Johannesburg, 13 Mar 2014
Zimele Technologies, a level 1 BBBEE company, is the leader in SAP IS-U and AMI consulting, technology and outsourcing solutions in South Africa. For the past 10 years, Zimele has helped municipalities become operationally effective.
Technology offers the opportunity to maximise efficiency within municipalities, saving time and money, and improving customer satisfaction.
Innovation in billing, customer invoice issues
Municipalities across the world worry about their revenue collection. Numerous interventions are put in place to improve revenue collection while reducing the costs associated with this exercise. The industry is seeing more and more solutions deployed which are aimed at addressing this challenge. Some companies go for a pure IT application, while others try to address the issue by implementing a system together with re-engineered and optimised processes.
No one seems to have found a silver bullet to address these issues, despite millions of rands being invested in this area. Some interventions, however, seem to have tamed this monster. One example of a place where a somewhat manageable solution is in place is the City of Cape Town.
City of Cape Town background
The City of Cape Town is a large metropolitan municipality with over 3 million residents. The city supplies its residents with essential living services like water, electricity, property rates, sanitation and waste removal. The city bills over a billion rand per month in revenue, from the supply of services to its residents.
City of Cape Town (COCT) has different tariff structures for each of its services its supplies. Tariffs are approved by council and implemented on a yearly basis. Examples of some tariffs include:
* Domestic electricity tariff (step tariff)
* Domestic water tariff (step tariff 6kl free)
* Domestic sanitation and waste removal tariff
Tariffs are configured in the SAP system based on business rules for each tariff and billed in the respective portion. Billing runs daily, ensuring a positive incoming cash flow for the city to operate and run.
Understanding the billing process
Below is the high level billing process:
* Meter reading orders are created on daily basis for each customer.
* Meter readers read residents' water/electricity meters.
* These readings are entered into SAP system and validated.
* If the readings pass validation, they get passed on to billing, which bills the meter readings.
* A second validation check is run on the billing document.
* If this validation passes, invoicing runs occur and a third validation is in place to check the invoice value.
* If validation passes, the documents are extracted and sent to a print vendor for printing.
Understanding common challenges in this process
As simple and straightforward as this process looks, there are complex calculations that take place to generate the final bill to go to the invoice. Let us look at a case where the customer has a simple water and electricity meters installed in his property. In each invoicing period, the municipality must send a single invoice to the customer, combining both these services into one total figure. More often, errors arise, resulting in the wrong total figure. The following are common causes of invoice errors.
* Non-alignment of processes - from customer meter reading to invoice generation;
* Program errors;
* User error - failing to adhere to the defined process; and
* Data error - customer data, installation data.
System solution to invoicing problems - Block for Printing
Block for Printing (BFP) functionality was implemented by COCT as a control measure to ensure that only correct invoices are sent to customers. BFP aims to prevent incorrect /erroneous billings being sent out to customers. BFP is validated at invoicing runtime, whereby the SAP amount is validated against the invoice amount. Any difference in value results in an invoice error and the account is not sent to the customer. This functionality has seen much customer frustration, as faced by various regions, greatly reduced. The program addresses the previously mentioned causes to a great extent. Some of the problems, eg, user errors, cannot be entirely eliminated.
Examples of Block for Printing issues
* VAT not adding correctly on account;
* Instalment plan being doubled on account; and
* Direct debit not being pulled through.
Positive effects of Block for Printing on city, customers
* Improved revenue collections due to decreased invoice disputes;
* Reduced number of customer queries;
* Improved city image from customer perspective;
* Generally, no income received as customer does not receive his invoice;
* Increased calls from customers querying their accounts; and
* Greater reputation in customer confidence as they are not receiving error invoices.
Consulting approach in addressing invoicing challenges
* Continuous process review and process improvements;
* Dedicated and focused end-user education and training;
* Proper system controls eliminating and blocking any errors before the invoices get to customers;
* Train and educate users; and
* Ensure proper system controls are put in place.
Conclusion
Addressing customer billing issues remains a key challenge to all the municipalities. However, with a focused and dedicated team with deep and exceptional understanding of end-to-end processes, and a good technical understanding of the SAP solution, these challenges can be managed to the benefit of both the consumer and the municipality.
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