Why Cities Should Sell Late Water Bills to Certified Debt Buyers

Quick OvewHow to Sell Late Water Bills

Selling late water bills allows municipalities or utility companies to recover unpaid balances by transferring accounts to a collection agency or debt buyer. Follow these steps:

1. Compile Account Data: Organize debtor details, including account numbers, overdue amounts, and contact information.
2. Identify Qualified Buyers: Partner with certified debt buyers or agencies experienced in utility debt.
3. Negotiate Sale Terms: Agree on a purchase price based on the age, amount, and collectability of the accounts.
4. Ensure Compliance: Work with buyers who adhere to state and federal regulations, including utility collection laws.

Selling delinquent water bills helps recover funds and streamline your accounts receivable process..

Late Water Bills: Why Cities and Counties Should Consider Selling Them to Debt Buyers

Unpaid water bills are a growing challenge for many cities and counties, impacting municipal budgets and straining resources. These delinquent accounts can lead to additional fees, tying up cash flow that could be reinvested in critical infrastructure, community programs, and other public services. One effective solution is to sell late water bills to certified debt buyers, enabling local governments to recover some of the outstanding funds while freeing up resources for other priorities.

This article explores the challenges of managing late water bills, the benefits of selling them to debt buyers, and how the process works.

The Problem with Late Water Bills

1. Accumulating Delinquent Accounts: As residents or businesses fall behind on water bill payments, local governments face a growing backlog of unpaid accounts. This backlog can delay planned projects and strain financial resources. Accumulating delinquent accounts result in a growing delinquent balance, which can further exacerbate these issues.
2. Resource-Intensive Collections: Collecting overdue bills requires significant administrative efforts, from sending reminders to managing payment plans. Managing late payments involves additional tasks such as sending termination notices and handling late charges. These tasks divert staff and resources from other important functions.
3. Impact on Budgets: Unpaid water bills directly affect cash flow, limiting a city or county’s ability to fund public services, repair infrastructure, and invest in growth initiatives.
4. Aging Debt Challenges: The longer a water bill remains unpaid, the harder it becomes to collect. Aging debt often results in lower recovery rates, increasing financial losses.

Why Cities and Counties Should Sell Late Water Bills

Selling delinquent water bill accounts to certified debt buyers provides a practical and efficient way to address these challenges. This approach can simplify bill payment processes and reduce the need for complex payment arrangements. Here are the key benefits:

1. Immediate Cash Flow

Selling late water bills allows cities and counties to receive an upfront payment for delinquent accounts, ensuring that these accounts are paid. This influx of cash can be reinvested into critical areas, such as infrastructure improvements, public safety, or community programs.

2. Reduced Administrative Burden

Managing delinquent accounts is time-consuming and resource-intensive. Selling these accounts shifts the responsibility of collections to a third-party service, freeing up municipal staff to focus on other priorities.

3. Cost Efficiency and Late Fees

Recovering unpaid bills internally can be costly, especially when factoring in staff salaries, mailing costs, late fees, and legal fees. Selling debt eliminates these ongoing expenses.

4. Professional Recovery Efforts

Certified debt buyers have specialized tools, technology, and expertise to recover debts more effectively, including delinquent water service accounts. Their professional approach often results in higher recovery rates than in-house efforts.

5. Risk Transfer

Once the debt is sold, the risk of non-payment transfers to the debt buyer. This reduces the financial uncertainty associated with delinquent accounts.

The Process of Selling Late Water Bills

Selling late water bills to certified debt buyers involves several steps:

Municipalities must review their delinquent accounts to determine which are eligible for sale, including assessing the due date of each account. This ensures that only accounts that meet specific criteria are considered for sale.

1. Evaluate the Delinquent Balance Portfolio

Municipalities must review their delinquent accounts to determine which are eligible for sale. This includes:

• Assessing the age of the debt, which involves reviewing the monthly bill history to ensure accurate and complete debtor information.
• Ensuring debtor information is accurate and complete.
• Categorizing accounts by collectability.

2. Select a Certified Debt Buyer

Partner with a reputable debt buyer experienced in municipal debt and offering financial assistance programs to support struggling customers. Ensure the buyer complies with all relevant regulations, including consumer protection laws.

3. Negotiate Sale Terms

The sale price is typically a percentage of the total utility bill or debt value, influenced by factors such as:

• The age of the accounts.
• The volume of debt being sold.
• The quality of the data provided.

4. Transfer Accounts

Once terms are agreed upon, the delinquent accounts, including those with water shut notices, are transferred to the buyer, who assumes responsibility for collection efforts.

How Selling Late Water Bills Benefits the Community

Selling delinquent water accounts doesn’t just help local governments—it also benefits the community:

• Improved Services: The recovered funds can be reinvested in improving water infrastructure, public safety, and community development projects, benefiting residents who pay their bills on time.
• Fairer Processes: Certified debt buyers operate within the bounds of the Fair Debt Collection Practices Act (FDCPA), ensuring fair treatment of residents.
• Reduced Utility Rates: Freeing up resources and improving cash flow can help municipalities stabilize or lower utility rates over time.

Considerations for Cities and Counties

While selling late water bills offers many advantages, there are important considerations:

1. Reputation Management: Partnering with reputable debt buyers can help maintain the city's or county's reputation. Ensure that the debt buyers have a track record of ethical behavior and compliance with all relevant laws and regulations.
2. Fair Treatment of Residents: Working with certified debt buyers who adhere to ethical and legal recovery practices ensures fair treatment of residents who are paying their bills. This can help build trust within the community and ensure that residents feel supported during the payment process.
3. Financial Stability: Selling late water bills can provide immediate cash flow, which can be used to fund essential services and infrastructure projects. This can help improve the overall financial stability of the city or county.
4. Administrative Efficiency: Outsourcing the collection of late water bills can reduce the administrative burden on city or county staff, allowing them to focus on other important tasks.

1. Public Transparency

Communicate with residents about why the debt is being sold and how it benefits the community. Transparency builds trust and mitigates concerns.

2. Ethical Recovery Practices

Work only with certified debt buyers who adhere to ethical and legal recovery practices to protect residents from aggressive or unfair collection tactics.

3. Data Security

Ensure sensitive customer data is securely transferred to prevent breaches or misuse.

4. Restrictions on Resale

Negotiate contract terms that prevent the debt from being resold to additional parties, maintaining control over how the debt is handled.

Real-Life Examples of Municipal Debt Sales

Several municipalities have successfully sold delinquent utility accounts to avoid additional fees and generate immediate funds for infrastructure improvements:

• City of Chicago: Sold delinquent utility accounts to generate immediate funds for infrastructure improvements.
• Harris County, Texas: Partnered with debt buyers to address growing unpaid utility bills, reducing administrative burdens and improving cash flow.

Conclusion

Unpaid water bills can be a significant drain on municipal resources, but selling these debts to certified buyers offers a viable solution. By freeing up cash flow, reducing administrative costs, and transferring collection risks, cities and counties can refocus on serving their communities effectively.

For municipalities grappling with delinquent accounts, partnering with a certified debt buyer is a strategic way to turn unpaid bills into opportunities for growth and improvement.