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.