CUSTOMER CARE COLLECTIONS

Transcription

1 EB-0-0 Tab Page of CUSTOMER CARE COLLECTIONS INTRODUCTION The Collections area is responsible for ensuring appropriate follow-up and collection of unpaid accounts based on THESL s customer care objectives and guidelines for managing overdue accounts. These guidelines meet all the requirements of the Distribution System Code and other OEB codes that impact collections and have been approved by THESL s Senior Management. They have also been reviewed and approved through THESL s Internal Control Processes. THESL s follow-up and collection activities are efficient and effective. They maximize customer payments and improve collections, thereby reducing pressure on rates. 0 ACTIVITIES To accomplish follow-up and collection activities, the department (based on an historical three year average from 00-0): Mails out over,000 reminder notices annually; Places,000 automated payment reminder phone calls to customers annually; Issues over,000 field collection service orders annually to THESL s field collection contractor and internal field staff; Disconnects,00 accounts per year for non-payment using THESL s field collections contractor and internal field staff; and Tracks Days Sales Outstanding ( DSO ), which measures the average number of days that it takes to collect revenue, and reports on how this figure compares to plan. The DSO can be a leading indicator of customers' ability to make timely payments.

2 EB-0-0 Tab Page of To support its activities, Collections: Maintains a watch list of customers with a higher risk of default and takes mitigating action where necessary to limit losses; Monitors about 0,000 accounts with deposits and oversees the annual process to refund deposits as required; Processes about 00 bankrupt accounts annually to ensure that they are closed, the appropriate claims are made and the necessary follow-up is completed; Prepares and sends over,000 inactive unpaid accounts to external collection agencies for follow up and collection; and Performs write-off activities. 0 As a result of these and other actions, the DSO averaged. days in 0. With a due date that is no less than days past the printing date, this indicates that collection activities were successful. In addition, complaint calls from customers with respect to internal collection activities and external agency activities were rare. This indicates a successful balancing of collection policies versus customer care objectives. In 0, the contract field collectors delivered over 0,000 notices to customers and collected $. million as a result of this activity. The cost of external agency collection activity is percent of the amount collected and this cost is included in the operations budget. In addition to work on customer accounts, the department completes a monthly financial report which includes a reconciliation of the allowance for doubtful accounts. Following an established procedure, at month-end the outstanding accounts receivable balances in various categories, bankrupt accounts and accounts considered to be at risk are reviewed to determine THESL s estimated bad debt exposure. This estimated value is compared to the value determined from the previous month. These reports are reviewed

3 EB-0-0 Tab Page of with senior management. Variances are explained as part of the month-end financial process and the Allowance for Doubtful Accounts provision is adjusted quarterly as required. Trends are carefully monitored so that corrective action can be taken immediately. A significant trend impacting bad debt exposure is the upward pressure on the average customer bill from commodity cost and other rate increases. Customer Service Code Amendments The various customer service code amendments implemented under EB-00-0 have increased delinquency activities and processes, requiring additional resources and significant programming changes to the Customer Information System. A potential for an increase in bad debt expenses also exists. An extension of the amendments developed under the OEB s LEAP consultations, which are to become effective October, 0, will require additional resources and programming changes to implement and sustain. 0 Customer Information System The introduction of a new Customer Information System ( CIS ) in 0 significantly impacted the collections processes. Staff training requirements were extensive as both the technology and many of the business processes changed. As a result, there has and will continue to be an increase in staff time required during the implementation and postimplementation commissioning period. Internal Controls The department works to ensure internal controls are in place for existing processes and developed for new processes. These controls have been designed to ensure that major processes like the collection of accounts and bad debt write-offs follow well-defined steps that are checked, audited and signed-off by management at various stages to ensure

4 EB-0-0 Tab Page of accuracy and integrity. All existing and new processes are reviewed annually to ensure that adequate controls are in place and the procedures in use are still valid. COSTS Table : Collection Operating Costs ($ millions) Actual Actual Actual Bridge Test Test Test Collections The increase in operating costs from 0 to 0 is projected to be $. million, and $0. million increase in labour costs as per the negotiated contract; $. million increase in bad debt expenses as the average cost per bill increases due to TOU rates for some consumer groups and overall higher commodity and rate costs; and $0. million increase in collection services to control bad debt expenses. 0 The increase in operating costs from 0 to 0 is projected to be $0. million, and $0. million for a contracted labour increase, a decrease of labour from a transfer to another area within Customer Services, an increase to the operating budget for a return of labour from the CIS capital project, and an increase in collection services to control bad debt expenses; and $0. million increase in bad debt costs due to growth in customer base and amendments (under EB-00-0).

5 EB-0-0 Tab Page of The increase in operating costs from 0 to 0 is projected to be $0. million, and $0. million for a contracted labour increase; $0. million for an increase in bad debt costs due to growth in customer base and amendments (under EB-00-0): and $0. million increase to cover collection services and supplies to control bad debt expenses. The increase in operating costs from 0 to 0 is projected to be $0. million, and $0. million for a contracted labour increase and one additional headcount to manage the increasing customer base; and $0. million for an increase in bad debt costs due to growth in customer base and amendments (under EB-00-0).