During the Q&A period after speaking at a conference last week, one of the attendees asked me what I thought about a final bill fee.
That’s a question I’ve never been asked before, so I had to think about it for a minute before responding. After giving it some thought, I ended up telling him I would prefer to charge an application or service activation fee when the customer applies for service rather than a final bill fee when they leave.
Why charge an application fee instead?
I prefer an application fee over a final bill fee for a couple of reasons. The most obvious is collectability – if you charge a fee when a new customer applies for service (or is activated if you don’t process applications) you are guaranteed to be paid. If not, the customer doesn’t get service!
On the other hand, if you charge a final bill fee when the customer leaves, that’s one more charge you will have to write off if they don’t pay their final bill.
It’s more customer friendly
The second reason I prefer an application fee is it’s more customer friendly. Customers expect (or at least aren’t surprised) to be charged a fee when initiating service. On the other hand, assessing a fee when they terminate service may catch them unaware.
One trip serves both purposes
In the case of a read-and-leave-on turn-off, where a new customer is moving in right behind the departing customer, the same reading serves as the final reading for the old customer and the initial reading for the new customer. This means you aren’t making a separate trip to turn the account back on, so if you’re already charging an application fee, there’s no need for a final bill fee.
If you do have a significant number of turn-offs when a new occupant isn’t ready to move in, you can increase your application fee to account for two trips – both the turn-on and turn-off.
Application fee amounts
From the 2021 Utility Fee Survey, 66 of the 142 responding utilities, or 46.5%, charge an application fee. These fees range from $5.00 to $250.00, as shown below (clicking on the graph will open a larger image in a new window):
I suspect some of the larger fees are in lieu of charging a refundable security deposit.
Does your utility charge a final bill fee?
If your utility charges a final bill fee, I’d be interested in hearing about it. Do customers complain about it? Are you able to collect it in most cases? Please feel free to comment on this post.
Does your fee schedule need updating?
If your fee schedule hasn’t been updated recently, please give call me at 919-673-4050 or email me at firstname.lastname@example.org to learn how a business review could help you review your fees.
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2022 Utility Staffing Survey
There’s still time to complete the 2022 Utility Staffing Survey, if you haven’t already participated.
If you’d like to complete the 2022 Utility Staffing Survey, please click here. This should only take a few minutes to complete and I will publish the results in future newsletters. Thank you in advance for taking the time to complete the survey and please feel free to share it with your peers at other utilities.
© 2022 Gary Sanders