Why isn’t your security deposit enough?
I’m intrigued by the early results from the Days of Exposure tool that was featured two issues ago. If you remember, Days of Exposure is the total number of days of service a customer ends up owing for if they are disconnected for non-payment and never reinstate service.
I had a suspicion most utilities don’t charge a sufficient security deposit, and the early results have confirmed that. Thus far, 40 people have used the Days of Exposure tool. Of those 40, seven don’t charge a security deposit, so this analysis is based on the remaining 33.
The Days of Exposure tool doesn’t ask who is completing the page, but it does log the values for each entry. This means I don’t know which utilities are represented by the results.
Days of exposure
The Days of Exposure for those utilities that bill monthly ranged from 53 days (1.77 billing periods of exposure) to 116 days (3.87 billing periods of exposure). 53 Days of Exposure might be the lowest I’ve seen over the course of several years of using this calculation.
Refunds vs. potential write-offs
Seven of the 33 responses (21.2%) charge a security deposit sufficient to cover their potential liability, based on their Days of Exposure. The remaining 26 responses (78.8%) risk potential write-offs ranging from a paltry fifty cents to a whopping $308.33!
Five of the 33 responses are within $10.00 of charging a security deposit that exactly covers their potential liability. Of these, two are refunds – $2.00 and $8.33 – and the other three are potential write-offs of $.50, $1.49, and $6.00. Kudos to these five utilities for doing a stellar job of determining their security deposit!
If you haven’t already done so, I invite you to take a minute and click here to calculate your utility’s Days of Exposure and determine if you are at risk for a potential bad debt write-off.
Are your days of exposure as low as they could be?
Are your days of exposure as low as they could be? To find out, please give me a call at 919-232-2320 or e-mail me at firstname.lastname@example.org to learn how you could benefit from a business review.