Operational process improvements deliver ~£15m cash benefit for large energy retailer

Jon Vincent Small headshot image of Jon Vincent, Senior Manager at BFY Group. 28 Aug 2023
Written by Jon Vincent
  • Large energy retailer facing double-digit revenue gap due to cash not being collected on prepayment meters
  • We identified the root causes, quantified their impact, and developed new processes and controls to fix broken meters. This involved onboarding new third parties and optimising manual processes to maximise in-year cash and secure debt
  • So far in this project, we have delivered ~£15m of in-year benefit and fixed the majority of broken meters, with plans in action to fix the backlog completely

Challenge

We supported a large energy retailer with the management of its prepayment portfolio, where a shortfall in expected cash was causing a double-digit revenue gap. This problem was expected to increase in scale significantly, due to the ongoing energy crisis and its impact on prices.

A large number of meters in our client’s prepayment portfolio were operating incorrectly, meaning customers were potentially using energy without having to top up in advance.

We attributed this problem to inefficiencies in the retailer’s operational processes and business controls, worsened by poor performing third parties and gaps in ownership and accountability.

To bridge the revenue gap, our team sought to rectify the retailer’s meter issues, transform its complicated manual processes, and provide a clearer understanding of process bottle necks.

​Our approach

We started by mobilising a multi-workstream activity programme, focussing on replacing faulty meters including non comms Smart, building new controls and insight, and loading debt to meters. This was underpinned by senior stakeholder management, meter-level benefit tracking, and effective project and risk management.

However, as the programme mobilised it became clear that progress was being hindered by underlying operational issues. There was a lack of field capacity to replace meters, operational and system processes were inefficient and did not deliver the right outcomes, and existing outsource providers were not performing as required.

In response, we successfully onboarded new third parties and utilised these providers to deliver process and performance improvements for our client, while also increasing their field capacity.

Overall, providing clarity was a key focus in this project. This was reinforced by the delivery of an online reporting structure, fed by dialogue between our client and its third parties, meaning they were better equipped to identify variance in meter activity and target bottlenecks in future.

Results

Upon completion of our initial 9-month programme, a significant proportion of the backlog of faulty meters had been fixed, with plans in action to complete the remainder.

This action has delivered ~£15m of in-year benefit via cash collection, and debt being secured on meters. We’ve also helped to streamline our client’s approach to these processes by utilising automation.

In addition to this, we have improved their ability to calculate revenue, applying industry best practice to ensure forecasts are reflective of meter status and inclusive of any ongoing customer risks, such as being off supply.

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