Improving Debt Collection w/ Predictive Analytics - A MSD Success Story

The Opportunity

Metropolitan St. Louis Sewer District (MSD) was challenged with making significant reductions to bad debt provisions and days sales outstanding. Although MSD was collecting 97% of its billings each year, bad debt was growing by $3.5M annually. Unlike many utilities, operating as an “unapplied service” meant that MSD does not have the option to shut off service to delinquent customers. MSD partnered with VertexOne to meet their challenge.

The VertexOne Approach

VertexOne quickly completed a “Credit & Collections Assessment” leveraging data and best practices from the numerous credit & collections programs VertexOne operate for their North America clients. The assessment evaluated all facets of MSD’s credit and collections process including: Payment Arrangements, Payment Options and Processes, Collection Agency Management and Customer Engagement.

Based on the results, a prioritized roadmap of initiatives to address MSD’s bad debt issues were identified and implemented over the course of the following 4 years: 

• Predictive Analytics - predicting the likelihood of individual customers to pay back debt 
• Proactive Communications - timely and appropriate multichannel communications based upon customer segment
• VR Self-Service - increase self-service options including payments
• Paperless Billing - increase customer enrollment in web self-service and paperless billing
• Long-Term Recovery Program - an outbound collections campaign for customers more than 5 years in arrears 
• Performance Management - a comprehensive reporting & performance management system

Results Delivered

Since the initial assessment was completed in 2011, the results across the credit & collection program have been compelling, and continue to yield increasing returns. Since 2011, MSD has experienced these business improvements and more:

• 30% increase in collections on delinquent accounts
• 79% reduction in accounts assigned to collection agencies
• 57% decrease in collection agency commissions
• 69% decrease in bad debt provision
• An average of 19,827 fewer accounts entering arrears each month
• 21-second reduction in call center average handle time

VertexOne’s re-named product portfolio echoes the company’s long-standing mission to enhance the customer experience. Therefore, products mentioned in these resources may not reflect our current portfolio names. Click the link to learn more about our product renaming and restructure.