - in some businesses these are extensive. And with complexity always comes opportunity for error - particularly when there is a high degree of human intervention.
A good debt management process is streamlined, automated, efficient, and improves the customer experience - especially given 73% of executives in a recent survey agreed that a poor invoice-to-cash process can have a negative impact. It ensures high degrees of accuracy while simplifying and reducing operator effort. And this minimises the opportunity for revenue leakage while also supporting the organisation’s long-term financial goals and stability because it provides assurance of incoming funds. There are also benefits for the customer; the more efficient the process, the greater the likelihood the customer can pay because one overdue bill is significantly easier to settle than two or more.
Robust billing technology can significantly improve the debt management process
So if good debt management is critical to an organisation's financial rigour, then it would be fair to say that it’s also vital the billing technology underpinning the debt management process is up to scratch.
Billing technology should provide the scope and flexibility to seamlessly manage a range of different debt scenarios. As customers are moved into the various stages, or stopovers in the debt management process, the majority of this should be automated to ensure consistency of experience and accuracy in timings and communications, with points set up in the process where manual intervention may be required.
This approach of automation supplemented with manual intervention enables internal teams to focus their activities more meaningfully on value-adding tasks, or those special circumstances that sit outside the usual process. But without a robust billing platform, debt management can be highly manual, resource intensive, and error prone, creating additional strain on the team and the organisation’s finances.
Debt management features to look for in your billing technology
Ideally, you want a billing platform that lets you build out your debt management process without technological limitations. Where you have the flexibility to configure different stopovers, paths, conditions, thresholds, and delays to create a debt process that caters to every customer scenario and moves them through unique processes smoothly with the correct timings and messages.
Below is a high level overview of the functionality your billing system should provide:
Due date calculations
Automatically move the customer into the debt process once the due date has passed, with rules that allow for different due date methods to be assigned to different customer segments. Configurable thresholds, timing delays, and communications.
Tailored communications
The ability to set specific messaging appropriate to different customer segments and scenarios, for example a customer with an overdue balance that is high enough to enter the debt management process but below the minimum threshold for a disconnection warning will receive a different set of comms to a customer with a significant outstanding balance.
Customisable thresholds and delays
You should be able to tailor thresholds and delays at every stopover to ensure only the customers that meet the criteria for progression receive the appropriate credit action, within the recommended time frame.
Dynamic eligibility checks
As customer circumstances change, your billing solution should perform dynamic eligibility checks to ensure the correct action is taken. Any updates to a customer’s account manually should automatically be taken into account to ensure real-time consistency of experience and eligibility.
Robust payments management
Of course, payments management should be robust and highly secure, with integrations into various banking interfaces supported to facilitate an automatic banking process.
You should be able to easily configure:
- Preferred payment methods
- Payment initiation
- Payment arrangements
- Payment allocation and reconciliation
- Refunds
Streamline operations and drive profitability with Flux
With many energy businesses facing the adjacent imperatives of decarbonisation, digitalisation, increasing profitability and reducing cost to serve, the management of debt collection and revenue has a significant role to play in achieving these targets.
Flux’s next generation energy billing platform enables a robust, automated, and highly configurable debt management process that caters to every customer scenario - residential, business, life support and special treatment, former customers, corporate, payment arrangement and Smoothpay, and additional support for accounts in credit and debt suspension functionality. If you need better, more forward focused technology to underpin your debt management process, speak to one of our energy tech experts today.
