Are you doing all you can to protect against fraud?

The last Utility Information Pipeline dealt with your Red Flags Rule policy and if it is up-to-date. Today, we’ll take a look at applying the Red Flags Rules at various phases of the account lifecycle.

The graphic below is from LexisNexis and identifies key areas in the life of a utility account where potential identity theft and fraud, two key areas addressed by the Red Flags Rule, can occur. If you’re not familiar with LexisNexis, many utilities use their services to research and validate social security numbers. Your utility may already use their services if you operate in a state with a debt set-off program and need to locate social security numbers for bad debt accounts.

For most utilities, the infographic below is primarily relevant for the Account Opening process, but can also apply to Account Management and Account Collections:

Account opening

When a new customer applies for service, you should insure the applicant is who he or she claims to be. The two best ways to do this are to require photo ID and proof of residency (lease agreement or closing documents) for the address for which they are applying for service.

You should also perform a bad debt search using relevant identifying information (name, driver’s license number, social security number and date of birth) to see if the applicant is a previous customer with possible unpaid bills.

Finally, if you base your security deposit on the applicant’s credit rating, insuring the applicant is who they claim to be is vitally important.

Account management

Insuring the person you are talking with is indeed the account holder is important before divulging any financial information for an account. If the customer is in your office, their identity can easily be verified by comparing their face or current photo ID to the photo ID on file.

Customers on the phone aren’t as easily verified, so many utilities require the caller to provide either the last four numbers of their social security number or answer a security question.

If a customer who previously had no history of delinquencies suddenly appears on your cut-off list, do you have a policy in place to insure they have an adequate security deposit?

Account collections

The key to collecting final bills is to be diligent and have an aggressive program in place to follow up with unpaid final bills. Waiting until the end of your fiscal year, just before writing off bad debt accounts, is too late to follow up. You should actively pursue unpaid final bills after each billing.

Is it time to reexamine your processes?

If you aren’t doing all you can to protect against identity theft and fraud or to collect bad debt accounts, please give me a call at 919-232-2320 or e-mail me at gsanders@logicssolutions.com to learn how a business review could help you evaluate how to improve your effectiveness.

© 2016 Gary Sanders

Is your Red Flags Rule policy up-to-date?

You remember the Red Flags Rule, don’t you? For many people, it is best remembered because of multiple deadline extensions before it finally went into effect.

The Red Flags Rule originated with the Fair and Accurate Credit Transactions Act (FACTA) of 2003. It had an original effective date of November 1, 2008 and implementation was delayed three times, finally taking effect on January 1, 2011.

The Red Flags Rule is designed to help prevent identity theft. There are four elements to a Red Flags Rule policy:

• Identify relevant red flags
• Detect red flags
• Prevent and mitigate identity theft
• Update the program

Let’s examine each of these elements in more detail…

Identify relevant red flags

In this phase of your Red Flags Rule policy, you should determine what types of suspicious activity might be relevant to your particular utility. For example, do you require photo ID and proof of residency when establishing a new account? If so, relevant red flags could be what appears to be an altered ID or the name on a lease agreement not matching the name of the applicant for service.

Detect red flags

Detection of red flags requires your customer service representatives to be vigilant when taking an application for service from a new customer. In this phase, your staff should be actively reviewing the possible red flags identified in the previous section each time they interact with a customer.

Prevent and mitigate identity theft

This phase of your policy documents what action to take when a red flag is detected. Depending on the severity of the red flag that was detected, the mitigation could range from contacting law enforcement to denying service to taking no action.

Update the program

The final phase of a Red Flags Rule policy is the requirement to update the policy as needed. Changes in technology and new schemes from identity thieves are two reasons you would want to update your policy.

Approval and training

Your Red Flags Rule policy must be approved by your board or governing body, or a committee appointed by your board. Each new hire should receive training about your Red Flags Rule policy as part of their initial orientation. It’s also not a bad idea to conduct periodic refresher reviews of the policy with current staff members.

Does your Red Flags Rule policy need updating?

If your Red Flags Rule policy hasn’t been reviewed since it went into effect or if you don’t have one, please give me a call at 919-232-2320 or email me at gsanders@logicssolutions.com to learn how a business review could help you update your policy.

© 2016 Gary Sanders

2016 Utility Staffing Survey Results – Part II

This is the second of two consecutive Utility Information Pipelines reporting the results of the 2016 Utility Staffing Survey. 73 utilities, representing 20 states, ranging in size from 200 to 80,000 active accounts participated in the survey.

Last week’s issue summarized the demographics of the survey respondents as well as staffing levels and factors outside the control of the utilities. Today’s issue deals with practices each utility can control, such as payment processing and bill printing.

In addition to asking the number of office employees, how many active customers, what services each utility bills, and annual customer turnover, the survey also asked how each utility handles various labor intensive processes.

Meter Reading Processing

Because this survey focused on office staffing, the meter reading question only distinguished between manually entering readings or importing them from some sort of automated reading process. The survey did not distinguish between whether the imported readings were from handhelds or an AMR or AMI system.

As expected, most utilities in the survey have automated their meter reading process, as only five of the responding utilities still enter meter readings. Somewhat surprisingly, two of these utilities were in the upper 50% of most efficiently staffed offices. The other three were all within the six least efficiently staffed offices, as represented by the graph below (clicking on any of the graphs will open a larger image in a new window).

Bill Printing

Bill printing and the related tasks required for preparing bills for mailing – separating postcards or folding and inserting full page bills, sorting, and traying the mail – are very labor intensive tasks.

Not surprisingly, the top six and 19 of the top 24 most efficiently staffed offices use an outsource printer to print their bills. On the other hand, only four of the 20 least efficiently staffed offices outsource their bill printing.

Mail Payment Processing

Mail payment processing is quite possibly the most labor intensive process in most utility offices. For that reason, many utilities have sought to automate the processing of mail payments, either by scanning barcodes on the bill, or using a remittance processing system or a bank lockbox.

As anticipated, 27 of the 31 most efficient utilities automate the mail payment process in some way, while the bottom 10 and 20 of the 24 least efficient utilities manually enter mail payments.

Phone Credit Card Payments

The final area the survey asked about is phone credit card payments. This can be an extremely laborious process considering the customer service representative must look up the account, tell the customer how much is owed, take the credit card number and process the payment authorization and, finally, enter the payment in the system.

Somewhat surprisingly, 13 of the 26 most efficiently staffed offices have a person in the office take phone credit card payments.

Is your office adequately staffed?

If you think your utility is understaffed or could operate more efficiently, please give me a call at 919-232-2320 or e-mail me at gsanders@logicssolutions.com to learn how a business review could help you determine this.

© 2016 Gary Sanders

2016 Utility Staffing Survey Results – Part I

For the past few months, I’ve been conducting the 2016 Utility Staffing Survey. This survey grew out of a business review I recently completed for a customer. As a part of that review, I suspected their office was understaffed and e-mailed a few questions to 30 of Logics’ largest customers. The results of that informal survey were intriguing enough to make me want to conduct a more formal survey across a larger base of utilities.

This is the first of two Utility Information Pipeline issues publishing the results of the 2016 Utility Staffing Survey. This issue will examine staffing levels and factors outside the control of the utilities. The next issue will examine staffing levels and practices each utility can control, such as such as payment processing and bill printing.

Demographics of survey respondents

73 utilities, representing 20 states, ranging in size from 200 to 80,000 active accounts participated in the survey. Click on the links below to see charts of the various demographic data:

• Number of responses by state
• Size of utilities responding
• Size of utilities under 20,000 accounts responding
• Types of utilities responding
• Services provided by responding utilities

Accounts per employee

To arrive at an accurate index to compare utilities of differing sizes and billing frequencies, I came up with the number of accounts billed annually per employee. This formula multiplied the number of active accounts by the number of times each account is billed annually (12 for monthly billing, 6 for bi-monthly billing and 4 for quarterly billing) then divided that product by the total number of office employees. The higher the result, the more efficient the office should be.

The results ranged from 1,583 to 41,570 as represented by the graph below (clicking on any of the graphs will open a larger image in a new window).

One disclaimer applies. At least two of the top six most efficient offices are local governments where payments are taken in a different department, so their staffing numbers do not include cashiers.

Annual customer turnover

I wondered if the turnover in customers would be a factor in how efficiently offices are staffed, so the survey asked how many applications for service (including routine move in/move outs and new construction) each utility processes per year.

One question the survey didn’t ask, which in retrospect it should have, is if the utility bills tenants or only property owners. Obviously, those utilities billing only property owners have a much lower turnover rate than utilities billing tenants.

Not surprisingly, the annual turnover rates ranged widely, from .94% to 40.00%. On the low end is a utility in a predominately rural area that only bills property owners. On the high end is a City with multiple college campuses that bills tenants.

As you can see from the graph below, there is no correlation between annual turnover rates and office efficiency.

Services billed

The final variable I examined for this issue was major services billed (water, sewer, electric and natural gas) looking for a correlation between the number of services billed and office staffing. I only considered the major services, because other services, such as garbage, stormwater, or area lights, generally are billed as flat-rate services and are not nearly as labor intensive to bill. Even though sewer is not generally a metered service, I considered it to be a major service because some of the responding utilities bill only for sewer.

I anticipated utilities billing multiple metered services would require more staff than those billing for only a single metered service. This proved to be the case, as 23 of the 25 most efficient offices bill for only one metered service, as shown below. The one anomaly was the most efficient office, which happens to be one of the utilities mentioned above that doesn’t collect payments.

Next issue

The next issue will analyze staffing levels and labor saving practices each utility can control, such as automation and outsourcing.

Is your office adequately staffed?

If you think your utility is understaffed or could operate more efficiently, please give me a call at 919-232-2320 or e-mail me at gsanders@logicssolutions.com to learn how a business review could help you determine this.

© 2016 Gary Sanders

Do you track this?

I’ve begun reviewing the responses to the Utility Staffing Survey. If you haven’t completed the survey yet, there’s still time to do so by clicking here.

In addition to asking how many staff in various capacities are employed by each office, the survey asked questions about labor intensive practices such as payment processing and bill printing.

One of the those questions asked what percentage of payments were received by each of the following methods:

• Walk-in
• Mail
• Bank drafts
• Online
• Phone

Walk-in payments

One of the most interesting observations from the survey was the wide range of responses in the number of walk-in payments received. On the low end, several utilities reported receiving less than 5% of payments from walk-in customers while on the opposite end of the spectrum one utility reported receiving 90% of their payments as walk-in payments!

The graph below illustrates the responses of the percentage of walk-in payments for those utilities who track this (clicking on the graph will open a larger image in a new window).

Surprising responses

Other than the wide range in the number of walk-in payments, one of the big surprises of the survey was that a few utilities don’t track payments by source. They track how many payments are made in cash, by check and credit cards, etc., but they don’t know how many checks were received in the office compared to in the mail.

Tracking payments by source

If your goal is to reduce the amount of walk-in traffic (in 35 years in this business, I’ve never heard a utility wish more customers would pay in the office!), doesn’t it make sense to measure this statistic in order to track trends?

If your software is configurable to allow tracking payments in more detail than just cash, checks and credit cards, I encourage you to make use of this feature. If you’ve started initiatives such as online bill pay or IVR phone payments in an attempt to reduce in-office payments, the only way to know if these initiatives are working is to track the volume of walk-in payments.

Do you need help reducing the number of walk-in customers?

If your utility needs assistance evaluating ways of reducing walk-in traffic, please give me a call at 919-232-2320 or e-mail me at gsanders@logicssolutions.com to learn how a business review could help your utility.

© 2016 Gary Sanders

Final week for the Utility Staffing Survey

Do you think your office is understaffed?

Have you had to justify the number of positions in your office to upper management?

Or maybe you’ve wondered how your office staffing compares to similar sized utilities?

Here’s your chance to find out…

I’ve developed a Utility Staffing Survey. In addition to asking how many positions your office has, the survey includes questions about labor intensive practices such as payment processing and bill printing.

Complete the Utility Staffing Survey

Please click here to complete the Utility Staffing Survey. This should take less than five minutes to complete. I will publish the results in a future Utility Information Pipeline.

Please feel free to share this survey with your peers at other utilities.

Thank you in advance for taking the time to complete the survey and sending it to other utilities.

© 2016 Gary Sanders

Cost of doing business or charge a fee?

Just yesterday, another post surfaced on one of the listservs I subscribe to about charging a convenience fee for credit card use.

There are two prevailing schools of thought on credit card use and the resulting fees:

• The cost of accepting credit cards is a cost of doing business and the utility absorbs the fees
• The cost of accepting credit cards is a burden that should be borne only by customers who choose to pay by credit card and those customers should pay the fees

Before making a determination if your utility should charge a convenience fee, you must first evaluate why you accept credit cards.

Cost to be absorbed by the customer

Utilities that charge a convenience fee view the fee as a way of recouping the cost of the credit card transaction without spreading this cost across the entire customer base. A common refrain from utilities like this is “it’s not fair for all customers to pay for those customers who want to pay by credit card”.

If your utility chooses to accept credit cards only because a few, vocal customers have requested it and not because you see the value to your organization in doing so, then charging a convenience fee makes sense.

However, this logic fails to take into account the costs associated with other payment methods. Accepting a payment by cash in the office costs considerably more (wages for the clerk to taking the payment and making change, balancing the cash drawer, preparing a daily deposit and taking the deposit to the bank) than processing a bank draft. Would it be fair to charge customers paying in cash extra? I think not.

Cost of doing business

Utilities choosing to accept credit cards and absorb the fee generally feel they are providing a service for the customer and reducing their own workload at the same time.

One response to the listserv post I mentioned above noted a decrease in the number of customers on the cut-off list as a result of accepting credit cards.

Many utilities view accepting credit cards as a way to grow without adding staff and reducing walk-in traffic (especially if they offer online bill pay or IVR phone payments).

What other utilities do

If you’re interested in seeing how other utilities handle credit cards and convenience fees, the 2015 Utility Fee Survey results recaps how many utilities accept credit cards and how many of those charge a convenience fee.

Free rates dashboard webinar today

I’ve previously written about the Utility Rates Dashboards from the Environmental Finance Center at UNC. The EFC has just released the 2016 North Carolina Water and Wastewater Rates Dashboard and will be sponsoring a free webinar today at 3:00 pm EDT introducing the dashboard. If you’re interested, click here to register for the webinar.

Do you need help evaluating credit cards and convenience fees?

If your utility needs assistance evaluating credit cards and convenience fees, or any other way of reducing walk-in traffic, please give me a call at 919-232-2320 or e-mail me at gsanders@logicssolutions.com to learn how a business review could help your utility.

Staffing survey deadline

The deadline for the Utility Staffing Survey is Friday, April 15. This survey is designed to determine what is adequate staffing for a utility office. If you haven’t already participated in the survey, please click here to complete the Utility Staffing Survey. This should take less than five minutes to complete. I will publish the results in a future Utility Information Pipeline.

Thank you in advance for taking the time to complete the survey. Please feel free to share the survey with your peers at other utilities.

© 2016 Gary Sanders

Spring forward, fall back

As most of us entered daylight saving time slightly over a week ago, and the first day of spring was only two days ago, has your utility made preparations for spring?

Just as your local fire department encourages everyone to replace smoke detector batteries, the start and end of daylight saving time should bring about housekeeping chores in your office as well.

Seasonally adjusted high/low parameters

As temperatures warm in the spring and cool off in the fall, your customers’ usage patterns adjust according to the season. With this in mind, if your billing system determines out of range meter readings by applying high and low percentages to your customers’ average usage, you should seasonally adjust those high and low parameters.

Energy utilities

If your utility is an energy supplier (electricity or natural gas), spring marks the transition from winter heating season to more moderate temperatures, and less energy usage. Therefore, it makes sense to adjust the high and low limits down in the spring and back up in the fall.

Water utilities

Conversely, for water providers, spring brings about more watering of lawns and gardens and increased usage. Accordingly, you should adjust the high and low limits for water consumption up in the spring and back down in the fall.

Does your meter reading process need reviewing?

If your utility doesn’t seasonally adjust high and low meter reading parameters, or if you think any other internal process could be improved, please give me a call at 919-232-2320 or e-mail me at gsanders@logicssolutions.com to learn how a business review could help your utility.

Don’t miss your chance

In a recent issue, I introduced the Utility Staffing Survey. This survey is designed to determine what is adequate staffing for a utility office. If you haven’t already completed the survey and would like to participate, please click here to complete the Utility Staffing Survey. This should take less than five minutes to complete. I will publish the results in a future Utility Information Pipeline.

Thank you in advance for taking the time to complete the survey. Please feel free to share the survey with your peers at other utilities.

© 2016 Gary Sanders

What do you call your cut-off fee?

If you are considering charging your cut-off fee to every account when the cut-off list leaves your office, as I advocated in the last issue, the next dilemma facing you will be customers who complain.

A common complaint heard from customers of utilities with this policy is “You haven’t cut me off yet, so how can you charge me a cut-off (or reconnect) fee?”. This leaves your customer service representatives in the uncomfortable position of having to explain that, even though the customer hasn’t been cut off yet, the fee still applies.

Alternative terminology

To avoid these kinds of potentially inflammatory conversations with customers, many utilities have changed what they call their cut-off fee. They have adopted alternative terminology such as “delinquent fee”, “non-payment fee”, or some equally creative term that doesn’t imply the customer’s service has been disconnected.

Fee Survey results

While “reconnect fee” and “cut-off fee” were still the most popular, the 99 utilities responding to the 2015 Utility Fee Survey call their cut-off fee 32 different terms! This is an marked increase from the 2012 Utility Fee Survey when there were only 20 different terms.

Here is a graph of the various terms and the frequency of each from the 2015 Utility Fee Survey (clicking on the graph will open a larger image in a new window):

The Other category includes 20 additional terms not show on the graph. To view a table of all 32 terms and their frequency, please click here.

Is it time to change what you call your cut-off fee?

If your utility charges the cut-off fee as soon as it leaves the office and you still call it a cut-off or reconnect fee, I recommend you consider changing it to a more generic term.

Don’t miss your chance

In a recent issue, I introduced the Utility Staffing Survey. This survey is designed to determine what is adequate staffing for a utility office. If you haven’t already completed the survey and would like to participate, please click here to complete the Utility Staffing Survey. This should take less than five minutes to complete. I will publish the results in a future Utility Information Pipeline.

Thank you in advance for taking the time to complete the survey. Please feel free to share the survey with your peers at other utilities.

Does your cut-off process need reviewing?

If your utility is considering updating your cut-off process, or if you think any other office process could be improved, please give me a call at 919-232-2320 or e-mail me at gsanders@logicssolutions.com to learn how a business review could help your utility.

© 2016 Gary Sanders

When do you charge your cut-off fee?

I’ve written about when to charge the cut-off fee in a previous article about cut-off policies, and even devoted a full article to the topic. However, it’s been four years since the last article and I think this is a topic that merits revisiting.

Recently, I’ve done sales presentations for a few utilities that still charge the cut-off fee only to accounts that have been cut off, rather than charging it to every account on the cut-off list when the list leaves the office.

Fee Survey results

In the 2015 Utility Fee Survey, 71.9% of the utilities that cut off for non-payment charge the cut-fee as soon as the cut-off list leaves the office. I’m pleased to note this was an increase of 10% from 61.9% of the utilities responding to the 2012 Utility Fee Survey.

But this still means that nearly 30% of utilities aren’t charging the cut-off fee to everyone on the cut-off list when it leaves the office. My goal is for 100% of utilities to adopt this policy!

Let’s look at some of the reasons why I believe so strongly in charging the cut-off fee to all accounts at the same time…

It’s more equitable

Customers on the cut-off list have avoided every opportunity to pay their bill. Most utilities process the cut-off list in the same order each cut-off period. Once the first customers start getting cut off, the underground network that seems to exist in every utility’s service area kicks in and customers start showing up to pay.

Is it really fair to extend some customers a few more hours because they are toward the bottom of the cut-off list?

Charging the cut-off fee to all customers at the same time also removes the field service technician from the uncomfortable position of a customer pleading for time to get to the office before being disconnected.

Avoids confusion in the office

If every account has already been assessed the cut-off fee, there is no need to radio or call the field technician each time a customer on the cut-off list comes in to pay. This eliminates confusion in the office and allows the field service technicians to be more productive.

More efficient process

Administratively, it’s much easier to apply the cut-off fee to every account automatically rather than manually adding it to each account as they come in to pay.

Also, if you offer on-line bill pay, there is no way for the on-line bill pay website, unlike a cashier when paying in person, to know if the customer has been cut off or not. To solve this, some utilities don’t allow customers on the cut-off list to pay online. How inefficient is that?

More revenue

Finally, by assessing the cut-off fee to every account, your utility will generate more revenue from cut-off fees. What utility wouldn’t want that?

Don’t miss your chance

In the last issue, I introduced the Utility Staffing Survey. This survey is designed to determine what is adequate staffing for a utility office. If you haven’t already completed the survey and would like to participate, please click here to complete the Utility Staffing Survey. This should take less than five minutes to complete. I will publish the results in a future Utility Information Pipeline.

Thank you in advance for taking the time to complete the survey. Please feel free to share the survey with your peers at other utilities.

Could your cut-off process be more efficient?

If your office is still charging the cut-off fee to only those accounts who are actually cut off, or if you think your cut-off process could be more efficient in general, please give me a call at 919-232-2320 or e-mail me at gsanders@logicssolutions.com to learn how a business review could help your utility.

© 2016 Gary Sanders