Dealing with consumer debt has been a struggle for many an energy retailer.
While this is chiefly because of the utility sector's duty to supply, the problem has been exacerbated as a result of the global pandemic. Sharp increases in vacant commercial properties have caused violations of contracted usage volumes, debt collection activities have in some cases been ceased, households are struggling to keep up with their bills, patterns of consumption are changing, and there’s been a reduction in meter read frequency.
The combined effects of COVID on our community, along with increased customer protections from the energy regulator, means it’s harder than usual for retailers to collect payments from their customers.
With all these factors in mind, cash flow management is more urgent now than ever before. So how can technology help you protect and maintain your cash flow in the face of this unprecedented uncertainty?
It can be tempting to allow customers to defer payments with a "holiday" - an option that the banks employ with their mortgage customers. While this works well with a cash-rich banking business, this merely delays the issue for energy retailers, and could create an even bigger problem down the road.
An alternative approach is to make the setup of a payment plan your first response to a customer in difficulty. The size of the payment can be small, particularly if you make it weekly. The cash flow advantages of this approach may initially appear slight, but the big benefit is the early warning if the customer misses payments. In this scenario, the retailer will be able to take further actions, including anything from offering hardship provisions to disconnection procedures.
So where does technology fit into this? Well, it can provide tools that allow:
- Quick calculation of a suitable payment plan amount.
- Easy creation of direct debit arrangements to collect weekly payments.
- Email and SMS reminders when a payment is due or about to be collected (it is important to differentiate these two scenarios).
- Workflows that guide CX staff through the hardship assessment process.
- Digital and automated processes allowing customers to self serve the payment plan option.
For help integrating these solutions into your energy retail business, speak with the experts at Transformable. Get in touch today.