When customers don’t pay for goods and services they use, the companies that provide those goods and services suffer. A bank may repossess a vehicle when the consumer defaults on a loan. A mortgage company may foreclose on a house when the owner misses monthly payments. The options for utility companies are not as numerous, and if your utility company is seeing more and more accounts in default, you may know first-hand how detrimental this can be to a business.
Perhaps more than most other types of businesses, your utility company is often at the mercy of world events and economic trends. Additionally, depending on the type of utility you offer, you may face strict government regulations that hinder your ability to collect late payments or utilize other methods to prompt customers to pay, such as suspending services. Unless you have a system in place for collecting debts, you may find your company losing more money each year to delinquent customers.
Improving what you have
Since you cannot always overcome some of the external elements that complicate your ability to collect unpaid bills, your company may have to restructure its internal methods of operations. Preventing bad debt in the first place is key, and some effective ways of minimizing unpaid debt include the following:
- Establish simple ways for your customers to communicate with you.
- Offer several flexible payment options.
- Develop methods for identifying vulnerable customers who may qualify for special payment programs.
- Obtain sufficient data from new customers to allow you to locate those who vacate a property with an unpaid bill.
- Identify high risk customers early and offer them options such as direct payment or prepayment.
- Improve your system of monitoring the billing process from start to finish.
- Set goals for improving your company’s bad debt ratio each term.
- Work to improve billing accuracy and minimize errors, which is the leading reason why customers pay late or do not pay at all.
Additionally, you may want to examine your collections department. Are they understaffed? Do they have the appropriate training and experience for the job? Is there an established system of best practices? Does your collections team have the legal counsel and support behind them to ensure they act within the law as well as protect the rights of your company? If you answered no to any of these questions, it may be time to reach out for guidance in making your debt collection process more efficient and successful.