The fol­low­ing part­ner insight was authored by Paul Apple­gate, VP of Alliances and Busi­ness Devel­op­ment at Invoice­Cloud.

Util­i­ty providers are still con­tend­ing with one of the pandemic’s most cost­ly after­ef­fects: bil­lions of dol­lars in unpaid bills that now threat­en their oper­a­tional sta­bil­i­ty. Accord­ing to a recent report from the Nation­al Ener­gy Assis­tance Direc­tors Asso­ci­a­tion (NEA­DA), util­i­ty pay­ment arrear­ages, or house­hold debt to util­i­ties, have risen to more than $20 bil­lion in the U.S. as of last Sep­tem­ber (up 36.6% since Jan­u­ary 2022).

Even as this chal­lenge emerges, util­i­ty cus­tomers’ expec­ta­tions con­tin­ue to evolve dra­mat­i­cal­ly. In response, util­i­ties are start­ing to shift from think­ing about their con­sumers as ​“ratepay­ers” to under­stand­ing them as com­plex ​“pro­sumers” and ​“omnisumers” who judge util­i­ty expe­ri­ences against the seam­less inter­ac­tions offered by com­pa­nies like Ama­zon and Uber.

Such a shift in mind­set demands sim­i­lar shifts in oper­a­tional effi­cien­cy. Each unnec­es­sary man­u­al process func­tions as an orga­ni­za­tion­al tax for util­i­ties that pre­vents them from sup­port­ing their most vul­ner­a­ble cus­tomers. The time spent han­dling avoid­able phone calls, pro­cess­ing paper checks, or man­ag­ing oth­er man­u­al work­flows rep­re­sents a sig­nif­i­cant oppor­tu­ni­ty cost for orga­ni­za­tions already oper­at­ing with con­strained resources.

Mean­while, cen­sus data shows an impor­tant demo­graph­ic trend: urban cen­ters are los­ing pop­u­la­tion as Amer­i­cans increas­ing­ly relo­cate to rur­al areas and sub­ur­ban neigh­bor­hoods, par­tic­u­lar­ly in the South­east, Flori­da, Texas, and parts of the Moun­tain West.

Util­i­ties in these rapid­ly grow­ing regions now face ser­vice ter­ri­to­ries with sig­nif­i­cant­ly more cus­tomers and new con­struc­tion, all with­out cor­re­spond­ing staffing increas­es. This forces them to main­tain ser­vice qual­i­ty with few­er employ­ees per cus­tomer, par­tic­u­lar­ly in areas see­ing the most sig­nif­i­cant pop­u­la­tion gains.

Tak­en togeth­er, these chal­lenges have cre­at­ed a per­fect storm, demand­ing solu­tions that address both sides of the equa­tion: help­ing util­i­ties recov­er rev­enue while deliv­er­ing the fric­tion­less expe­ri­ence mod­ern cus­tomers expect.

Under­stand­ing and Address­ing Non-Payment

Research iden­ti­fies two dis­tinct groups of non-pay­ers: busy indi­vid­u­als who sim­ply for­get bills amid life’s chaos and those strug­gling finan­cial­ly who require sig­nif­i­cant assistance.

When util­i­ties fail to seg­ment these dif­fer­ent caus­es of non-pay­ment, they waste resources apply­ing one-size-fits-all approach­es. One key to suc­cess? Focus­ing on cus­tomers who have the means to pay but are not pre­sent­ed with a mod­ern CX plat­form that meets them when and how they want to engage. If you can elim­i­nate, ​“I for­got” as a valid rea­son for non-pay­ment, think of the time and resources you can spend on your most vul­ner­a­ble customers. 

Col­lec­tions suc­ceed when strate­gies are cus­tom-built for dis­tinct cus­tomer seg­ments rather than using one-size-fits-all approach­es. For exam­ple, con­sid­er the tra­di­tion­al util­i­ty paper bill. Check fraud has sky­rock­et­ed in the last five years — jump­ing a stag­ger­ing 385%, accord­ing to Trea­sury fig­ures — endan­ger­ing both util­i­ty com­pa­nies and their cus­tomers. Paper state­ments rou­tine­ly van­ish beneath mail piles or get mis­placed dur­ing every­day house­hold activ­i­ties. Even well-inten­tioned cus­tomers miss pay­ments when bills disappear.

Lim­it­ed inter­net access con­tin­ues to block many cus­tomers from mak­ing time­ly pay­ments. Over 14 mil­lion Amer­i­can house­holds still lack inter­net access, espe­cial­ly those in unbanked and non-Eng­lish speak­ing house­holds. Yet, about 97% of Amer­i­cans, includ­ing those with­out tra­di­tion­al inter­net access, own mobile phones, offer­ing an alter­na­tive dig­i­tal chan­nel for reach­ing oth­er­wise dis­con­nect­ed customers.

Build­ing an Inclu­sive Pay­ment Infrastructure

Invoice­Cloud offers a proac­tive, mul­ti-chan­nel approach to tack­ling these chal­lenges, mak­ing it not only eas­i­er for cus­tomers to pay at every touch­point but, most impor­tant­ly, lever­age this pay­ment jour­ney to dri­ve behav­ioral change that leads to high­er rates of dig­i­tal pay­ment adoption.

Cus­tomers respond strong­ly to com­mu­ni­ca­tions that men­tion their spe­cif­ic area. Trust builds when com­pa­nies respect pre­ferred con­tact meth­ods. Acknowl­edg­ing past ser­vice inter­ac­tions shows atten­tive­ness to detail. These per­son­al­ized approach­es con­sis­tent­ly out­per­form gener­ic notices.

The inte­gra­tion between Invoice­Cloud and SAP S/4HANA Util­i­ties enables bet­ter seg­men­ta­tion of these non-pay­ment caus­es by con­nect­ing pay­ment data direct­ly with cus­tomer infor­ma­tion already stored in SAP sys­tems, allow­ing util­i­ties to apply appro­pri­ate col­lec­tion strate­gies based on cus­tomer his­to­ry and pay­ment patterns.

InvoiceCloud’s plat­form enables util­i­ties to:

• Send mul­ti­ple brand­ed reminders – Data shows that cus­tomers are more like­ly to pay after receiv­ing sec­ond or third notifications.

• Lever­age per­son­al­ized out­bound campaigns – Tar­get­ed mes­sag­ing via email, phone, or text helps reach unre­spon­sive customers.

• Pro­vide omnichan­nel pay­ment access – From mobile wal­lets to IVR phone pay­ments, cus­tomers can pay through their pre­ferred channel.

While some cus­tomers sim­ply for­get to pay, oth­ers strug­gle with finan­cial hard­ships. Ear­ly infor­ma­tion about assis­tance pro­grams is crit­i­cal for those in seri­ous finan­cial dif­fi­cul­ty. Time­ly inter­ven­tion pre­vents tem­po­rary pay­ment issues from esca­lat­ing to ser­vice disconnection.

Invoice­Cloud helps util­i­ties pro­vide flex­i­ble options, including:

• Pay­ment plans and install­ment options – Solu­tions like PayPal’s ​“Pay in 4” allow cus­tomers to break pay­ments into man­age­able amounts.

• Assis­tance pro­gram out­reach – Proac­tive com­mu­ni­ca­tion about finan­cial assis­tance pro­grams can help those in need before they fall too far behind.

• Cash pay­ment options at local retailers – Ensur­ing acces­si­bil­i­ty for unbanked or under­banked cus­tomers helps pre­vent ser­vice shutoffs.

Progress demands pay­ment infra­struc­ture built on true inclu­siv­i­ty. Such sys­tems must work equal­ly well for tech novices and experts, accom­mo­date var­i­ous finan­cial sit­u­a­tions, and respect pay­ment preferences.

Even the most com­pre­hen­sive pay­ment options will go unused if cus­tomers encounter con­fu­sion or fric­tion when nav­i­gat­ing them. Cus­tomer sat­is­fac­tion improves when frus­trat­ing pay­ment process­es are replaced with con­ve­nient options tai­lored to indi­vid­ual needs.

Invoice­Cloud has devel­oped an inte­gra­tion with SAP S/4HANA Util­i­ties that con­nects pay­ment func­tion­al­i­ty with exist­ing CIS, allow­ing util­i­ties to main­tain their core SAP oper­a­tions while enhanc­ing pay­ment capabilities.

To enhance effi­cien­cy and secu­ri­ty, util­i­ties must encour­age dig­i­tal pay­ments. Invoice­Cloud facil­i­tates this by:

• Pro­mot­ing Auto­Pay and sched­uled pay­ments – Encour­ag­ing ​“set it and for­get it” options pre­vents missed due dates.

• Edu­cat­ing on check fraud risks – As check fraud increas­es, guid­ing cus­tomers toward secure online pay­ments is critical.

• Moti­vat­ing paper­less billing enroll­ment – Dig­i­tal invoic­es help elim­i­nate the issue of mis­placed paper bills.

As demo­graph­ic shifts and staffing lim­i­ta­tions con­tin­ue to chal­lenge util­i­ties, mod­ern­ized pay­ment sys­tems offer a crit­i­cal advan­tage by allow­ing com­pa­nies to accom­plish more with exist­ing resources while simul­ta­ne­ous­ly deliv­er­ing the improved expe­ri­ences cus­tomers increas­ing­ly demand.

By inte­grat­ing these solu­tions, util­i­ties can reduce col­lec­tions bur­dens, improve cash flow, and ded­i­cate more time to assist­ing cus­tomers who need it most. InvoiceCloud’s inno­v­a­tive plat­form makes it easy to encour­age pay­ments, offer flex­i­bil­i­ty, and tran­si­tion more cus­tomers to dig­i­tal billing.

Paul Apple­gate is VP of Alliances and Busi­ness Devel­op­ment at InvoiceCloud.