A collaboration of:
Efficient and EffectiveTransforming PSEG's Debt Collection Process
Michael Kelly Manager, Credit and Collections,PSEG
Venkateshwarlu Putcha Senior Partner/Lead FICA Consultant, Tata Consultancy Services
What We’ll Cover
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3
5
7
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6
Business Operational Challenges
Background of the Issue
TCS Solution Approach
Business Results Before implementation of Solution
Business Results After implementation of Solution
Business Operational Benefits
New Jersey & Public Service Electric & Gas (PSE&G)
About PSE&G
Most of New Jersey’s Urban Centers are in PSE&G territory
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New Jersey 8.8 million People• 3.2 million Households• Almost 1,200 people per sq. Mile
PSE&G serves nearly three quarters of New Jersey's
population
• 1.8 million gas customers and 2.2 million electric customers
• 80% Receive Both Electric and Gas from PSE&G
2.4 million customers
Benchmarking Write off / Billed Revenue
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When benchmarked nationally, first quartile performance would require net write-off to be around $0.25, in the northeast it is around $1.00
PSE&G has several collection challenges
Two seasonal peaks
Gas only territory
Electric only and Combination service territories
Winter and summer moratorium
No late payment charges on residential customers
>50% of meters inside
No AMI
No remote shut off capabilities
Soft disconnect on move out
Use on inactive meters creates an “Unknown” account which needs to be shut off by field collection and any balances are written off if no responsible party is identified
Net Write-Off / $100 Billed Revenue
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Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec YTD
2012 1.134493662121
34
1.038179874904
82
1.369796108610
9
1.477837424470
53
1.410318147860
47
0.966312768738
664
1.097757558033
6
1.357173997715
5
1.116693205280
63
1.401332173850
55
1.079006114490
06
1.164292060409
98
1.21
2011 0.889250204280
49
1.106176209083
98
1.488274095174
23
1.331850082017
34
1.464683719637
63
1.352448824223
89
1.101880358268
06
0.888016090862
715
1.579651456853
99
1.086489911750
53
1.553545629632
33
1.248864865962
1
1.23
2010 0.345264688442
311
2.000737956348
18
1.217220981715
99
1.143514418016
06
1.358310367249
82
1.153212854271
74
1.244599498458
22
1.242245280839
34
1.051383654273
38
1.165653916700
11
1.383178952109
05
0.741965664248
296
1.18
$0.25
$0.75
$1.25
$1.75
$2.25
Percent of AR > 90 Days
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Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec YTD
2012 0.196 0.189 0.194 0.211 0.257 0.246 0.211 0.215 0.201 0.239 0.236 0.201 0.226050238998512
2011 0.18 0.165 0.175 0.183 0.227 0.236 0.222 0.229 0.235 0.265 0.263 0.239 0.209866128617588
2010 0.169 0.139 0.157 0.19 0.224 0.235 0.216 0.221 0.229 0.252 0.264 0.225 0.204
2.5%
7.5%
12.5%
17.5%
22.5%
27.5%
Performance deteriorated to a point where in some months we were 50% higher than previous years...
Investment in New
Outbound Dialer
Supplement Field
collection with Meter Readers
Improvements to
Automated Call
Campaign
I&C Financial Monitoring
Centralized Dispatch
Collection Work
Management Implemented
Meter Readers to
Shut-off Unknowns
Customer Behavioral Modeling
Agency Management
Tool
Exterior Cut Targets E&G Distribution
Difficult Access Team
formed
Field Collection AR
Targets
Payment Arrangement
Controls
Deposit Waiver
Controls
Dunning Lock Controls
Notice period does not Expire
Prioritize Field work by Age
Move-In Controls
Moratorium Rules
Challenged
Deposit Automation
Started
Prioritization of Account
Maintenance Work
Field Collection Contractor
Strategies for Improvement Timelines
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Jan 2010 2014Jul 2010 Jan 2011 Jul 2011 Jan 2012 Jul 2012 Jan 2013 Jul 2013
Many initiatives have been tried before 2013 to streamline Collections process
04 Inability to measure success level of CollectionsUnable to
Measure level of Collections
Business Operational Challenges Manual collection process lead to Inefficiencies and difficult to run daily business operations
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03No real time tracking by Supervisors to monitor progress of work assigned to SpecialistsInability to track trend of delinquency across customer baseInability to track performance of SpecialistsNo option for Supervisors to callback / reassign work assigned to Specialists
Unable to Track & Monitor progress
02 No control around delinquent customer accountsSusceptible to errors and likelihood of missing delinquent customer accounts
Inefficiencies & instances of
wrong collection calls
01No automatic Identification, Segmentation and Prioritization of delinquent customer accountsHighly manual and paper driven processSignificant effort for Collection department
Manual Process & Significant
Effort
Collections Process
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Outstanding Payments
Outstanding Payments
Debt Recovery
Download customer accounts into Spreadsheets
Manually segment customer accounts depending on customer category
Run separate set of Reports and Queries for each customer segment to prioritize customer accounts
Distribute customer accounts to Collection Specialists through paper print-outs or by forwarding spreadsheets to process
Reports & Queries
Download
Manually Segment
Prioritize Accounts
Distribute Accounts
Collection Supervisors had to run Reports and Queries to identify delinquent customer accounts
Automated Collections process
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Group Work items by
Segment & assign to
Supervisors
Automation of Collections process by TCS streamlined daily collection business operations
Create Work itemfor each
Delinquent Account
Prioritize Customer Accounts
Apply Business
Rules
Segment Customer Accounts
Identify Delinquent
Customer Accounts
Roles and Responsibilities
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Collection Supervisor1 2Collection Specialist
Collections Process driven by 2 key
roles
Re-Prioritizes Work items by Work item Attributes
Distributes / Re-distributes Work items to Departments within the Portfolio
Monitor Progress of Work assigned to Specialists
Forward Customer accounts to Calling Campaign
Assign Specialists to Collection Groups
Perform Temporary Specialist Assignments
Track Efficiency of Specialists
Perform Analytics on levels of Delinquencyby Age and Amount
Checks customer account Overview before processing
Processes customer account
Interacts with Customer
Accepts and Processes Payments
Transfer customer account to other department for further processing
Updates Customer Interaction
Work Distribution
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Multiple departments in each Collection Segment. One Supervisor for each Segment. Collection Supervisor assigns work to Specialists.
Collection SupervisorSegment 1 Segment 2 Segment 3
Ass
igns
Work
to S
peci
alis
ts
Collection Specialists Collection Specialists Collection Specialists
Re-Prioritizes Work based on Key Attributes
Re-Prioritizes Work based on Key Attributes
Re-Prioritizes Work based on Key Attributes
Full Time Users
Part Time Users
Inbound Users
Field Collectors
Vendors
Full Time Users
Part Time Users
Inbound Users
Field Collectors
Vendors
Full Time Users
Part Time Users
Inbound Users
Field Collectors
Vendors
Standard Implementation Methodology
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SAP Collections Management• Contract Accounts Receivable and Payable (FI-CA)• ERP Central Component (ECC) 6.0, Enhancement Pack 2 (EHP2)
Business Rules Framework (BRF)• Configured customer Segmentation• Configured Business Rules to determine Prioritization of customer accounts• All rules in one place• Application Independent• Reusability of Rules
Business Objects (BOBJ)• Provided flexibility to Collection Supervisors to design own Collection reports• Reports to demonstrate efficiency of Collection Specialists• Reports to demonstrate delinquency by Age and Amount• Reports to demonstrate delinquency by customer segment and priority
More inclined towards SAP Standards. Leveraging functionalities of SAP Collections Management
Net Write-Off / $100 Billed Revenue
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Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec YTD
2013
0.91804401263598
7
0.91576036746656
7
0.87113714635197
1
0.88633530614341
0.88923774066020
7
0.79929702389585
7
0.86279932679209
3
1.25033362599059
1.01018906204583
1.32247326374335
0.85882917766012
2
0.63136423698732
9
0.93
2012
1.13449366212134
1.03817987490482
1.3697961086109
1.47783742447053
1.41031814786047
0.96631276873866
4
1.0977575580336
1.3571739977155
1.11669320528063
1.40133217385055
1.07900611449006
1.16429206040998
1.21
2011
0.88925020428049
1.10617620908398
1.48827409517423
1.33185008201734
1.46468371963763
1.35244882422389
1.10188035826806
0.88801609086271
5
1.57965145685399
1.08648991175053
1.55354562963233
1.2488648659621
1.23
2010
0.34526468844231
1
2.00073795634818
1.21722098171599
1.14351441801606
1.35831036724982
1.15321285427174
1.24459949845822
1.24224528083934
1.05138365427338
1.16565391670011
1.38317895210905
0.74196566424829
6
1.16
$0.25
$0.75
$1.25
$1.75
$2.25
Percent of AR > 90 Days
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Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec YTD
2013 0.178 0.144 0.1296 0.1544 0.201532887613392
0.188 0.181 0.187897554893491
0.1798 0.2259 0.224296033296115
0.197129175327755
0.178716070013767
2012 0.196 0.189 0.194 0.211 0.257 0.246 0.211 0.215 0.201 0.239 0.236 0.201 0.2137
2011 0.18 0.165 0.175 0.183 0.227 0.236 0.222 0.229 0.235 0.265 0.263 0.239 0.2118
2010 0.169 0.139 0.157 0.19 0.224 0.235 0.216 0.221 0.229 0.252 0.264 0.225 0.203837832212827
2.5%
7.5%
12.5%
17.5%
22.5%
27.5%
Collection Resources (FTEs)
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2011 2012 20130
50
100
150
200
250
Field Collection Collection Process
Many of the strategies deployed were focused on efficiency and reducing the number of FTEs needed to be effective in collections…
Regulatory Inquiry Rate
At PSE&G, we count every inquiry that comes into our board of public utilities (BPU). We measure these as a % of our collection activity including calls, letters, notices and actual shut offs.
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Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec YTD
2013
0.87462140230964
8
0.65460299751250
9
1.342776150
01
1.37944987538969
1.13667798315101
1.28682593029945
1.48026783991599
1.11042706979502
0.78779669125389
7
1.55199765251758
0.98031392843708
3
0.79169052097816
3
1.11959562205493
2012
0.94841392535669
7
0.54878454878454
9
1.05252188411838
1.59875407441098
1.31702321908851
1.14301814421239
1.83240570650435
1.43033978713701
1.33052166490937
1.14569247916537
1.88877796065945
0.96092132411332
3
1.19455945922555
2011
0.40575528447953
8
0.57297156307925
2
1.58459446039593
1.40565115691679
1.51348050505502
1.67088785704235
1.74671946193581
1.55673265210635
1.30523544439362
2.22064438535606
1.36520916331184
1.98777565983109
1.36835212502284
2010
0.88474898362902
8
0.82093415053097
1.61377992498287
1.35693259085146
1.75068106115539
1.71832679652032
1.83904663822275
1.73105695149405
1.21806037237846
1.20344203473788
1.27250438939381
0.74788688763995
2
1.31939738543906
0.250.751.251.752.25
As we have been making improvements,we have also seen a decline in our inquiries!
Key Benefits post implementation of TCS’ Solution
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2012 vs. 2013 we realized considerable improvement in a number of key performance metrics
10% reduction
in write off
A bad debt reduction of nearly $10M
We have driven down
process costs
Customer metrics are at an all-time low
16% reduction in
AR > 90 days
Our overall collection efficiency has improved
Proven financial results and reduction in Bad Debt
Integration with other Applications
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Collection Work
Management System
Behavioral
Scoring
Predictive
Dialer
Agency Manageme
nt Tool
Automated
letter/email
campaigns
The work management system is linked to three additional major process improvements, greatly improving performance and streamlining the operations…
Business Operational Benefits
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• Identification of delinquent customer accounts• Customer segmentation and Prioritization• Transfer accounts to Calling Campaign
Usability
• Improved Customer relationships through customer specific Receivables Management
Customer Relationships
• Improved Cash flow• More control on Delinquent accountsFinancials
• Determine new Collection strategies for faster debt recovery• View delinquent customer accounts by Age and Amount of debt• Measure efficiency of Specialists and identify workload• Measure success rate of Collections
Statistics / Analytics
Automation• Identification of delinquent customer accounts• Customer segmentation and Prioritization• Transfer accounts to Calling Campaign
Contact Us
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Michael Kelly, [email protected]
Venkateshwarlu PutchaTATA Consultancy Services (TCS) [email protected]
How to