The worrying performance of water utilities and service providers in India is caused, among other reasons, by financial and capacity constraints, including the absence of a commercial orientation to services, institutional deficiencies, and the lack of systemic incentives to deliver ongoing quality services.
Effective billing and collection systems are a critical component for ensuring the viability of a service provider. Improving billing and collection activities has an immediate impact on the revenue streams of a service provider that can, in turn, help the service provider in improving services. However, while effective billing and collection practices depend on many internal factors (including customer databases, the extent of metered and unmetered service provision, tariff and billing structures, delivery of bills, and facilities for customer payments), the institutional arrangements under which service providers operate and provide services determine whether such practices will remain sustainable in the long term. Efficient billing and collection practices can set incentives for the provider to effectively charge and collect water bills while also fulfilling a commercial orientation to services.
This note draws on national and international cases to explore what it takes to implement an effective billing and collection system that encourages commercial and operational efficiencies for aiding the expansion and delivery of improved, reliable, and sustainable services. The note starts with an explanation of how poor billing and collection hurt the service provider, followed by the key principles of an effective billing and collection strategy, illustrated through national and international billing and collection practices.