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5 Ways Utilities Can Improve Days Sales Outstanding (DSO)

April 25, 2023

Though cooling, inflation is still causing significant price pressures in the United States. With less money in consumers' pockets, the struggle to manage rising energy costs is a legitimate concern for a growing number of utility customers. The ripple effect for utilities is that they’re seeing days sales outstanding (DSO) increase which means it’s taking longer to collect payments from their customers. When that starts happening more frequently, it triggers cash flow challenges.

5 Ways to Improve Day Sales Outstanding

The cost of collecting late payments is high, and the cost of not collecting at all is even higher! The key to reducing DSO is preventing late payments from ever happening. Here are five ways to do that (including ways to help your customers manage rising utility costs). 

1. Convenient and flexible payment options

More ways to pay means getting paid on time more often. Remove as many barriers to paying as possible by offering a wide range of payment options. Digital, voice, or artificial intelligence (AI) channels let customers pay online, use automated IVR and call centers, or pay through mobile apps, smart speakers, and chats. For cash-preference customers, offering convenient in-person solutions like self-service kiosks and retail cash payments in popular retailers helps increase the likelihood that you’ll get paid on time simply by making payment options more accessible. 

2. Incentivizing early payment

Early payment discounts encourage your customers to pay their bills earlier than the due date. This cash discount is a great incentive to offer customers to pay their bills before they’re due, which helps you to improve your cash flow. Loyalty points for early payment are also a great option to motivate customers to pay you early. 

3. Pre-pay program

Pre-pay energy programs, or pay-as-you-go power as some call it, are like pay-as-you-go phones. They allow customers to pay for their energy in advance, providing greater control over how much they use. Customers benefit from being able to monitor and adjust their behavior to reduce energy consumption and save money. 

KUBRA PRE-PAY™ Load and Go Payments let utility customers add money to their utility accounts before energy is used. Our pre-pay solution lets your customers put money in their accounts whenever they have the funds to do so, reducing the likelihood of late or missed payments. As the power is consumed, automated customer communications deliver custom notifications and alerts about their energy usage and pre-paid balance. 

4. Use data analytics to find other factors that may be impacting DSO 

There are many reasons why your customers aren’t paying their bills on time. Until you know those reasons, it’s challenging to come up with solutions. Business intelligence helps you analyze payment patterns and customer behavior to understand the factors influencing your DSO. 

With our newest product innovation, KUBRA BizInsights, we work with you to analyze your data and information gathered from our products and services and third parties to uncover customer payment patterns and understand what factors influence DSO. Maybe there’s a specific payment method that leads to a lower DSO? If so, run a campaign to drive people to use that payment method. Or, if we discover that higher bill amounts lead to late payments, you can adjust your payment terms to make them more flexible. 

5. Educate customers on available bill assistance programs

Most states and regions have implemented utility bill assistance programs to help alleviate some financial burdens for those customers struggling to make ends meet. Whether it’s one-time emergency assistance or ongoing support designed for low-income customers, this financial help could be the difference between having services shut off or not. 

If you have a high DSO number, your utility is experiencing delays in receiving payments. This can cause a cash flow problem that can really only be alleviated by bringing that number down. Using the tips above will help you receive more on-time payments and reduce your DSO. Despite your best efforts, you’ll likely continue to face some challenges with overdue accounts. Stay tuned for our next blog post on how a robust collections process will help you recover late payments.

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