CUSTOMER BILLING—MUNICIPAL UTILITIES*

By CLAYTON SCHLOSSER, Certified Public Accountant, Alton; Member, Municipal Audit Advisory Board

Billing of customer accounts of municipally owned utilities may be accomplished by any one of three basic procedures, which may be referred to as:

The Postal Card Stub Method
The Register and Post Card Stub Method
The Bill and Ledger Account Method

Each of the Methods has some advantages over the others, and each has some deficiency or requires additional bookkeeping procedures; therefore, in considering the method best suited to a particular situation, one must be prepared to make some compromises. Each basic procedure also has many variations which can be used in a particular operation.

The Postal Card Stub Method is fast because no register or formal ledger is involved. Only one sequence check is necessary—that of checking- the bill with the meter reading. An additional advantage is that paid and unpaid accounts are at all times completely segregated. Proof of billing is accomplished with a minimum of effort, as 13 trial balancing.

This method, however, does not provide a permanent or continuous record of customer transactions, with an ensuing loss of customer credit history. There is also some danger of loss of record of customer accounts. Some additional time is also required to file the customer account cards from the unpaid to the paid account file, each day, as payments are received.

PROCEDURE POSTAL CARD STUB METHOD:

Bring forward all old balances and penalties from the open Zone or Cycle file. Fill in current readings and dollars, extend totals. Remove customer ledger section of each card and file in open file. Mail bill cards to customers.

As payments are received, proof amount on cash stubs and file in customer account sequence. Tape stubs and balance cash. Remove paid stubs from open customer account file. Tape stubs removed, to ascertain that total of accounts removed agrees with tape of stubs and cash count. File stubs removed in closed file.

The Register and Postal Card Method merely combines a register with the postal card method and, therefore, eliminates the disadvantage of no permanent record, and some of the difficulties in case of a lost account card. This method does, however, take some additional time if done manually. Machine operation, as to this method, is almost as fast as the Postal Card Method used without the register. The Register and Postal Card procedure still has the disadvantage of not providing a continuous record of the customer's account. The method does lend itself very well to auditing.

The Register could be in substantially Form (2). The Postal Card Billing method should be used with the register, but the ledger stubs section of the card is eliminated.

PROCEDURE:

Each customer's transaction is recorded in the register, and bills are then prepared from the register. The same procedure is, thereafter, followed as with the Postal Card Plan, as to collections, excepting credits are posted to the register and the balance if any is shown. Penalties, if applicable, are recorded at the time credits are posted. No ledger section on the card is involved; therefore, cash is balanced with the postings to the register each day, before remittance stubs are filed.

The Bill and Ledger Account Method has the advantage of providing excellent accounting control

Suggested form for POSTAL CARD STUB METHOD:

Form (1)

CUSTOMER'S BILL				CASH STUB A/C # (Detach and Return with Remittance)		LEDGER STUB A/C # (To be Retained by City not Sent to Customer)
PRBS.	PREV.	USED	AMOUNT	DATE	AMOUNT	PRES. READING	DATE	USED	AMOUNT
550	500	50	$5.00	4/1	$5.00	550	4/1	50	$5.00
Previous Bal. Fwd $
Previous Penalty
TOTAL $					$				$

• Paper delivered at 44th Annual Conference at Illinois Municipal League, Springfield, November 11th, 1957.

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Form (2)

PRES.	PREV.	USED	AMOUNT	NAME AND ADDRESS	A/C #	PENALTY	TOTAL	CREDITS DATE /AMOUNT		BALANCE
	TOTAL

over customer accounts and provides a continuous credit history for each customer. The posting of all transactions to the ledger is time consuming, but this method does lend itself very well to machine posting. The Ledger and Bill Method is relatively simple to audit and to control. Accounting control should be established for each zone or cycle group. Meter deposits, turn on charges, etc., can all be recorded easily.

The Postal Card Method of billing can readily be adapted to the ledger plan in much the same form as for the register plan. The ledger should be in standard debit, credit, balance form with provisions made for consumption data. Many variations of the ledger are possible, but the suggested Form (3) is often used:

The cost of using the Bill and Ledger Plan is somewhat higher than other methods, but to the writer (perhaps because of his profession) the customer history record and positive accounting control features are so valuable that the method seems to be the most desirable.

Form (3)

CUSTOMER NAME		ADDRESS				A/C #________ Z0NE#________
CREDIT CHECKED __ DEPOSIT LIABILITY LEDGER		OWN PROPERTY __			LANDLORD NAME ADDRESS
DATE				FOLIO	DEBIT	CREDIT	BALANCE
RECEIVABLE LEDGER
CURRENT READING	PREV. READING	USED	DATE	FOLIO	DEBIT	CREDIT	BALANCE

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