Smart Collection Strategies for Modern Utilities: Overcoming Challenges with Smartflex and AI

With rising utility debt and economic uncertainty, the pressure on utilities to improve collection processes has never been higher. Traditional methods are no longer sufficient as customer expectations and financial hardships evolve. According to the National Energy Assistance Directors Association (NEADA), utility debt has reached $17.4 billion, an 8.4% increase. This growing burden affects a wide range of customers, with over 20% of U.S. households reporting that they couldn’t pay an energy bill at least once in the past year [1].  As energy prices remain volatile and inflation persists, utilities must modernize their collection methods with customer-centric strategies that are based on flexibility, data, and automation.  

The growing debt not only threatens the financial health of utilities but also strains customer relationships. In this context, it is crucial to find new ways to address collections without harming customer relationships or incurring high operational costs.  

To meet today’s challenges, utilities are adopting innovative technologies that streamline collections, enhance customer engagement, and improve financial performance. Flexible, customer-centric strategies powered by digital tools are essential. For this reason, Open created Smartflex, an all-in-one, flexible, and adaptable solution designed to help utilities efficiently manage their operations, respond quickly to changing market demands, and deliver exceptional customer experiences  

Let’s find out how Smartflex supports utilities with smart collection strategies driven by automation, customer segmentation, and AI insights, transforming debt recovery while maintaining strong customer relationships. 

1. Intelligent Customer Segmentation 

Smartflex enables advanced customer segmentation by using variables such as customer type, billing cycle, location, and more. This allows for the creation of personalized collection strategies, maximizing the chances of recovering debt without resorting to drastic measures like immediate disconnection. The segmentation also allows utilities to proactively address potential nonpayment by applying actions like automated reminders or early customer outreach. 

2. Automated Collection Management Programs 

One of the key features of our solution is its ability to create flexible and automated collection management programs. These programs are activated based on different variables and predefined conditions, allowing specific actions such as deadline extensions or payment agreements to be applied automatically.  

3. Online Self-Service Options 

Smartflex’s online portal allows customers to manage their debt transparently and easily. Customers can make payment arrangements and settle bills directly through the portal, which reduces call center volume and improves user satisfaction. In one instance, one of our customers was able to process 37% of payment agreements through Smartflex’s online portal, cutting down operational overhead. 

4. Proactive Customer Interactions 

Proactive customer interactions help anticipate and prevent nonpayment before it becomes an issue. Actions such as automated reminders and early-stage communication can maintain regular contact with customers, reducing the need for more drastic measures like disconnections or legal actions. 

5. AI Empowered Processes 

Artificial Intelligence improves smart collection systems by predicting nonpayment risk and recommending actions like payment plans or extensions before debts grow. It boosts recovery and customer satisfaction. Open is currently working to include smart agents in Smartflex that can analyze payment history and identify the best strategies for each customer. These insights automate decisions and support service reps with real-time, personalized guidance. AI-driven virtual agents also assist CSRs during calls by suggesting payment options, reducing errors, and ensuring consistent service—turning collections into a more supportive experience.  

Smartflex’s flexible architecture allows utilities to quickly adapt to new regulatory policies and protect vulnerable customers without compromising financial goals. The solution also includes an automated rule-based workflow system that ensures regulatory compliance while addressing customer needs. This means that utilities can focus on revenue recovery while maintaining consumer protection standards.  

An example of Smartflex’s impact on the collection process is a utility that recovered $13.8 million in just 18 months using intelligent customer segmentation and automated strategies. After pausing collections due to the pandemic, the utility reactivated its process with an empathetic approach, focusing on proactive communication to help customers avoid service disconnection.  

Smartflex was key to this strategy, enabling them to segment customers based on multiple variables, such as residential, commercial, schools, and hospitals. This allowed for tailored preventive measures, disconnection protocols, and legal actions suited to the specific needs and risk levels of each group. Leveraging this flexibility, the utility decided not to disconnect commercial and industrial customers, recognizing their vital role in the community. This case illustrates how the early implementation of the right tools can significantly enhance debt recovery. By embracing automation and AI, the future of collections will not only be more efficient but also more human.  

Join us for our credit and collections series and discover more ways to balance effective strategies with a more empathetic approach to debt. 

References  

[1] National Energy Assistance Directors Association (NEADA) – https://neada.org/wp-content/uploads/2024/08/August-Arrearages-Press-Release-8.26.24.pdf