Cashing In

Billing is one of the key business processes for a utility, and it is essential that systems are effective and flexible in order to deliver the highest quality service to customers. Any failure to deliver such a service is likely to have an effect on customer satisfaction and reverberate through the entire organization; customers do not want their bills inaccurate, confusing or late. In fact, a recent Platts and Capgemini survey of 120 senior executives at US and Canadian utility companies revealed that billing was a top priority.

“The meter-to-cash process is certainly a focal point in business transformation, since it affects financial and customer satisfaction objectives,” says Energy Insights Analyst Karen Blackmore. “These objectives are almost always part of the corporate scorecard. Sub-processes within the meter-to-cash process – such as billing, collections and meter reading – are often key places to gain revenue assurance and improve customer satisfaction. Utilities are much more inclined to consider outsourcing, upgrading to a newer customer information system (CIS) or enhancing existing billing systems.”

Outsourcing

There are a number of trends apparent when it comes to the different approaches taken by utilities with their billing. The first of these is that many utilities are outsourcing their bill printing and mailing functions “regardless of any other outsourced parts of the meter-to-cash process or what application they may be using,” says Blackmore.

Outsourcing the bill print function can, in fact, help to achieve high levels of efficiency and customer service. “Outsourcing the bill print function is probably the first cost savings measure a utility looks at in the meter-to-cash process, as the savings can translate to smaller rate increases over time,” she explains. “It saves utilities the expense of keeping up with postal changes, eliminates expensive hardware maintenance and frees employees to do other tasks that are more important to customers.”

Other process that are also outsourced more commonly these days include billing enquiries, particularly those that are straightforward and do not require any in-depth reply. “Questions that relate to bill payment due dates or total owed require quick answers and little expertise other than friendly and accurate service,” highlights Blackmore. “Even more complex billing enquiries such as questions about a high bill can be easily outsourced, using smart metering technology to provide instant answers when available, or automatically setting up a service order for a re-read when needed.”

A second trend she identifies is that utilities with legacy CIS in place often continue to keep those legacy applications. “Accuracy of billing and payment is cited as reasons to leave well enough alone,” she says. “These utilities generally add features ‘around’ the CIS, such as electronic bill payment, bill presentment, integrated voice response (IVR) offerings and customer service representative (CSR) help. Some of these utilities have opted to keep the process in-house, knowing their employees are very familiar with the existing system, while others have outsourced upkeep for the application and/or the entire customer care sub-process.”

Blackmore also explains how other utilities have opted to implement newer CIS that already include electronic billing features in them. “These systems are built around common customer care practices, but can be easily modified through the use of templates and options, making technology easy to fit into the process. Still other utilities have started to look at the newer services with software models, where they can outsource the majority of the process work and application upkeep, but retain their staff for core functions.”

Challenges

There are a number of challenges associated with billing in the utility industry as outlined by Blackmore. “With the advent of smart metering and more rates such as time-of-use and critical peak pricing, utilities must upgrade their CIS to accurately and quickly calculate usage and bill accordingly,” she says. “The volume of data is increasing exponentially as more residential customers sign on for these rates, and hence the CIS must be capable of dealing with it.”

A second challenges she identifies is the segmentation of customers, as billing presentment options increase. “Customers may want to receive electronic bills via a specific email, or pushed online, while others may want a reminder that their bill is ready. Customers continue to become more technologically savvy and expect utilities to be ready to provide the services they want. Some utilities have a very mobile customer base, which again means customer identification is essential in identifying those customers with previous outstanding accounts or less than ideal payment patterns, and then setting billing options accordingly (and possibly catch-up payment options).”

Customer care

A utility that has an effective billing system can, very often, claim to also have a very high level of customer satisfaction. It is therefore essential that this link is recognized and bills are correct and delivered on time. “Customer satisfaction is highly dependent upon the belief that billing is accurate,” highlights Blackmore. “Public utility commissions do not tolerate inaccurate, slow or late billings. Customers increasingly expect options when it comes to getting and paying their bills, with some wanting electronic options such as those specifically targeted to a PDA or email.”

Considering the link between effective billing systems and overall customer satisfaction, Blackmore has some advice for utilities that would like to improve customer loyalty and communication through the monthly bill. “Giving people timely and accurate information that is easy to understand is essential – it should reduce call volumes and make first time resolution more attainable for any remaining calls about billing,” she advises. “Adding features such as usage data and weather may be helpful for some customers. Ensuring CSRs have the same copy of the bill as the customer, whether the bill is sent by a third party or in-house is essential in quickly answering questions. In deregulated states, customer loyalty is key in retention. All of the above items should be essential pieces of the monthly bill. Something more prevalent in deregulated utilities, but one even regulated utilities can provide, is a comparative analysis of a customer’s existing bill under their current rates and how they might be able to save energy and money by signing up for a different rate.”

Innovations

Innovations in the billing arena are few and far between; gathering payment is a basic function with is little room for reinventing the wheel. However, there have been a few new changes including presenting ‘where’ the customer wants the information – for example, to devices such as PDAs. “Some utilities are combining information from several applications, using products that aggregate data from a variety of sources,” says Blackmore. “These are often used with legacy systems where the CIS does not contain all the data elements needed to produce the bill, or where the billing calculations are separated from other customer data applications.”

In addition, revenue assurance products can help to streamline billing processes. According to Blackmore these can help “identify customers with unique payment habits, such as those who always pay late but pay in full, can increase customer satisfaction and decrease costs of collection through targeted use of notices for those customers who really need them”.

Utility customers will require that their bills continue to be clear, straightforward and swiftly delivered in the future, therefore utilities will have to ensure that their billing systems continue to be flexible and user-friendly. “The continued interest and expectations by customers in receiving the type of billing information they want, when they want it, in a certain format, and where they want to receive it, will drive billing changes,” concludes Blackmore.

The utility meter-to-cash process

Energy Insights has studied outsourcing in the customer service space and reached the following conclusions:

• Utilities will try to meet challenges (such as advanced metering directives and changing views on energy efficiency, new rate structures and increasing information requirements) through increased adoption of outsourcing in customer care and, more specifically, in the meter-to-cash process
• The leading drivers of outsourcing in the meter-to-cash process are cost management and the drive toward a leaner meter-to-cash process; the availability of newer, more flexible outsourcing deals; and aging workforce concerns
• Outsourcing contract longevity is increasing, showing growing awareness of not only the importance of strategic fit but also the tactical undertakings needed to achieve expected metric
• Outsourcing can help, but it’s a tool rather than the solution – a utility can excel in its corporate objectives and improve its bottom line by joining with the right service provider or providers in partnership

BIO:
As Program Director of Energy Customer Operations Strategies at Energy Insights, Karen Blackmore provides research, advisory and consulting services to business and IT executives involved in customer operations, smart metering, and meter-to-cash processes. She helps them maximize the value of their technology investment and drive technology-enabled business innovation.