Different Write-Off Criteria For Different Customers And Different Debt

Consider the following:

  • You probably have different write-off criteria for different customer segments. For example, customers with large bills probably have strict criteria, whereas you're probably more lenient with small customers (or vice versa). You differentiate your customers in respect of the collection process via a collection class code on the customers' accounts. An account's initial collection class is defaulted from its customer class. You may override an account's collection class at will.
  • You probably have different write-off criteria for different classes of debt. You differentiate your debt in respect of the collection process via a write-off debt class on the customers' contracts (note the write-off debt class is actually defined on the contract type and every contract has a contract type).
Note: Write Off Debt Class vs. Regular Debt Class. It's important to be aware that a contract type references both a regular debt class and a write-off debt class. The regular debt class controls the collection criteria applied against an account's contracts. The regular debt class is also used to segregate an account's outstanding balance on several queries in the system. The write-off debt class controls the write-off criteria applied against an account's stopped contracts. The reason the system supports two different debt classes is because you may categorize your contracts differently when you try to collect overdue debt versus when you write-off debt.

Given the above, you should understand that different write-off criteria will exist for every combination of collection class and write-off debt class.

The following table illustrates different write-off criteria specified for different set of customers and debt class combination:
Contract's Write-Off Debt Class Account's Collection Class
Commercial Customer Residential Customer
Regulated N/A - there is no regulated, commercial customer debt.

Attempt to reduce the contract's balance to zero using the following methods:

Synchronize current balance with payoff balance.

Attempt to transfer debt to another active contract linked to the account.

If the debt is < $10 and > $-1, write down the debt using a write-down adjustment.

If the debt is <= $-1, create an A/P adjustment to refund the credit to the customer.

If debt remains, create the default write-off process for regulated debt.

Unregulated

Attempt to reduce the contract's balance to zero using the following methods:

Synchronize current balance with payoff balance.

Attempt to transfer debt to another active contract linked to the account.

If the debt / credit is < $10 and > $-10, write down the debt using a write-down adjustment.

If the debt / credit is <= $-10, create an A/P adjustment to refund the credit to the customer.

If debt still remains:

Highest priority: If customer has a non-cash deposit, create the non-cash deposit write-off process.

Otherwise, create the default write-off process for unregulated commercial debt.

Attempt to reduce the contract's balance to zero using the following methods:

Synchronize current balance with payoff balance.

Attempt to transfer debt to another active contract linked to the account.

If the debt is < $10 and > $-1, write down the debt using a write-down adjustment.

If the debt is <= $-1, create an A/P adjustment to refund the credit to the customer.

If debt remains, create the default write-off process for unregulated residential debt.

Notice that each cell in the matrix has the same pattern:

  • The system first attempts to reduce the contract's current and payoff balances to zero using the following methods (assuming you have set up the write-off control appropriately):
    • Sync the current balance with the payoff balance. If the contract's payoff balance is zero, this will cause the current balance to become zero and therefore close the contract.
    • If there's a debit balance, transfer the debt to any pending start or active contract in the same write-off debt class.
    • If there's a credit balance, transfer the debt to any non-closed/ non-cancelled contract in the same write-off debt class
    • If the remaining debit / credit balance is within a user-defined tolerance (this is defined on the respective algorithm on the write-off control), create an adjustment to write-down the small balance.
    • If a credit balance remains, create an A/P adjustment to refund the balance with a check (the adjustment type is defined on the respective algorithm on the write-off control).
  • All of the above points will cause the contract to close. If debt remains, the system starts some type of write-off process. The type of process is dependent on the respective criteria. What differentiates one write-off criteria from another is its priority. The higher priority criteria will be compared first. If the customer / debt meets the criteria, the write-off process is initiated; no further comparisons are performed.
Fastpath: For more information about maintaining this matrix, refer to Setting Up Write-off Control .