Understanding Bridgin's Back-Up Servicing

How does Bridgin Guarantee Investors Technical Continuity when Paygo Servicers Default?

We recently deep dived into some essential questions related to one of the hot topics in the access to energy industry: Back-Up Servicing (BUS). What is it, who benefits from it, why do we need it, what are the challenges surrounding BUS? If you need a refresh, check out our piece: Back-Up Servicing Explained: Essential Questions Answered

In a nutshell, Back-Up Servicing mechanisms should help manage and maintain the servicing of customer accounts, payment collections, device maintenance, and overall customer support in case of default of the primary servicer on servicing obligations within off-balance sheet, or secured, financial deals. Simply put, BUS acts as a safety net against the impact of default or disruptions.

We previously detailed how BUS was made of several complementary pillars: legal arrangements, field servicing, as well as software and technical continuity.

That last pillar is the one our team at Bridgin is helping to solve, with the aim of unlocking additional capital for the sector. Read on to learn more about our approach, and how we think we can facilitate de-risking off-balance sheet transactions by maintaining technical continuity.

Paygo Functioning 101

Before delving into how to maintain technical continuity of operations in case the primary servicer’s defaults, it’s essential to revisit how Pay-as-you-go (Paygo) companies, and companies providing essential products and services on credit, operate within their technical ecosystem on the field.

Ensuring technical continuity: What is needed?

As mentioned in our previous piece, the objective of technical BUS is to ensure continuity of payment collection, CRM use, electronic communication with customers and token generation, if required.

When a Paygo end-customer repays a loan/contract instalment to unlock their solar appliance for a given period of time, these payments should still be received by the investor if made on account of purchased receivables, and the token should still be created to effectively activate the device - even when the distributor’s technical infrastructure has become unavailable.

What does this call for, in terms of technical infrastructure and processes to be maintained when the BUS goes live? A holistic technical and payment system under the legal control of the investor should be ready to be activated in live mode. It is made of: 

1. Back-Up Software: a properly functioning CRM is the backbone of any distribution business. For those who also give access to credit, it is paramount to manage those loans. And for Paygo businesses specifically, the software is key to locking and unlocking devices remotely. At this stage, it becomes apparent that managing continuity if a distributor defaults requires having access to a stable software solution that allows to receive payment notifications, track tokens, monitor asset statuses and communicate with customers through SMS. 

   
   
   
   

   A specific roadmap needs to be available on how to switch from the primary to the secondary software.

   
   
   
   

   Note that distributors are likely managing all of their contracts on their primary software, including those not financed off-balance sheet. As such, “switching” ownership of the primary software account over to investors or back-up servicers in live mode will rarely, if ever, be a viable solution.

   
   
   
   

2. BUS Payment channels: A secured payment system needs to be available for customers to keep sending payments to repay their loans and activate their device in live BUS mode. At high-level, two scenarios will generally be available in terms of recipient accounts: 

   
   
   
   

   a. Where the investor has obtained Power of Attorney and / or been granted signatory rights over the primary payment system of the distributor, including it’s mobile money and collection bank accounts, those same accounts can be used in Live mode

   
   
   
   

   b. Where the investor has not been granted such controls, different accounts should be used in live mode. They should be either an ad hoc BUS account, or the mobile money and bank accounts of a field servicer.

   
   
   
   

   Once these legal and administrative aspects have been agreed upon, a technical roadmap needs to be drafted, to effectively understand how to receive payments on the right account in live mode, and how to redirect associated payment notifications toward the BUS software.

   
   
   
   

3. Monitoring tool: Throughout the transaction, including in cold mode, investors should have access to monitoring dashboards and metrics indicating how receivables are performing. This should allow to spot any deterioration early on and to anticipate performance breach which, according to legal agreements, would trigger the activation of the live BUS. Such monitoring should continue in live mode to control the performance of the BUS, up until the BUS intervention is interrupted or the portfolio is purchased by a third party.

Bridgin’s BUS: What do we offer?

Investor's Need	Bridgin's Solution
Back-Up Software	Option 1: Traditional Migration Our team performs a traditional software migration in the transition from cold to live mode, ensuring minimum viable continuity. This migration is conducted if and only if the BUS gets activated. This process is only partly automated and is not independent from the primary servicer - collaboration with its technical teams will be needed to access the data and carry out the migration. In the set-up phase, the Bridgin team produces a migration diagnosis, whereby we confirm expected software migration timeline, process, risks and mitigations solutions available at transition. Option 2: Automated switch In cases where an investor wants to guarantee a higher degree of continuity / increased independence from the distributor at activation, or where we identify high risks at transition, we will offer to set-up an automatic BUS switch using a Payment Notification Dispatcher and a pre-deployed BUS software. The BUS software account will be already available and pre-configured in cold mode. Regular and automated upload of data mirrored from the primary software will guarantee it is up to date with the latest necessary information, ensuring it is fully prepared and ready for immediate activation when needed.  Where the chosen payment channels call for it, we also build additional infrastructure to allow payment notifications to be redirected in “one-click” toward the BUS software upon activation, effectively disabling the primary software to validate payments made on account of purchased receivables. This pre-deployment ensures a seamless transition to live mode with minimal downtime, guaranteeing continuous service.
BUS Payment Channels	Provided that investors have decided to handle the legal and field management aspects of the BUS, we will understand with them what should be the expected payment system and accounts available in live mode. This boils down to one key question: will customers making payments on purchased contracts need to change paybill number when the BUS goes live? Accordingly, the Bridgin team will ensure that the software systems are properly configured to receive and track payments, either by building the Automated Switch infrastructure for payment notifications, or by working on pre-deployed integrations between the BUS Mobile Money account and the BUS software. Where investors need support on figuring out which payment channels can be used in live mode, we explore the possibility to leverage our legal-as-a-service options to fill this gap.
Monitoring tool	Through our one-click integration with the distributor’s CRM, Bridgin accesses performance data on purchased receivables. This data is then restituted in our visual BI tool, where investors find relevant metrics to track  receivables performance and associated contractual engagements. Because it is directly sourced from the CRM and built up from payment data, rather than manually reported, this data is robust and reliable. A system of alerts can be set up, to notify the investor when performances deteriorate toward agreed upon BUS activation thresholds.

If this set of technical BUS solutions sounds beneficial to your own off-balance sheet transactions, contact us to discuss it further.

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About Bridgin

Bridgin is Solaris Offgrid's Receivable Financing Solution. Conceived as an online trading platform for accounts receivables, it allows distributors of essential services to unlock liquidity over assets through the sale of their outstanding invoices to investors, offering investors a unique chance to tap into a previously untapped asset class at a lower risk.