RESOLVING THE BILLING CRISIS

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Agenda

1. Welcome & Introduction

2. Public Finance Policy

3. Evolution of Public Finance Policy

4. Problem Definition

5. City Power & Joburg Water Issues

6. Property Unit Issues

7. Developmental Planning, Property Unit & PIKITUP Issues

8. Solution Definition

9. Progress to date

10. RSSC vs. MOEs Responsibilities

11. Approach & Methodology

12. Summary

13. Conclusion

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Welcome & Introduction

A well functioning centralised Revenue Shared Services Centre (RSSC) function is an anchor in revenue generation

Aligns all efforts related to revenue generation across the City

Safeguards the surplus

Safeguards the liquidity level

But... We have a crisis in the RSSC function

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Public Finance Policy Guideline: Principles

Do’s (Symmetric) Don’ts (Asymmetric)

Fiscal Discipline:Spending within our means, balanced budget, revenue equalling or exceeding budget

Fiscal Expansionism:Increasing spending not informed by availability of resources

Fiscal Consolidation:Aiming for a budget surplus

Fiscal Erosion:Surge in budget deficit

Fiscal Sustainability:Maintaining prudent capital structure

Fiscal Cliff:Deficit spending in a climate of reduction in revenues and fiscal erosion

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Evolution Of Public Finance Policy Management

Political Leadership

TechnocracyLegislation

(Normative)

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Evolution Of Public Finance Policy Management: Political Leadership

They take lead in crafting public finance policy to achieve electoral (political) mandate

They are intimately, and proactively involved in translating legislation into programmes of action

They are the wise, informed agents of change, and provide leadership in the tenor and fervour of policy implementation

They enjoy absolute ideological and policy autonomy

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Problem Definition:

Scope

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• Across the City there are pockets of revenue and activities that impact the City’s revenue

• Efforts are not coordinated

Problem Definition

ORIGINAL SITUATION

Technical Issues → Unresolved Issues → Negative Perception → Questionable Credibility

CURRENT SITUATION

Questionable Credibility → Questionable Practices → High Frequency of Disputes

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Problem Definition

ISSUES

Inconsistent flow of the value chain

Low coverage of physical reading, ↑estimates (↓Credibility = ↑Disputes)

Incorrect readings from MOEs

Incorrect readings used by RSSC

Questionable accounting practices

Fraudulent practices such as creation of fictitious accounts

Fraudulent devaluation of properties

Possible legal contraventions

Inconsistent processes

Inadequate customer care

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City Power & Joburg Water

Issues

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Property Unit Issues

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Developmental Planning,

Property Unit & PIKITUP

Issues

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Solution Definition

LEADERSHIP

Request Executive Mayor for elevated authority over all City revenue related matters to be granted to MMC for Finance

Similar setup has been observed in Cape Town

To improve financial management and controls, Finance Directors in departments should report to Group Finance

VALUE CHAIN

Tightening the value chain

Developmental Planning → MOEs → Group Finance

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Solution Definition

METER READING & MANAGEMENT

Meter reading to be done by Group Finance, thus improving accountability

Timeous notification of changes in meter hardware

Thorough testing of meter hardware and software

Sufficient control in meter hardware changes

Frequent physical audit of meters

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Solution Definition

PEOPLE, PROCESSES & SYSTEMS

Reviewing processes, policies, and procedures

Conducting supplementary valuations

Improving the capacity of the valuation department

Recruiting qualified and skilled people

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Progress to date

CUSTOMER ACCOUNTS

Forensic audit on customer accounts are on going.

System access for individuals who are under investigation has been revoked.

PAST CREDIBLE INTERVENTIONS

A diagnostic exercise is underway looking at the interventions which were supposed to be implemented.

PROPERTY VALUATIONS

Properties that were fraudulently devalued have been rectified.

CUSTOMER SUPPORT

Active participation in unblocking processes.

Active participation in issue resolution.18

RSSC Responsibilities

The ideal model requires seamless system including all stakeholders to improve on the customer experience and enable a single property view from Land Information to customer interface.

RSSC Responsibility:

Order creation (download)

Meter reading upload

Meter reading

Meter reading quality control

Bill Transactional Processing

Invoicing

Statement Distribution

Query resolution & Check Reading

Revenue Collection

Disconnection & Reconnection (Credit Control)

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MOEs Responsibilities

Entities Responsibility:

Technical Device management

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Policy Amendments

Roll Out Prepaid meters on new connection.

Account collection leverage using prepaid vending system.

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Approach & Methodology

ESTABLISHING THE BILLING CRISIS WAR ROOM

Internally led team dedicated on recommending and implementing solutions.

Composed of skilled and qualified brains from the relevant departments and MOEs.

Focused on the two streams, issue resolution ❶ and providing solutions towards the root causes ❷.

Assistance of an external service provider will be sought to improve capacity and ensure complete coverage of issues

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Approach & Methodology

GOALS OF THE BILLING CRISIS WAR ROOM

Complete Billing

Accurate and Clear Invoicing

Effective Payment Process

Effective Credit Management

Improved Customer Relationship Management

Timeous Issue Resolution

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Approach & Methodology

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STREAM ❶: ISSUE RESOLUTION – DEALING WITH SYMPTOMS

STREAM ❷: ROOT CAUSE FOCUS

Root Cause Focus

Review & Recommend

Consult & Amend

Implement & Review

Amend & Entrench

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Accurate property, asset and customer

detailsAccurate invoicingComplete billing

Effective payment process

Effective credit management

Property rates

Service charges

Reprioritised• Property rate categories and/or

market values used to invoice

customers missing or incorrect

• Differing utility rate categories

are applied to same property to

invoice customers for services

consumed

• Customers are invoiced on

estimated meter readings

beyond the period allowed

• Customers are invoiced on

estimated readings after

services have been cut off or

the customer moved out or

changed to prepaid

• Meter device details on SAP

ISU are incomplete or

inaccurate

• Not all overdue accounts that

should enter dunning do so

• Accounts that should be

disconnected are not

disconnected

• No standardised processes nor

systems for external collections

• No reports generated to review

revenue completeness

• No indicator/flag in SAP ISU to

exclude certain services on a

property (e.g. Eskom

properties)

• Not all meter device information

available

Gap

s A

dd

ress

ed

• Unclear business processes for

updating customer and property

details

• Lack of training, quality control

and performance management

• No validations within SAP CRM

• Customer data in SAP CRM

and ISU is of a sub standard

quality

• Lack of revenue completeness

process and ownership

Customer Relationship Management

Interdependencies

2. Query resolution process

7. Credit management 6. Cash collection and

management5. Revenue accuracy1. Customer details

3. Call Volume Management

Inte

rve

nti

on

ar

eas

4. Revenue completeness

• Communication between Front

and Back office not sufficient to

enable agents to serve

customers effectively

• Key account queries not

prioritised on SAP

• Incorrect routing of queries

• Open queries delay collection of

revenue

• Staff profiles in call centre not

aligned to demand

• Lack of single customer view

results in duplicate service

requests

• Disparity in distribution of staff

numbers between call centres

• Inefficiencies in transferring of

calls between call centres and

routing to Back office

• 90% Completeness of BP

information, Deeds interface

rejections minimized

Be

ne

fits

• Indicators on what services

should be billed per property

• Net Increase in Revenue

invoiced of R386m (combined

with Revenue Accuracy

intervention

• Net reduction in uncollected

revenue R261m

• Accounts going into dunning

increase by R1.1bn.

• Release R3.5bn to be

disconnected for potential

collection

• Reduction in Queries>30 to zero

• Abandonment Rate below 10%

• 80% Calls answered within 60

seconds

SUMMARY

THANK YOU

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