Delays in paying utility bills impact access to basic services for consumers and create cash flow issues for utility providers. In the latest Next-Gen Debit Tracker, Jennifer Montague, senior vice president and chief customer officer of utilities provider NiSource, discusses how automated debit payments eliminate both of those frictions.
The pandemic has introduced financial uncertainties that may prompt both consumers and utility providers to seek transaction methods that give them firmer financial footing. Gas and electricity customers do not want to worry about potentially forgotten bills as they juggle pandemic-induced challenges. Utilities providers are closely watching their cash flows and looking to create positive customer experiences with payment options that make it easier to pay on time, according to Jennifer Montague, senior vice president and chief customer officer at NiSource, the national utilities parent company of Columbia Gas and NIPSCO.
Automatic debit payments, which allow customers to be automatically charged each billing cycle, could be just what both sides need to reach their goals. The method has been gaining popularity over the past few years, but Montague recently told PYMNTS that the pandemic has kicked customer usage into high gear.
“More and more customers are enrolling [in automatic payments] each year,” Montague said. “We think it’s good for customers and good for the business to ensure cash flow and reduce bad debt.”
The Autopay Customer
Montague said NiSource’s experiences with automatic debit payments have illustrated the method’s growing popularity during the pandemic. Sixteen percent of the utility firm’s customers used such features in 2018, yet adoption rose to 17 percent in 2019 and leaped further to 22 percent last year. Common stereotypes might hold that older consumers still handle payments manually while technology-hungry millennials spring for digital transactions, but Montague said the reality is more nuanced. The typical automatic payment user is defined not by age but rather by the desire to complete monthly payments on time and without worry.
“People who are on fixed incomes — which often includes seniors — like having the level of security and [assuredness] of knowing that their payments are being received,” Montague said. “Also, there are people in the millennial category who want to set it and forget it.”
This controlled, repetitious nature makes automatic debit payments important to customers who worry that checks will be lost in the mail or that they might simply forget to pay bills and incur late fees. NiSource receives 8 million automatic debit transactions per year, making it the firm’s third-most commonly used payment method.
Safeguarding Cash Flows
Montague said utilities providers also see the benefit in extending automatic payment options. Supporting customers with easy, low-stress ways to pay can create better experiences that build loyalty, and the method can also help improve companies’ abilities to collect on payments.
“One thing we’re [really] focusing on … is trying to look at shoring up our cash flow, particularly because we’ve gone through [the pandemic] and have a number of customers who are newly vulnerable and a number of customers who are now moving into delinquency,” Montague said. “We are doing everything we can to get customers to pay in the collection cycle so we don’t have them go into being delinquent.”
The economic crisis has made it harder for many consumers to handle their bills, and utilities providers are eager to work with customers to head off problems. Certain payment tools and interventions can reduce the likelihood that customers miss payments and keep debts manageable enough that utilities companies do not have to cancel their accounts.
Montague explained that some customers may struggle with larger heating bills in the winter, for example, but they can be helped with budget billing plans that utilize automatic payments. These customers can be charged the same amount each billing cycle based on their average year-round energy usage, which could insulate them from major price fluctuations. Those who face financial setbacks and other challenges may also find that regular, automatic partial payments make it easier to return to good standing.
“We’re hoping that by doing that — [offering] autopayment and payment plans — we’ll be able to reduce our gross bad debt … before people get to the point where they’re written off,” Montague said.
Utility companies may also turn to automatic debit payments to more smoothly collect funds from customers who can comfortably pay but who sometimes need reminders to do so or who find monthly transaction processes inconvenient. These digital methods can also help businesses manage their finances in other ways: Companies can avoid the costly process of sending paper bills once they have switched customers over to automatic payments.
Consumers and businesses are concerned about keeping their finances in order, but payment solutions that help both parties come together and transact more conveniently and reliably can help them avert conflicts and reach resolutions. Utilities providers looking to better navigate pandemic-related challenges could find that automatic debit payments offer the utility they need.