Collection muscle lets utility handle loans

Published in Electrical World - T and D Edition

Louisville & Jefferson County Metropolitan Sewer District (MSD), Louisville, Ky, planned to offer all new customers the option of financing their sewer line connections at the lowest possible cost. The utility wished to make the assessments as affordable as possible, each being a proportionate cost of the installation, ranging from $2000 to $17,000 per property.

The utility's management specified a 7% fixed-rate loan for 20 years be made available to new customers. Local banks were responsive to purchase the assessments and offer the customers other banking services as long as prevailing interest rates were at or below 7%.

The utility decided that it would be better off if it were not entirely dependent on banks for the continued availability of reasonably priced financing. Instead, it set about evaluating loan servicing software for an in-house, PC-based system. After reviewing the products available, the utility settled on LOANLEDGER, PC-based loan servicing software from Dynamic Interface Systems Corp.

Herman Adams, MSD's wastewater administrator, notes that the software makes it possible for the utility to continue offering loans to new customers. The system has a loan capacity that is limited only by hardware, so it will be able to handle loans for some 2000 additional customers to be served by projects currently in design and construction.

The software gives the utility multiple-user access to data and provides audit trails, agings, transaction reports, and management analyses. In addition, the software interfaces with Allison Payment Systems, a coupon payment book processor. Coupon books allow customers to mail their payments to a lock-box at a local bank through automated cash reporting. The bank processes the payments and sends a record on diskette to the utility. The data are uploaded onto the LoanLedger software, which updates accounts receivable. No manual posting is necessary. This is important, given that the expected number of loans is expected to grow from the current 800 to as many as 2500.

Adams stresses the importance of strong software manufacturer support, and notes that his staff flew to Los Angeles, Calif, for initial training by Dynamic Interface. He also believes phone support is critical, since it is the primary source of problem solving and must be available during business hours. MSD scrutinized several software packages before selecting LoanLedger. Adams suggests that utility administrators check out potential software systems for features that meet their individual needs, such as real-time access to transaction information, aging for delinquency tracking, compact portfolio summaries, usable management reports, and automated forms reporting.

Adams has been able to meet the utility's needs with the basic loan servicing software up until now, but as the loan portfolio grows in response to new projects, he expects to add the available collection module.