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04 April 2018

An end-to-end approach to the back office experience in utilities

Prashant Kachhala

Prashant Kachhala
Senior Manager | Energy, utilities and resources | London

Across energy and water retail, organisations are recognising there is significant opportunity to improve bottom line performance by taking a more end-to-end perspective across billing and collection operations. This first blog in a three part series explores the benefits of adopting an end-to-end perspective.

Over the past few years, organisations have increasingly turned to their Credit Risk and Collections Departments to deliver P&L improvements through enduring Bad Debt Charge (BDC) reduction. The cost of debt is estimated to add roughly £20 to every customer’s bill per year. This is one of the reasons driving OFWAT’s PR19 focus on better use of data and management of vulnerable customers. Our next blog will consider this point more closely, exploring areas of the debt management cycle that water companies should address to achieve best practice performance.

The most mature organisations are now building upon the expertise that their Credit Risk, Collections and Billing departments possess. They are being challenged to improve their understanding of how they affect each other’s workloads, and improve the operational links in order to deliver better outcomes for all. The most successful organisations are seeing significant customer and financial benefit by considering the upstream drivers of BDC, with acquisition, home move and billing as a key moment of truth. We have seen that up to 25% of annual write-off can be traced back to upstream bill quality issues. Indeed, billing and payments drives anything up to 60% of complaints[1], so getting the experience right up front releases pressure across the organisation.

Some are organising themselves to reflect this end-to-end view; combining their billing and collections data, insights and operations to tackle their P&L challenges in a more joined up fashion. The philosophy is that quality of billing will “turn the tap off” and mitigate risk before it hits the debt book.

Having a more joined up approach brings greater complexity than the traditional approach of working in functional silos. It requires many disciplines to achieve success, which we will explore in the third and final blog in this series. For example, it needs data science that is well in tune with business strategy and so transforms insight into commercial outcomes, well informed and expedient process improvement and re-organisation such that operations can deal with customer issues in an end-to-end way through to resolution.

Getting these aspects right can bear significant and sustainable improvements not only in BDC, but in revenue, operational cost, churn, satisfaction and employee engagement. There are clear, significant opportunities for energy and water retailers to improve operational and financial performance by adopting a more holistic approach.

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