TransUnion
TransUnion Case Study: How Reporting Helped Nicor Gas Reduce Net Bad Debt TransUnion is a leading global information solutions provider that customers trust as a business intelligence partner and commerce facilitator.
Challenge: Keeping Up With a Changing Marketplace To stay competitive in a diversified or deregulated marketplace, you need to re-examine how you process applicants and pursue prospects. Can you rely on your current system to ensure that customers can pay their bills in a timely manner, or even to verify they are who they say they are? If not, your current process will be highly ineffective and ultimately ver y costly. With new players entering your industr y you can’t afford to have an antiquated system. But there is another way, thanks to the extensive tools TransUnion offers to the energy industry. Our vast array of products and ser vices provide you with the necessar y decisioning tools to manage receivables, increase profits, acquire new customers, and, in the end, provide better customer ser vice. The following case study illustrates how TransUnion was able to assist Nicor Gas reduce net bad debt. Nicor Gas, a leading regional, regulated energy provider with more than 1.6 million consumers, faced rising costs and increasing defaults.
Needs/Goals Nicor Gas needed to redefine its account management strategy in order to: • Decrease net bad debt • Reduce delinquent accounts receivable • Be recognized as a creditor
Solution Nicor Gas approached TransUnion, which recommended reporting positive and negative account performance to TransUnion’s credit reporting database although, historically, this had not been done in the energy industry. Nicor’s leadership made the decision to explore how this solution could work for them.
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Methodology Step One: Initial Consultation Senior leadership worked with TransUnion to get a clear understanding of: • Current industry trends and practices • Development and implementation timeframes and costs • Formats and protocols Step Two: Impact Assessment Nicor Gas created an internal team, with representation from finance, information technology (IT), marketing, legal, regulator y, and customer ser vice, to explore how repor ting would: • Impact its operations, system, and staffing • Affect credit policy • Be perceived by customers
delinquent. Over time, they tracked and monitored results and evaluated and evolved their strategy, ultimately redefining minimal reporting amounts and reporting procedures.
Process • Instituted a program to reduce net bad debt • Consumers are notified prior to being reported for a last chance to pay • Accounts are reported as "paid as agreed" unless the past due amount is greater than or equal to $100 • Initial reporting inquiries are handled by Nicor’s centralized call center • Two dedicated consumer relations specialists have been added to Nicor’s staff to manage a credit reporting portfolio of 1.6 million accounts, as well as all consumer special handling and credit bureau relations
Step Three: Regulatory Review Apar t from the Fair Credit Repor ting Act, there were no rules addressing the repor ting of account per formance to a credit bureau. Therefore, Nicor Gas informed its governing bodies of the intent to repor t and worked closely with them to: • Create a smooth implementation process • Develop bill messages designed to leverage understanding and acceptance of the new practice
Results
Step Four: Outside Collection Agency (OCA) Notification The relationship with OCAs was redefined allowing Nicor Gas to bring accounts back in-house at their discretion.
• Less effort required to collect balances • Consumer awareness of potential negative impact increases their motivation to pay and potentially reduces fraud • Company procedures help consumers establish good paying credit history and acquire additional credit
Step Five: Consumer Education To educate consumers about their new process, Nicor Gas began a full-scale communications initiative three months prior to launch using bill inser ts, messages, and press releases. Step Six: Ongoing Evaluation From the start, Nicor Gas decided to report its full portfolio of accounts, both current and
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• 20 percent decrease in net bad debt over a three-year period, using credit reporting as the anchor • Annual customer dispute rate of less than 1 percent • Reduction in late payments • Increase in payments and promises to pay • Company gained competitive advantage within the industry
Benefits: Enhanced Customer Relationship Management
Increased Operational Efficiency • Minimal cost to implement • No major system modifications were made, only new credit reporting screens • Only one format is needed for all bureaus • Flexibility to repor t based on billing cycle • Multiple methods to transfer data
• Ability to run multiple analyses on company data, without additional costs • Easier to develop custom and generic models and to per form statistical por tfolio analyses for better decision-making
Today, Nicor uses credit repor ting as the foundation of much of our credit activity. It has reduced charge-offs, but more impor tantly it has changed customer behavior and how they prioritize their utility bill!”
Solution Provider
www.transunion.com
CONTACT INFORMATION Harry Gambill President and Chief Executive Officer David Emery Executive VP and Chief Financial Officer Len Lombardo Executive VP and Chief Information Officer
• Oppor tunity to subscribe to other TransUnion por tfolio products and account monitoring ser vices
Conclusion Dave Lukowicz, customer care ser vices manager at Nicor said, “After a thorough evaluation of credit repor ting, we determined that although the concept was new to us, the solution fit ever ything we were tr ying to accomplish. After three and a half years of experience, the benefits are greater than we originally anticipated and the challenges have been manageable.
Discover the Value of TransUnion At TransUnion we help our business par tners reduce risk, streamline processes, cut costs and increase profits. For more than 30 years, TransUnion has been a leading provider of essential business intelligence ser vices, including consumer data, targeted marketing, analytical models, and decisioning tools. We maintain one of the world’s largest databases of consumer credit information, providing value-added intelligence solutions to leading businesses around the globe. ■
TransUnion 555 W. Adams Street Chicago, IL 60661 Phone 312.258.1717 Fax 312.466.8385 BUSINESS CONTACT
Amanda Franklin Vice President
[email protected] Phone 312.258.1717
To learn more about how TransUnion can help you improve your risk management strategy by reporting, please contact your TransUnion representative or call us toll-free at 1.888.396.8361. For legal and format information on reporting, visit www.cdiaonline.org.
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