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Debt management review for urban water business

Paul Harris — March 2011

Recent Engagement: MHC was engaged to improve debt management processes for one of Australia’s largest, regionally-located, urban water businesses providing world-class water, sewerage and recycled water services to over 250,000 people.

Given the global financial crisis, increases in water tariffs and the subsequent rising debt levels of their customer base, the business expected an increase in customer hardship and non-payments. Complicating matters, the business’ debt management processes were poorly documented with limited review since they were developed some years ago. Whilst low staff turnover had historically allowed the business to operate with limited formal documentation, the planned departures of a number of key personnel team in the Debt Management Group presented a significant risk.

To deliver improvements in the debt management processes, MHC used these key operating principles:

  • Being proactive rather than reactive to customer needs
  • Maximising uptake of payment plans to avoid the need for more aggressive debt collection
  • Minimising increases to overall debt levels without incurring significant additional recovery costs, and
  • Enhancing customer experience by focussing on the customer.

MHC’s approach was based on a four-step methodology:

  • Establishing ‘As-Is’ debt management processes
  • Assessing current performance and practices supporting these ‘As-Is’ processes
  • Establishing ‘To-Be’ processes and identifying corresponding immediate and medium-term improvement opportunities, along with recovery accountabilities, timescales and decision points, and
  • Implementation Planning.

Final deliverables included Level 3 ‘As-Is’ and ‘To-Be’ processes for Debt Management, including Sundry Debt Management, Hardship Assistance and Customer Complaints Resolution.

Our report comprised process maps, performance observations, improvement opportunities, and implementation plans for immediate and medium-term improvements. As an immediate initiative, MHC advised engaging with the customer by providing improvements for Hardship Assistance. As a medium-term initiative, MHC recommended reducing customer debt levels by continuing to encourage certain payment methods for hardship customers, developing a customer contact strategy, and customer segmentation based on risk profile.

Clearly documented process maps now guide current and new staff with debt management activities – ensuring the team delivers consistent work practices for dealing with hardship and non-payment customers.

The review has improved the client’s processing of customer information and enhanced the overall customer experience through more effective communication channels, and incentives for customers who pay on time.

Get in touch with the author — Paul Harris »

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