Utility Companies Continue to Outsource Debt Collection

Posted by Ryan Howard


Earlier this year, Puerto Rico was left with no choice but to attempt to restructure its current utility debt. With its population facing a decade-long economic crisis, Puerto Rico had attempted to help ailing utility companies previously meet financial obligations. The U.S. court system, including the Supreme Court, continues to strike down any legislation that the island has passed on its own to restructure the debt. In this state of emergency, schools and hospitals have closed due to limited resources such as electricity and water. 

With private and public utility companies continuing to face more delinquent accounts, collections outsourcing is on the rise.

consumers/Utilities Relationship

Consumers and businesses must establish relationships with power and utility companies in order to meet basic household needs including water, heat and electricity. With the recovering and ever-changing economy however, consumers and utility companies are on edge. Consumers are facing ongoing challenges including unemployment or underemployment, student loan debt and increasing credit card debt leading to more bankruptcies. Utility companies are working within an increasingly competitive environment of privately and publicly owned companies, decreasing budgets and higher costs of doing business. 

Compound these circumstances and utility companies are increasingly faced with delinquent or non-paying accounts. Debt collection recovery and collections requires more time, patience and a specialized workforce to assist utility companies with maintaining a positive relationship with their customers. The collection activities affect the revenue stream, as we've seen in the Puerto Rico case, so it is an imperative activity, no matter the constraints to the company.


How Third Party Debt Collection Agencies Can Help

With the dire need for utility collections to increase revenue, more companies are turning third party debt collection agencies to help. In fact, a 2014 Deloitte survey on outsourcing revealed 41% of organizations, including banking, professional services, power and utility companies, outsourced collections with another 22% planning to do so.

A few of the reasons businesses generally outsource certain functions include saving money, improving operational efficiency and flexibility to fulfill customer needs. With the ongoing revenue challenges mentioned above, utility companies are outsourcing particular operational tasks so they can (1) continue to increase revenue, (2) stay within budget constraints, and (3) remain proactive to customer needs. 

A third party collection agency also helps protect the utility/customer relationship. With an objective party taking on the debt recovery process, the utility company has a stronger chance of maintaining a positive relationship with one of its most valuable resources: the customer.


What to look for in a Utility Collections Vendor

Obviously there are several factors to determine which collections agency would suit the needs of a power or utility company. Some things to consider include:

Choosing to outsource any part of a business can affect brand revenue but can also affect reputation and customer interaction. The right debt collections partner will not use deceptive or abusive collections tactics. They will be nationally and state licensed. They will nurture a relationship with accounts receivable to provide proof of quality collections and debt recovery.

More than 60% of BYL Collections clients are referred by existing clients. We have worked with utility companies since the inception of our company and continue to build strong relationships and successful spreadsheets. Consider BYL Collections when hiring a collections agency.

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Topics: Debt Collection, Utility Collections