When utilities understand early signs of financial stress, the first engagement can change the trajectory before debt escalates.
In most utilities, debt management begins at the same moment: a missed payment.
That makes sense. A missed payment is clear and objective and provides a legitimate reason to engage. The reminder process begins, and the account enters the early arrears pathway that has been refined over years.
But something has changed.
Across the industry, finance and collections teams are seeing more customers entering arrears who don’t fit the traditional profile. These are customers who have historically paid on time. They don’t self-identify as needing help. And when financial stress emerges, it often goes unrecognised — by both the customer and the utility — until the first payment is missed.
Engagement still begins only once an account is legitimately overdue. What changes is the understanding of which customers are likely to recover on their own and which may need a different conversation.
At that point, all customers look the same in the system, but in reality, they are not.
A missed payment is an event.
Future debt is a trajectory.
Some customers will quickly recover. Others are at the early stages of financial stress and are more likely to fall further behind. Traditionally, utilities have had no practical way to distinguish between the two at the start of arrears, so the first conversation has been the same for everyone.
Operationally, this is consistent. But it is not always effective.
Collections teams know that accounts engaged earlier in the arrears cycle are easier to resolve. Finance teams know that once debt ages, recovery becomes more expensive and less predictable. Yet the industry has largely been forced to act only once problems become visible.
What is changing now is not when utilities intervene,
but what they know when they do.
Advances in predictive AI using utilities’ own first-party data are making it possible to identify customers showing early signs of financial stress before debt escalates. Importantly, engagement still begins only once a payment is missed. The difference is that the first conversation can now be different.
Missed Payment → Two Paths
When utilities understand which customers are at risk of falling further behind, the objective of the first interaction shifts. Instead of focusing purely on immediate recovery, the conversation can focus on stabilising the account before debt compounds.
For finance leaders, this reduces the flow of accounts into aged arrears and lowers downstream cost. For collections teams, it improves engagement outcomes by addressing problems while they are still manageable.
This is not about acting earlier or softening collections. It is about acting more intelligently at the first legitimate moment of engagement.
Not every missed payment requires the same response.
As traditional collections levers deliver diminishing returns, utilities are beginning to recognise that outcomes are often determined at the first interaction — not the last.
The missed payment remains the trigger.
But when the first conversation changes, the trajectory can change with it.
If you’re exploring ways to reduce the flow of accounts into aged arrears, we’d welcome a discussion.
