I’ve written previously about how bank drafts are the easiest way to collect payments. They are also generally less expensive to process than credit card payments. As a result, many utilities offer incentives to get customers to sign up for bank drafts.

I recently completed a business review for a utility that offers an interesting financial incentive for customers to sign up for bank drafts.

Provide letter of credit from previous utility

The first step is for an applicant for service to provide a letter of credit from a previous utility provider. This is a common practice for utilities that waive security deposits. It provides your utility with some degree of assurance that this will be a customer who pays on time.

Get them to sign up for bank drafts

Secondly, get them to sign up for bank drafts. This is the objective you are trying to accomplish.

Waive the security deposit

Finally, waive their security deposit as an incentive for signing up for bank drafts and providing a letter of credit. Be sure they understand you are waiving the deposit because you anticipate them being a good paying customer. If they opt to cancel their bank draft, then they should be expected to pay a security deposit.

Make them pay a deposit if a bank draft is returned

Of course, if a draft is returned for insufficient funds or a closed account, you will want to require them to also pay a security deposit in addition to making a payment to resolve the returned bank draft.

Are your policies up-to-date?

Are you offering your customers the best options? Are your policies up-to-date? If not, or if you aren’t sure, please give me a call at 919-673-4050 or email me at gary@utilityinformationpipeline.com to learn how a business review can help you find out.

© 2024 Gary Sanders