I’ve never heard of a financial measure for trade receivables called “collection rate” but the term was evidently dropped a good bit at last Tuesday’s City Council meeting like it meant something from a financial standpoint. (The typical measures of receivable efficiency are properly called receivable turnover and my personal favorite, the DSO. I have guesstimated the City’s DSO at somewhere close to 30 days for purposes of this post.)
I mention all this because there has been some chatter about last Tuesday night’s Bay St Louis City Council meeting and delinquent utility bills was a topic of conversation. Let’s start with Dwayne Bremer’s account of it to set the mood:
Ron Thorpe, a member of the Hancock County Alliance for Good Government, on Tuesday appeared before the city council and offered an aggressive presentation with props such as a large garbage bag filled with paper and 135 water bottles arranged on a table.
The garbage bag, he said, represented $400,000 in uncollected utility bills. The 135 water bottles represented how many utility customers are more than 60 days past due, he said.
Councilmen and the audience sat in stunned silence during the presentation. At one point, Thorpe held the garbage bag above his head, shook it, and then threw it toward the council podium.
The story is framed around the mythical “collection rate” ratio, which the City claims is 97%, a number that even if mathematically true is meaningless.
That said I’d posit there is some good news in the trends beginning to emerge on the Water and Sewer Utility Ageing reports that I have published on Slabbed here and here. Yes, Al Showers still has some flapper value issues but in the “it will be a miracle if these accounts are ever collected column” (that would be the rightmost columns on the ageing reports) has decreased by a substantial amount and that is good news. Collecting old accounts, especially those from previous fiscal years is a very good thing from a budget standpoint and if there is bad news the budget is where it lies but that is another post.
This brings me back to that guesstimate of the City’s Utility DSO at 30 days. Its really more than just a guesstimate because I adjusted off the “it will be a miracle if these accounts are ever collected column” so as to get a better idea of how the more recent customer balances were being managed and 30 days is not a bad number. But that has been lost due to politics and hizzonner has no one but himself to blame by yammering about the problems he perceives in Wards 5 & 6.
I’ll have more after I get past the 15th.