Turin-Index is a useful tools for public utilities interested to:
- Enrich their set of analysis and forecasting tools on user behavior in relation to the payments of service bills,
- Improve their quantitative understanding of the phenomenon of arrears under the private point of view, in the context of corporate management.
Besides the calculation of the Index for each user and the possibility to create aggregations, the Turin School of Local Regulation focused the research also on the development of an econometric model to evaluate “state dependence”, that is to say the persistence of the phenomenon of arrearage throughout the billing periods.
Moreover, the methodological instrument proposed is able to provide an assessment of the effect of the cost of arrearage on the revenues and on the issued bills from both the public (economic regulation of the service) and the private (corporate management) point of view. Using information related to administrative costs for the management of outstanding credits and an interest rate able to reflect the opportunity cost of not-paid bills on the basis of corporate financial management allows to build a measure of the cost of arrearage, which is different and specific for each utility and geographical area. This allows to go beyond the classical approach of commercial credit scoring and assessment of payment postponement, thanks to a detailed analysis of each single cost related to the management of arrears.