PSEG TCS SAP Collections Management

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

SAP for Utilities 2014 | 2

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3

5

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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


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


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


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



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


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


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


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


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


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


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



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


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



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



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)


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.



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


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


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


• 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


Michael Kelly, [email protected]

Venkateshwarlu PutchaTATA Consultancy Services (TCS) [email protected]

How to

PSEG TCS SAP Collections Management

Services

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