Cutting Days of Exposure to Boost Utility Revenue and Efficiency

Having too many Days of Exposure can be risky. Days of Exposure for utility companies refers to the period when unpaid services are at risk of non-collection. If a customer leaves or is disconnected, you may lose revenue for those days! Not a great look. We've seen it before; we help utility companies all the time.

But there's an easy(ish) solve. By shortening the Days of Exposure period, you can minimize potential loss, You can streamline billing processes for better revenue management, too. Reducing the “Days of Exposure” in utility billing is a strategic move that can positively impact your cash flow and reduce financial risk.

Let’s take a closer look at what Days of Exposure entails, why it matters, and how utilities can reduce it. Especially between meter reading and billing.

Understanding Days of Exposure

Days of Exposure is the sum of various time spans in the billing cycle, from reading the meter to the final cut-off date if a customer doesn’t pay. It includes:

1. Days between meter readings

2. Days from meter reading to bill mailing

3. Due date after billing

4. Grace period before bills are considered delinquent

5. Time until final notice is mailed

6. Days until service disconnection for non-payment

A high Days of Exposure number means the utility is at greater risk for revenue loss. The goal for utilities is to assess and reduce each of these components—starting with the days between meter reading and bill mailing, which can be one of the quickest improvements. (Don't know what your Days of Exposure number is? Our friend Gary Sanders has a great calculator.)

Key Opportunity: Reduce Time Between Meter Reading and Billing

The time it takes from reading meters to sending bills is a critical phase. And where utilities can potentially save days. While this part of the billing cycle may seem straightforward, delays can happen for a ton of reasons. This leads to prolonged Days of Exposure (uh-oh!). Reducing this time is often a matter of optimizing meter reading practices, improving confidence in billing software, and upgrading technology when possible.

1. Assess Meter Reading Practices

A lot of utility companies have upgraded to Automated Meter Reading (AMR) or Advanced Metering Infrastructure (AMI) systems. This should streamline the process. However, some utilities still follow schedules based on old practices. Like walking routes—even if their technology now allows readings to be completed much faster. Aligning meter reading schedules with the capabilities of modern technology can save valuable time. With drive-by or AMI meters, readings that once took days can be done within hours!

2. Leverage Billing Software Capabilities

An efficient billing process also depends on having reliable, advanced billing software that can automate data checks and minimize manual review. Work smarter, not harder, right? A big cause of delays is a lack of confidence in billing software. This leads to staff visually verifying readings, especially for high or low consumption flags. Exception reports should be utilized here; if your billing system provides accurate, customizable reports, they can quickly identify anomalies without delaying the process. The key is trust. You need to trust the software’s data-handling ability. This can eliminate unnecessary steps and free up time. And if you don't trust them... well, maybe you need to shop around.

Additional Steps to Reduce Days of Exposure

Reducing the time between reading and billing is crucial. But there are other measures that can shorten the Days of Exposure, too. And make the billing cycle more efficient.

• Automate Billing Notices: If possible, reduce the time between bill generation and customer notification. This can be done through automated billing notifications, including digital bills and email reminders.

• Implement Flexible Payment Plans: When appropriate, offer flexible payment plans. This can help reduce overdue bills and support timely collections. Especially if customers are notified promptly about upcoming due dates.

• Consider Prepaid Billing Options: Some utilities have found success with prepaid billing plans. Customers pay for services upfront, reducing the utility’s risk of unpaid balances. This effectively eliminates the Days of Exposure in these cases.

• Encourage Online Payments: Give customers the ability to make quick and easy online payments. This can shorten the time until full payment is received, reducing Days of Exposure.

The Financial Impact of Reducing Days of Exposure

Reducing Days of Exposure has a direct effect on cash flow and revenue collection. The end. It reduces the level of service provided without payment. It also decreases the financial risk if a customer defaults. By adopting a more proactive approach to each phase of the billing cycle, utilities can increase cash availability and minimize the time services are provided on credit. This proactive management also strengthens the utility’s financial position and allows for reinvestment in infrastructure, technology, or community programs. Who doesn't love that?

Conclusion

You can, indeed, reduce the Days of Exposure for your utility company. It is an achievable goal by you focusing on optimizing the meter reading-to-billing timeframe. Review your practices, modernize your technology, and maximize your software capabilities. This can drastically reduce Days of Exposure and improve overall revenue collection. Each improvement brings utility companies closer to financial stability, better service, and improved efficiency. And that's the end goal, right? 

Actually, I want to know how to research billing software first...