Penalty Calculation and Adjustment Activity Date

Bill or payment adjustments that raise the account balance (positive adjustments) must now use the Activity Date value on the Adjustment entry page. The delinquent process now uses the activity date on a positive adjustment to determine when and how much the account is penalized. By making the Activity Date a pivotal connection between the two modules, the software can more reliably ensure that adjustments have the proper effect on penalties.

When penalties are calculated, the calculation looks at an amount based on the type of arrears value it represents to determine when and how much to penalize it. Past arrears amounts are tied to an old bill and would use an Arrears Past Due amount, if one is defined on the delinquent event charge, to calculate the penalty. Current arrears amounts are tied to the current overdue bill and would use a Current Past Due amount, defined on the delinquent event charge, to calculate the penalty. Not yet due arrears amounts will not be penalized since the customer has not yet seen this amount on a bill. Thus, the activity date entered determines which part of the delinquency process is affected.

System Settings

Maintenance > Utility Management > UM Settings

From release 5.1 to 5.3, adjustments were not included in the penalty calculation. Adjustments were included with release 6.0. A new system setting, Include Positive Adjustments, has been added to the Delinquencies Tab in UM Settings to allow for either option.

This check box is cleared by default, indicating that adjustments that raise the account balance will be excluded when determining whether an account should be included in delinquent processing. In this scenario, the Activity Date is informational only.

If the check box is selected, adjustments that raise the account balance will be included when determining whether an account should be included in delinquent processing. In this scenario, the Activity Date is crucial. When a reference transaction is entered on the adjustment, the Activity Date will be populated with the date of the reference transaction. The Activity Date field is enabled, so the date can be changed to reflect whether this amount should be treated as past arrears (already penalized and should not be included again in current penalties), current arrears (penalize since this amount is from the most recent overdue bill), or future arrears (do not penalize since the customer has not yet seen the balance on a bill). See below for more details about the delinquent/adjustment scenarios.

Entering an Adjustment

Utility Management > Adjustments

When an adjustment is entered, either an Activity Date or a Transaction is required. The reference transaction can be entered once the Account and Adjustment Type are specified.

Previously, the penalty process used the adjustment transaction date when determining how to treat the amount. Now, if an Activity Date is specified, it will use that date to calculate a penalty on the amount. If a reference transaction is entered, it will use the date of that transaction (that is, the transaction that made the adjustment necessary) to calculate the penalty.

Scenarios

This section describes several possible scenarios. The configuration and timing details may vary at your organization. One key variable to note is whether your organization penalizes arrears. The third scenario with a previously penalized balance assumes that you do not penalize arrears; however, if you penalize them at a different rate this scenario is valid.

Adjustment to Establish a New Balance with a New Charge

Between the time a bill is posted and penalties are run, an adjustment is added that pertains to the current bill. Since the software penalizes only charges that have been billed, this adjustment will not be penalized since it the customer will not see it until the next bill.

Adjustment to Re-establish a Balance That Was Never Penalized

The customer sends in a payment for the current bill, but the check bounces. An adjustment is created to lower the payment amount, thereby returning the account to the balance it had before the bad payment. By using the payment date as the Activity Date, the account will be included in delinquent processing when penalties are calculated.

Adjustment to Re-establish a Penalized Balance

The customer sends in bad check to avoid shutoff. The balance resulting in shutoff has already been penalized for the bill on which it originally appeared and should not receive a “current charges” penalty on the adjustment amount. To avoid a double penalty, using the payment date as the Activity Date will restore the account to the balance that already included the penalty, and it will not be included when delinquent accounts are identified to be penalized for the current billing cycle.