5.4. ERMUSR 08-10-2010Elk River
Municipal Utilities
13069 Orono Parkway • P.O. Box 430
Elk River, MN 55330-0430
UTILITIES COMMISSION MEETING
Phone: 763.441.2020
Fax: 763.44 L8099
TO: FROM:
Elk River Municipal Utilities Commission Theresa Slominski -Finance Director
John Dietz, Chair
Jerry Gumphrey, Vice Chair
D 1 Thom son, Trustee
MEETING DATE: AGENDA ITEM NUMBER:
Au st 10, 2010 5.4
SUBJECT:
Commercial Customers Procedure for Earl Identification of Potential Default
BACKGROUND:
At the July Commission meeting second quarter write-offs were presented for review. Out of
that review a request was made for management to meet with staff and create a procedure for
early identification of potential default of the commercial customers.
DISCUSSION:
A core group of staff (Troy Adams, Director of Operations; Greg Scherber, Assistant Office
Manager; Michelle Martindale, Credit and Collections Specialist; and myself) met initially to
brainstorm and determine the best course of action to meet this request and have the following to
present. We determined that our policy is adequate, but the internal procedures could be
enhanced.
The first item noted was the necessity to have a list or report to work from each month. We
don't have the capability of creating such a list by customer class, but we do have an Accounts
Receivable report mechanism in place that, with some "tweaking", can provide a customer
balance listing that would identify accounts that hadn't paid by the due date of the given month
and have a designated $ balance (we initially looked at anything greater than $500.) The list
could contain high use residential customers and apartment buildings and so an additional review
to pare down the list is necessary. This list would then be reviewed by the Credit and Collections
Specialist who would identify the customers that should be followed up with.
Depending on the number of customers to follow up with, the Credit and Collections Specialist
would contact them or create a list for any member of this core group to contact. This contact
would be an opportunity to introduce ourselves to the customer, let them know that we are
watching their payment activity, find out what their needs or issues may be, and establish a point
of contact for any future calls. We will be contacting these customers on their first missed
payment (in a cycle of approximately 20 days) and so want to be perceived as concerned diligent
professionals at this point, not vigilante payment hounds.
If the customer is in financial difficulty at this point, we should be able to identify that. We could
demand a deposit at this point but the likelihood of being able to collect it would be sltm tf they
are already in financial trouble. We could get a guarantee signature at this point and hope that
there aze assets to cover it in the event of default. We would have to closely monitor the payment
activity following the initial contact. Per our policy, disconnection is possible simply for failure
to pay. Per statute, and our policies, proper notice has to be given. This initial phone call would
fall into that notice category and effectively "speeds up" the timeframe for disconnection, if that
becomes necessary. Ultimately, disconnection is our best defense, and that carries with it some
potential public relations issues with commercial accounts, especially if they are the hospitality
industry. Once a customer has been disconnected for nonpayment, a deposit is required in order
to reinstate service, and so that may be the point at which we collect it.
ACTION REQUESTED:
No action required.