Telecom Billing Collection Process - Telecom Billing

What is the collection process in telecom billing?

Once an invoice is generated and dispatched to the customer, customers will receive their invoice and pay promptly. There will be some customers who don’t pay their bills and hence the service providers should take some action to collect the outstanding balance due (called account receivable, abbreviated as A/R).

Collection is the process of tracking the past due receivables on customer account and it involves sending notifications to the customer and taking appropriate actions in absence of due payments after the due date.

Billing Systems support dunning (receivables chasing) both at the invoice level where receivables are chased on an invoice by invoice basis and at the account level whereby all overdue amounts for an account, across several invoices, can be handled by a single dunning action.

Dunning model is used for an account which is assigned based on its credit class. A core collection process includes below two items

  • Collections Aging Tracking − this is the process of tracking the customer invoices who did not pay within the specified payment period due date. It will deal with the "age of account receivables"; for example, invoices that are 0-30 days overdue, 30-60 days overdue, etc.
  • Collections Actions − Collection action will be performed when the account receivable reach a particular age. For example, reminder messages to the customer to be mailed or recorded audio message should be played.

Collection Action Schedules

Normally, collections actions will be taken in below steps

  • Send reminder mail and/or call: customer service department will contact the customer by reminding the payment. If they still receive the payment, then they proceed for the next action.
  • Send red letter − For example, a "Pay in seven days" letter is issued. If they still receive the payment, then they proceed for the next action.
  • Disconnect the service − network management department will suspend the service.

Collections schedules will define the collections actions to be carried out and the times at which they should be carried out when the customer does not pay.

Collections schedule will specify the series of stages which make up the collections process. For each stage, it will cover

  • The effective age that the receivables have to be for an action to take place. The effective age of receivable will be calculated by taking the actual age of receivable.
  • The action to be taken that the Billing System has to perform, for example, to send a dunning notice on a specific date.
  • If an action is mandatory or not. If an action is mandatory, subsequent actions will not take place until this one has been performed.
  • The minimum receivables amount below which the action will not take place.

Soft Collection Actions - Dunning Notices

In the early stages of the collections process, collection action were typically to send a number of dunning notices as simple reminder letters and requests to the customers for the payment.

When a number of dunning notices are sent at various stages, other actions will be typically scheduled. For example, a customer services representative (CSR) will call the customer asking reasons for not paying the bill on time.

Hard Collection Actions - Blacklisting

If the initial attempt fails, then more violent actions will be taken like barring the services or disconnecting the services or hot-lining (hot-lining is the process of re-directing all calls of delinquent customers to collections operator).

If none of the attempt works, then the service provider will write-off the account and marks the due amount as bad debt or may hand over (sell off) the account to any of the collection agency. Collection agencies will agree on a percentage of collected revenue. However, once the uncollected account invoices are sold off to a collection agency, service provider will not work with the customer related to the payments.

Here, write-off (service provider operator) will clear the dues on behalf of the customer and closes the account forever. This will be done for accounting purpose because it will be a loss for the operator.

Service provider will maintain the history of the write-off accounts, also called as blacklist customers so that they are not re-activated again and they keep informed about such accounts to the credit checking/reporting agencies.

What is Next?

There are different channels used for making payments.

We will discuss different types of payments and their end-to-end processing to settle down the invoices, in the next chapter.

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