How Utilities Can Decrease Their Accounts Receivable

Welcome to closing the books, a podcast by IC system, your trusted subject matter expert for debt collection solutions. Join us as we discuss the biggest trends and topics and debt collection and explore account recoveries in an uncertain future. Hune, welcome to closing the books, a podcast from the collection industry experts at IC system I'm your host, Tyler Kern. Thanks so much for joining us for this episode of the show. Now, today, I'm joined by 2 subject matter experts as we discuss how utilities can emerge from covid-19 and decrease their accounts receivable. It's a big question these days. And joining me now to discuss it is Karen jon��s, senior vice president for business development at I'se system. Karen, thank you so much for joining me. Yes, thank you for having me. Appreciate that. You got it. Welcome back to The podcast. We are happy to have you. And also joining us today here on the podcast, this Eric report is a Recovery Manager for debt. Next Eric, welcome to the podcast. Thanks for joining us. Thanks for having me, Tyler. Appreciate being here. Well, we are thrilled to have both of you on the show today. And so just to get things kicked off here. Eric, give us an idea of the current state of accounts receivable for utility companies. Just given what we've seen over the last year with covid-19 and so many of the different things that have been going on. What's the state of the industry right now, from your perspective? Yeah, definitely tither. Great question. I think what we're seeing now is a lot more utilities are starting to regain focus on their write off collections again, a year ago as we know it with the pandemic, what we saw was a lot of utility companies, they stopped disconnects. They also, in some cases, stopped the downstream recovery of delinquent accounts. So what we're starting to see right now is, again, a refocus on recoveries. We've also seen a shift in the type of recoveries, more of a digital type collection style, utilizing email and text communication, given the fact that many people have their phones with them today and are using email more widely than going to the mailbox and getting a demand letter. So we've seen a change in the recovery landscape when it comes to digital communications. But overall, I think we're at a point now where we're starting to see an uptick in recoveries and again, going into the year, we'll see how it plays out. But a lot of different directions that things go. But but for now, I think things are headed in the right direction. Karen, what are your thoughts on just where we are right now with utility companies? Yeah, right now they're know, last year They really couldn't write off or disconnect any accounts at that point, just due to the fact of the state of emergency or moratoriums. So they're seeing their accounts receivable increase. And so now going into twenty, 20 one, they are definitely trying to mitigate those write offs. So, you know, they're a little concerned about that. So they're just making sure that as they send accounts to the collection agency, that will be able to return as much money as possible during this year for them. So, Erica, how have you seen the productivity change during covid? Obviously, this has been a year and a year plus, honestly, that we haven't seen before. So have you seen productivity change during this time? Yeah, for starters, I think what we're seeing is obvious. The obvious, more people are working from home. So with that, I think in the beginning, it was a bit challenging when you're looking at receivables management. And a lot of your big companies have internal projects going on that affect their downstream recovery. So the biggest thing, I think, is just the productivity standpoint, just the shift in the remote work life as opposed to going to the office. I think Karen mentioned it to you know, the other thing we've seen with utility companies is that they stop rolling trucks out to disconnect. So that was another thing you saw with the pandemic. Outside of that, the downstream agencies ceasing collections many times the utilities, you know, wanted to stop collections and instead of the pandemic, so probably speak to that as well. But, you know, that was another change on the agency side. Obviously, you're not getting the formula of account. So that you regain focus on the inventory that you have. From a productivity standpoint, I would think the agencies probably shift the gears on their part knowing that. But overall, I think that's what we've seen from a productivity standpoint on our side. Karen, any thoughts you want to add to Eric's comments about productivity during covid-19? Yeah, you know, one thing is we had to remove hever collectors, deploy all the way, you know, working remotely within three days. And so that was really quick for us. Normally, that would take like over a year to do something like that. So because we had clients that we had to service and through the COVID in our productivity definitely has increased with our collectors working from home without ever having those distractions of being in the office, taking too long of breaks. Now they're at home. And so they want to get back to work. And and of course, now with this covid, with the stimulus checks that we're seeing that has increased collections but also increased our in bounds. And so a lot of people, the consumers are paying off their past two accounts through this COVID with the stimulus checks that they're receiving. That's a great point, actually. And I'm glad you brought that up, Kiran. And I wanted to follow just by asking how you're seeing clients handling your process now, what does that look like? And I suppose has that changed over the course of covid? Definitely, Tyler. I think from our standpoint, what we've seen is a shift in focus on active recoveries versus the write off. And how can each of our clients collect sooner than later? You're mitigating the risk of an account going into the write off recovery. So I think we've seen a big shift in just the overall recovery scheme for each of the clients from Wycoff to active, but also focusing on the active inventory to Karen's point with the stimulus checks and the reshift finances consumers. What we're seeing here is pay down of old debt that we haven't seen in recent times. So but again, up front, I think we're looking at a shift and recovery is more focused on the active accounts because of the suspension of disconnects. You do have a case. Now where some utilities have not started disconnecting again. So you have a backup force. And this backup is a damn waiting to burst. When that happens. The downstream agencies, you know, should be prepared for that. But I think a lot of the clients are our understanding that disconnects haven't been happening. Arrears are piling up. Know how do we tackle that before it becomes even a bigger problem downstream? What about for you? How are you seeing your clients handling your process now? Yeah, you know, it's one thing. They're just really right now, if they are able to disconnect, they have been starting to. But some of our clients are waiting for the state of emergency to end or the moratorium, so once that ends, you know, they're really nervous about what those write offs will look like. And as Eric was talking about, they're really looking at their active inventory to see what can the collection agency help them with. So is it more like a first party approach. Or is it a pre collect before it actually gets written off into primary? So they're really trying to take a look at that to mitigate those write offs. And then we still have some clients that have accounts paused. They haven't let us do any collections on those accounts we're taking in inbounds, but they're not sending us any forward flow accounts just due to COVID and concerns of customer complaints. So I know those clients are definitely taking a look at their age and seeing, you know, how long can they go without any collection efforts on these particular accounts without having the write offs be very large by the end of this year. So we're here to help. And definitely taking a look at those active accounts. So, Erica, in that vein, how are you managing your agencies, their numbers, scorecards, performance, things like that? How do you go about kind of looking at all of these things? Yeah, that's a great question, Tyler. This is always this is always a subject that comes up not only with the agencies, but the clients and how to best manage performance. And there's really two ways you look at performance. The first way is the pay down of inventory over time. And the importance of that is really understanding, you know, what of inventory is paid down over time. You look at this year over year by month, and obviously, you've got different geographic regions within recoveries. So you'll one would assume that if you take the month of, let's say, February, march, for example, you know, we're on the cusp of tax season, but that is that you look at year over year, month and you look at those months, year over year. Now, that really is a reflection of the downstream pull. Other metric we look at to are the best tracks or what we term as pools on each of the client systems. And the pool really represents a batch of accounts. You've got 12 pools throughout the year. Each of those pools are at a different point in their recovery lifecycle. So going back to the pay down of inventory, each of those pools, their life cycle, if we take the reporting month of again, using February or march, those pools will be at different points. But what's important is that how much money is recovered from each of those pools at a given point in time. And so as time goes on, we look at those two things and really each of those polls has an objective set to it, which historically, there is a recovery trend that each of those pools hits throughout each recovery month. So we look at those two metrics. The other thing we look at, too, is the work effort that takes place behind the account. So you've got your demand letter that sent out. You're establishing contact with the customer. Eventually you get them into a payment plan. So what of accounts fall within each of those categories really gives some good insight into how well, that pool is performing. And if we have to dive a little bit deeper into those to figure out how to recover more. So just to give us a little bit more background on debt next, what does that next provide to help the clients achieve their numbers and kind of hit these things that you're talking about as you talk about how you're managing and how you're gauging success in that sort of thing? What do you provide that to help them in that regard? Yeah, great question, Tyler. So, as you know, debt. Next is a middleware solution. We fit between a client billing system and the downstream collection agency. And the platform really provides that transparency that clients need and agencies like to manage their receivables. So it's an even playing field across the board. Our clients take advantage of the placement scorecard reporting that's on the platform again, goes into full performance. You've got the ability to create a champion challenger environment. You also have the ability to track work effort with that scorecard. So the other feature that our clients take advantage of is the next decision engine, the decision and is really about getting the right account to the right agency at the right time. With the decision engine. You also have built in recovery optimization, which takes into consideration AI and machine learning to optimize recovery. So the system is really thinking for the client. The best recovery strategy to make sure that not only are you maximize recoveries, you're also reducing costs. And that being productive as well. So, Karen, from your perspective, just the. Working with debt next, what does that look like on the system side and how does that help see system when it comes to finding success in this area? Yeah, one thing I see system loves about debt. Next is we can see their scorecards. They're available. So we know how we're sitting against our competition. And then we can also see which batch needs attention to make sure that we can make sure that we're winning that batch. And also, we're always looking to try to win more market share. So gaining more accounts once you're winning on that scorecard. So it really does help to see those scorecards to make sure that you can drive that performance. And it really helps the clients, too, because it is driving performance by having those scorecards. And then another thing that we also like is the invoicing on the client service side is really easy through deck next. So that definitely helps us as month and happens to. Absolutely so what other changes have you seen in covid-19? Obviously, this is disrupted. So many different aspects of every industry really around the world. But but what other changes have you seen as a result of this? Yeah, I think so. You mentioned earlier, the biggest thing, obviously, is around the active collections, but also all of our client base is really sharpening the saw around write off collections and outsourcing a lot of work on their end. So I think internally what we've seen is, is a lot of clients really looking for guidance around areas, understanding maybe the analytics that the platform provides. So a lot of clients are looking for advanced analytics ways to optimize recoveries and in some cases, even looking to us to for recovery management expertise. So we've seen a lot of that over the past year or so. In addition to changes in the industry, I know there's current changes coming down the pipe around validation notices, you know, managing call volume. So there's a lot of different things that the platform is being enhanced to accommodate those needs. So, again, I think all in all, it's been very busy on our front, but we've seen a lot of engagement from the clients and downstream agencies to at that. Given from your perspective, what else has changed during this time. And what other changes have you seen them, I guess, as a result of covid-19 disrupting things once again? Yeah, for the utility world, they're just trying to mitigate their write offs and making sure that they can start disconnecting again. And what does the future. What does it look like for the collectors? I think they're going to still be remote or they might be back in the office or like a little bit of hybrid and other changes through COVID was those stimulus checks that we received that the consumers have received because that was a game changer in the collection world. A lot of the consumers paid off their past two accounts. And so during that time, we've seen like a 15% lift through those stimulus checks back in 2020. And so that definitely has helped our clients. We return money, more money to them through in 2020. So that was really helpful as well. So because we begin to look ahead towards twenty, 21 and thankfully putting 2020 in the rearview mirror. What's this twenty, 21 look like for you. What does it look like moving forward. And how do we continue to take steps forward into the future. Yeah, definitely Tyler. So the changes we've seen on our end again mentioned this earlier, but a lot of clients are looking at active account collection. So again, chasing the debt further up the stream before it even goes to final bill, our write off. So that's one area of change that we've seen. Also, two bankruptcies. Bankruptcies is another hot topic in the industry. I think you're looking at your year that we're at. Last year, a lot of things were on hold. So as we come out of the pandemic, I think we're going to start to see an uptick on bankruptcies. And you'll overall just the outsourcing of services. A lot of clients have approached us for further assistance in understanding, you know, they're reporting analytics that the platform provides how to optimize recoveries, how to better manage collection agencies and understand what they can do through the platform to be more operationally efficient. So those are some of the things that we've seen since the onset of COVID. So because we begin to put 2020 in the rearview mirror, focus solely on 2021 what does it look like for you and what is things, what do things look like moving forward. Yeah so so far Tyler. 2021 across the board is. A great year, I think we've seen a positive impact in recoveries for all clients, utility companies, I'm sure Karen and her team can attest to the same with the downstream agencies. So I think so far we're off to a good start this year. As I mentioned earlier, this year, a lot of focus has been placed on active recoveries and understanding how to get to the account, understand the account before it heads the write off. So we've seen a focus on that. And also not neglecting the write offs, but a refocus on downstream recovery strategies around write off collections, different treatment strategies. It could be a high balance. Or maybe you're tackling your small bowel strategy. So or focused approach on recovery strategy and write off collections. Bankruptcies on the rise. Also, we're seeing a managed bankruptcy is better through the platform. In addition to that, you know, other areas of opportunity in the platform to better be operational efficient. So those are some of the things that we're seeing on our side. Yeah, so far it's been a great year, as Eric was talking about. I mean, you have the tax season, the stimulus checks, you know, and our clients are definitely seeing a good return. So far this year. I think what they're worried about is once they start writing off these accounts, what does it look like going into the future? And I really think it is the system, we need to continue to try to find new revenue streams for them and to help them reduce their bad debt and get as much money as possible for them in 20. 21 is considering 2020 was not that great of a year for those guys. So, you know, it's definitely one of those things that we're constantly looking to see what we can do to return more money to them. Kiran, one of the things that I've been thinking about just kind of throughout this conversation is whether or not there are any unique revenue streams that you would recommend for utilities clients in twenty, 2001. As you look forward, what do you think about that? Yeah, one of the unique revenue streams is just their older accounts that are just sitting there. So they're not even at an agency anymore. So they've been maybe at a collection agency through their tertiary and now they've had them in-house for like two years, just shelved the inventory because they didn't think that they could get a return. So that, you know, having all those bad accounts are shelved accounts, I should say, they're not working those accounts. That's a new revenue stream. We have a trigger program that we use. We have 28 triggers. So something changes with the consumer. So it could mean that they paid off their car loan, they applied for a home equity loan, so or they paid off their house. So those are the things by shelving those old accounts and taking them, putting them at a collection agency, something's changed with those consumers. And believe it or not, there is a lot of revenue in those older accounts. I think the thing that stuck out the most was their different ways, different recommendations to recover more from the clients. And that's something I think is always important to understand recoveries. It's not just vanilla. They'll call it collect demand, letter call and collect. There are different treatment strategies. So I think you hit the nail on the head there. Just from IT system standpoint, understanding how can they better collect for their client base, suheir? And how does the system contribute to achieve collection goals? This is something we've talked about on the podcast a number of times, but specifically for this episode, as we discussed utilities and that sort of thing. And the challenges from covid-19, how does the system really contribute to achieving those goals yet? You know, one thing, working with debt next, you get to see those scorecards. And so, like I mentioned, is we're always competing for more market share and trying to be on top of the scorecard. So currently, we have over 20 scorecards just in the utility vertical alone. So by gaining market share and more accounts, that definitely helps the performance for our client. And driving that. And then also, we have our strategy and the analytics department that definitely helps us to make sure that we can be very competitive on those scorecards to gain market share. And then also maybe get into a different tier and like I mentioned, and maybe trying to help our clients with that new revenue stream as well. And another thing we've covered on the podcast in the past, but I think is pertinent to this conversation is how I see system differentiates itself from other collections agencies. So from your perspective, what are some of the key things that people need to know as far as what separates IC system from other people that work in the same area? Yeah, you know, what makes us definitely different is we have a consumer survey, so we have a call quality program where we score the calls and to see how our collectors are doing. And then we also have had our clients listen to the calls and score us. But now we actually have the consumer score. So that definitely makes us unique and especially through this COVID time where they were definitely concerned of should I send this to a collection agency, how are you going to handle these accounts with complaints? And so it really put our clients at ease knowing that we had this consumer survey. So that they could see the results. And notice that the consumers aren't saying bad things about this account being in collections. So that definitely makes us unique. We have a data warehouse as well, where we can produce information very quickly for our clients and reports. So they know exactly what's happening on their accounts. And we also have online tools. And, you know, like I said, we've been around for 81 years and we're not going anywhere. So we definitely help our clients knowing that we're definitely a solid company. And from your perspective, what's it like? And tell me a little bit more about the partnership between debt. Next in the system and working with the folks over at system. What that's what's that like from your perspective? Yeah, as Karen mentioned, one of the big areas of the software is the placement scorecard that our clients take advantage of. And I think IAC system has been very vocal and active, understanding the scorecards and communicating results to the clients through their next web portal. So I think from that standpoint, don, I know that they provide a lot of feedback on what they're seeing based on what the scorecards display. Great team to work with, very responsive. And as I mentioned before, you know, they're always looking for innovative ways to cover more. And I think providing that feedback to the clients educates them and helps them understand how they can go the extra mile, what you can't say a place with a system. Absolutely well, is there anything else that you guys would like to share more money On this episode of the podcast as we wrap up talking about utility companies and how they can emerge from covid-19 and decrease their accounts receivable? Anything else that you want to mention that? Eric, let me toss it to you first, just for any closing thoughts, any closing statements or anything we haven't mentioned yet here in the podcast? Yeah, I would just say overall, all the clients out there looking at your data, I think each client has a unique vantage point. But really, the hear a lot of what's the secret sauce, what's the secret recipe out there to recoveries? And it's in the data. And the next platform houses the data. And to me, that's where the answer to recoveries is at. So just getting into the data is the first step. And Karen, final thoughts here as we wrap up this episode of the show. Yeah, you know, our clients definitely are looking at their age and trying to figure out how can they get more collections in. And Eric was saying, look at the data, look at the accounts that you have, maybe adding different streams, you know, like active collections and then looking at that warehouse piece where the accounts are just shelved and nothing's happening to those. So it definitely can be a good year for utilities out there. It's just kind of looking at things a little bit differently. And trying different things as pilots and try to see if you can get that revenue in for them as well. So that's definitely what we're always here about, is to really help our clients along through this process, because COVID definitely has been very unique out there. And, you know, it's definitely trying to kind of maneuver through it. So we're getting through the end. Hopefully we're to the end of this COVID soon. But until then, we definitely have to continue to find different ways to return that money back to our clients. So certainly it has been a disruptive and challenging time. And so so thank you both for joining the podcast today and just sharing a little bit more about how utilities can emerge from covid-19 and really get things back on track and get things back to normal. So, Karen, jon��s of IC systemone, report from debt. Next Thank you both. So much for joining us here on the podcast today. All right. Thank you so much. Thanks for having us. Absolutely and everyone, thank you for tuning into this episode of closing the books, a podcast from the collection industry experts at IC system. And thank you so much to our special guest, Eric, for joining us more money On this episode. For everyone out there, if you haven't subscribed to the podcast, stay up to date with the latest on the collection industry by subscribing to closing the books on Apple Podcasts, Spotify. Wherever you get your podcasts these days, make sure to go and subscribe to stay up to date with the latest stuff from these experts here at AC system. And stay tuned. We'll be back soon with more episodes of the show. But until then, I've been your host today. Tyler, Thanks so much for listening.