Electricity, Water, Natural Gas! These familiar resources we are accustomed to using in our homes and businesses every day. All familiar resources for which we are accustomed to being billed based on the amount we use.
When we receive a bill for electricity, water or gas, our tendency is to think that we are being billed for the amount of electricity, water or gas we used in a given period. We understand that our bill is a calculation based on a difference between a previous and current meter reading. We rarely take time to consider that these resources are supplied to us as services, for which we also have to pay. In other words, we need to pay for the amount of electricity, water or gas we have used, and the service of delivering these resources to our homes and businesses.
We do not consider the complex network of stages, wires and pipes that bring these resources to us as a service. We simply press a switch, turn a tap or open a valve and electricity, water or gas starts flowing. The fact that we do not wait for a person to arrive with a battery, a bucket, or a gas bottle, makes the process of receiving these resources seamless and near transparent. We do not see the transport infrastructure via which we take receipt of these resources. So we do not equate the means by which we get these resources as a service.It’s not until we do not have this infrastructure of wires and pipes, or when the system fails, that we realize that we have no services and start referring to their supply as a service. The reality is that before we can enjoy the benefits of any of these resources there is a complex network of operations and infrastructure that needs to be developed, managed and maintained. All of which amounts to a cost that is carried by us, the consumers.
The entire process of producing, distributing and delivering each of these resources to consumers is a complex, expensive and labour intensive process that has resulted in the huge industries that support whole economies. Let’s pause a moment. Can you identify the key term used in the paragraphs you have just read? The key term, of course, is “resources”.Resources, resources, resources, from the basic commodities we are discussing to the industries surrounding them, resources are the most important asset in the whole picture. As populations and industries grow, the entire resource chain is continually coming under additional pressure to increase capacity to supply.If we are to be capable of meeting these ever growing demands, it is clear that we must get two fundamental tasks right.
Accurate billing and revenue collection are the keys to the management and sustainability of resources throughout. However, it is not enough to say that we must get these two tasks right. We must also get them right in a way that is seen to be just and equitable to all stakeholders. The legacy of failing to bill correctly has shown to lead to dissatisfaction, suspicion, frustration and illegal actions on the part of consumers, often leading to disputes, and in many cases, tampering or by-passing of metering equipment. Everything in this situation leads to reduced revenue collection which, if left unchecked, eventually leads to degradation throughout the industry resources that support delivery of these services. The pain of stunted social and economic development is a downward spiral that is often very difficult to reverse. The knock on effect of poor billing and revenue collection starts as a micro problem and rapidly becomes a macro problem when funding resources can no longer increase capacity to meet new demands or maintain existing and ageing infrastructure. As a property manager, trustee or member of a body corporate you may be asking, “What does all this have to do with me?”
The answer is that this theory can be applied on any scale, national, regional or within your sectional title scheme. The effects of incorrect billing and poor revenue collection present a growing financial risk to all sectional title schemes as much as it affects municipalities. The problems associated with billing and revenue collection are very apparent to property managers. Every property manager will agree that these problems are further compounded by a number of factors ranging from differences in payment culture to the individual financial ability to pay of members within the body corporate. The current trend toward increases in the costs of resources and services from utility service providers is further increasing the financial risk property managers must manage. All revenues not collected from body corporate members place the body corporate under financial strain and can lead to the position where the body corporate is not able to cover the bills received from their utility service providers. The result of this situation is often disconnection of service to the detriment of all body corporate members.
The practices of billing and revenue collection for utilities within your sectional title scheme can become less of a risk if prepayment for utilities is an option as a means to better managing billing and revenue collection. There are different types of metering concepts, metering methods, technologies and facilities you can use to better manage your utility billing and revenue collection process and so better manage the associated financial risks you face.
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