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Extended Expert View: Bad Debt in UK Residential RetailPublished by: Datamonitor Published: Jul. 27, 2005 - 14 Pages Table of ContentsTABLE OF CONTENTS EXECUTIVE SUMMARY 3 Utility bills worth approximately £600m are not paid on time - UK utilities currently spend £2.5m chasing it up, but there are several ways to reduce this cost 3 BAD DEBT 6 In the average European household, electricity and gas costs are low in comparison to other essential goods and services 6 In the UK, gas and electricity bills are often at the bottom of the pile - approximately £600million per year is not paid on time 7 The cost of chasing bad debt is borne almost entirely by the payment department and contact centre 8 Utilities need to improve both their effectiveness at handling bad debt, and the efficiency with which they do it 10 Effectiveness 10 Efficiency 11 Example: Exelon reduced its field force team by nearly 50% by introducing a credit scoring system 11 APPENDIX 13 Research methodology 13 Future readings 13 Writing team 13 How to contact experts in your industry 14 LIST OF FIGURES Figure 1: European consumers spent the most on housing, food and transport in 2001 7 Figure 2: Utilities may be essential but the payment of electricity and gas bills are the most likely to be postponed 8 Figure 3: Breakdown of bad debt costs 9 AbstractIntroductionIn the UK, gas and electricity bills are often at the bottom of the pile approximately £600million per year is not paid on time. In a MORI survey, 4% of respondents admitted delaying payment of gas or electricity bills approximately £600million per year not paid on time. Only water bills and council tax are postponed by more people. Scope Analysis of the importance of utility bills to consumers in relation to other bills. Metrics that utilities need to measure and success strategies for reducing bad debt. Case study on Exelon, which reduced bad debt by introducing a credit scoring system. Highlights "In the UK, gas and electricity bills are often at the bottom of the pile approximately £600million per year is not paid on time. In a MORI survey, 4% of respondents admitted delaying payment of gas or electricity bills approximately £600million per year not paid on time. Only water bills and council tax are postponed by more people." "According to Datamonitor's Cost-to-Serve model, the six major suppliers to the residential sector spend on average £2.5million chasing late payment (including the cost of debt write-offs). 90% of the costs are attributed to the payment centre, approximately half in labour costs and half in maintenance costs." Reasons to Purchase Understand the attitude of consumers to utility bills that constrains efforts to reduce bad debt. Learn the metrics and success strategies that utilities need to measure and pursue in order to reduce bad debt Get Full Details About This Report >> |
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