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HomeMy WebLinkAbout8 Bill Payment Process Agenda Item # w iw �Iv a �wu�wr VA Memorandum To: Board of Directors From: Mary Chapman, Administrative Services Manager Date: September 24, 2004 SUBJECT: Consideration of authorizing staff to outsource the customer bill payment process 1. WHY THIS ITEM IS BEFORE THE BOARD Over the last many years, we have been looking for ways to more efficiently process the daily work that we do. Tonight, I would like to propose another move to more efficient data processing. This proposal involves outsourcing our daily bill payment process to NISC. 2. HISTORY As you know, when we converted to the NISC billing software we also chose to outsource the bill print and mailing processes to NISC. This process works very well for us. It saves our staff a lot of time. We also save money by not having to maintain expensive stuffing and mailing equipment. We send out bills four times a month. When a billing cycle is ready to be billed, NISC's mailroom services logs onto our system over the Internet, goes through the firewail which they maintain for us and picks up the billing file. The bills are printed that night. They are stuffed using their very fast and sophisticated equipment and mailed the next day. The bills usually include one to several inserts besides the bill and return envelop. The next day, we receive a file which shows the customer's actual bill. 3. NEW INFORMATION With more and more customers moving into Truckee and the increased workload on the customer services staff, outsourcing the daily mail makes a lot of sense. The only other alternative is to add more staff. Freeing up some of their time will help them handle the additional workload in a less stressful environment. They will still have a lot of tasks to perform relating to customer generated activity. So, I would like to take advantage of NISC's remittance processing system. Leveraging this technology, we will be able to have the payments sent to a lockbox in Arizona and the payment file sent to us for posting the same day the payments are processed. To implement this system, NISC will use a different return envelope and will change the OCR line on the billing stub. The only drawback is that while the customers'accounts will be posted with the payment on the day that the payment is processed,we will not be credited with the funds received until the third business day. Since we are not receiving very much interest on those three days, the loss is negligible. The estimated monthly cost for this service is: Base charge $ 650 9000 mailed in payments @ $.15 1,350 (12,000 less 1500 EFTs, 400 night drop, and 1100 over-the-counter payments) Estimated miscellaneous charges 50 Total estimated cost $2,050 X 12 months = $24,600 per year Attached, I have included a proposal from NISC to perform these services. RECOMMENDATION: That the Board authorize staff to proceed with the outsourcing of remittance processing. Remittance Processing Proposal Adpoll AIZSC . s For Truckee Donner Public Utility District f Executive Summary NISC is pleased to present Truckee Donner Public Utility District with a proposal to provide a remittance processing service. This service will seek to process the mailed remittances from the approximate 13,000 Members of Truckee Donner Public Utility District. Consistent with your requirements, this service will: • Provide quality service and timely updates of billing files • Eliminate many internal processing delays • Decrease mail times • Allow quicker access to 100% of funds • Provide for professional and reliable customer service Due to the unique ability NISC has to process thousands of remittances per month at three locations across the country, we are able to capitalize on economies of scale and offer extremely competitive prices to you. In addition, because of our ability to be flexible with your bill layout, we can help you more readily adapt to change as your customer base and remittance volume increases. The service that NISC is proposing is that of receiving mailed utility payments, creating and transmitting a datafile that contains the specific payment information, encoding and clearing the customer's checks, and depositing the money into the Truckee Donner Public Utility District account. This proposal includes all aspects of the remittance processing business, including the relevant banking services of check clearing, processing of returned checks, and outgoing funds transfer to Truckee Donner Public Utility District's cash accounts. 2 Remittance Processing Overview The remittance processing service provided by NISC consists of NISC collecting remitted payments on behalf of Truckee Donner Public Utility District. Remittance Processing customers will have the remittance portion of their electric bills programmed to indicate a return address to NISC's P.O Box in one of the processing cities: • Phoenix, Arizona - Prescott • Des Moines, Iowa • Philadelphia, Pennsylvania Once your members mail their payments, the mail will be delivered to the NISC P.O. Box and delivered to the processing center where it will be processed using high-speed opening and imaging machines, as detailed below: I. Mail delivered to the processing center will be date and time stamped for tracking purposes. 2. The mail will be processed using an OPEX NP 40 high-speed opening machine that will separate the incoming mail by weight, indicating single payments, multiple payments, and any possible exception items. 3. Single payment items will then proceed to PASS 1, which will read the Courtesy Amount Recognition (CAR)on the coupon as well as the Legal Amount Recognition(LAR)on the remitted check. This is also the stage in which both the coupon and the check(s)will be imaged. If these two amounts equal, the payment is considered clean and will proceed to PASS 2. If the two amounts do not equal, the payment will then be sent to a second machine for another attempted read. This machine will attempt to read the legal tender amount (LAR) as well as the numerical amount indicated on the check(CAR). If the two are matched, it will then proceed to PASS 2. If the amounts do not match, the payment will be electronically sent to a person who will visually verify the amounts of the check and the coupon. 4. Once the check and coupon amounts have been matched and verified, the checks will be sent to PASS 2 which will encode the back of the check for depositing purposes. The encoding will also include the account number upon which the check has been run with for posting purposes, as well as the time and date of the processing. 5. Once the checks have been encoded, the data file is created containing the relative information for posting purposes to the NISC system. The totals from this file will be verified against the total deposited amount generated by the PASS 2 process. If the totals match, the file will be released for transmission to NISC. If the totals do not match, the file will be sent to a quality control department that will verify the amounts in the file and deposit and identify the differences. Once identified, the necessary adjustments will be made and the file will be released for transmission. 6. Once the file has been transmitted, the total deposits will be deposited to the NISC custodial account. 3 i 1 Once the file has been transmitted to NISC headquarters, the total file received is verified against the transmission report to ensure accuracy and completeness of the transmission. s The next step in the process is to run a program against the file that will separate the large file into separate files for each District using the service. Once this is complete, a report will be generated that will list the totals of the individual files. This report will be v verified against the total of the larger file to ensure accuracy. When the individual files have been created and the totals verified, they will be transmitted to the District. In addition, a report will be created that will be sent to the District to indicate the total number of payments and total amount that has been transmitted for the day. At that point, it is the District's responsibility to verify the transmission and post the file to their system. A second report will then be created that will indicate the total amount of payments deposited into the account and the date upon which these funds will be transferred to the District's account. Operationally, NISC will keep deposited funds for three days in the NISC account before transmitting to the District. This will allow time for any returns to be processed, and for 100%of funds to clear the FED before transferring money to the Truckee Donner Public Utility District bank account. For example, when NISC processes payments for on Monday, the funds will be deposited into the NISC account Monday afternoon/evening. An ACH deposit will be created and setup for deposit into the your bank account effective Thursday. In the meantime, any returns that have been received will be deducted from the total transmitted to the District. Information regarding the specifics of the return checks (account number, date processed, and amount) will be sent to you in a separate report upon receipt of the information from the bank. The return check will not be built into the payment file. The final responsibility of posting the return check to your system will be with your staff. From time to time, discrepancies will arise from the automated process in which a payment will be posted with an incorrect amount, or to an incorrect account. When that happens, you will call NISC for information to resolve this discrepancy. NISC will create a CD containing the images of the processed payments and coupons. NISC staff will access this CD via the date the reported discrepancy was processed. The relative information(image of the check and coupon)will be sent to the District for the purposes of disposition. A detailed description of the incident will be created and the necessary steps to repair the problem will be indicated. At the end of the month, the total payments and amounts processed will be tallied and a report will be sent to you indicating the amount of business that has been completed, as well as a detailed bill. 4 Service and Pricing The service that NISC will be providing to Truckee Donner Public Utility District is that of receiving mailed utility payments, creating and transmitting a datafile that contains the specific payment information, encoding and clearing the customer's checks, and depositing the money into the District's account. NISC will sort/process the following: • Single check/single coupon • Full payments (check amount equals amount due in OCR scanline) • Partial Payments (check amount does not equal amount due in OCR scanline) • Multi-checks/multi-coupons • Balanced multiples (amount of check(s) equals sum of all coupon(s)) • Unbalanced multiples (amount of check(s) does not equal sum of all coupon(s)) The following items will be returned to the District for processing: • Check without remittance coupon • Remittance coupon without check • Correspondence The checks that are processed in the automated system will not be reviewed for negotiability, i.e. • Acceptable payee • Signature • Date • Legal/courtesy amount • Foreign check • Other check inspections The system will utilize high-speed extraction and imaging equipment that will enable the company to process numerous payments accurately on a daily basis. The price for this service is: NISC Charge Base Charge $ 650.00 Single $ 0.150 per item Multi le $ 0.200 per item Correspondence $ 0.20 per item Return Checks $ 5.00 per check Research $ 4.00 Meter Read (surcharge) .05 per item The base charge of$650 includes: • Monthly file and ACA transmission costs • Postage costs of returned items and correspondence • Two research items per 5,000 payments processed • Post Office Box Rental 5 The Retail Loekbox/Remittance Processing service is a cost-effective back-office operation that will help utilities reduce operational expenses, update customer accounts faster, and improve audit controls. Cost Effective The service is cost effective in design due the ability to solve problems on a very timely basis allowing the utility employees to save extensive time and money in a variety of ways: • No physical handling of mail or payments o Mail is returned to the NISC P.O Box and put through the automated system. The utility then posts the file to the accounts. This eliminates costly delays that can be caused by personnel absences, turnover, or peak processing requirements. o It allows the utility employees to spend their valuable time on other, more customer service oriented tasks, rather than the more repetitive, monotonous tasks that have a tendency to produce poor working attitudes and low morale. • Funds are deposited electronically o This improves the TOTAL funds availability time as well as accuracy of payment information and receipts. Since the funds are deposited via ACH two business days after NISC receives them in the custodial account, returned checks can be removed before they are actually deposited into the utility's account, thus eliminating additional bank charges. Reduce Operational Expenses Operational expenses are reduced through the elimination and reduction of office overhead, office space, employee expenses, expensive equipment maintenance, and costly research time. Initial estimates show a potential savings of 5¢ to 7¢per payment due to utilities outsourcing this mundane task. _Update Customer Accounts Faster Once the scanned file is created, NISC electronically transfers this to the utility's CIS system where it will be posted by the utility. • This updates all of the remitted accounts the same day the coupons are received, extracted, and scanned. The NISC service will transmit both regular payment files, and specific return check information on a daily basis. • By transmitting return check information for the utility to post to the system, the information is received and posted on the customer's account before the returned check is physically received from the bank, thus giving the utility extra time to collect the money from the customer. 6 t } Improve Audit Controls All of the coupons and checks that are remitted to the NISC address are scanned and imaged onto a CD, allowing for more efficient research of any account in dispute. • These records are kept for ten years and they allow NISC to research any discrepancy the utility may have. NISC has the ability to view the scanned payment information, research and find the discrepancy, and report to the utility's customer service representative the detailed, necessary steps to remedy the discrepancy. • Due to the automation of the system, most discrepancies are resolved within the same business day as reported. 7