IDEAS home Printed from https://ideas.repec.org/a/eee/juipol/v87y2024ics095717872400016x.html
   My bibliography  Save this article

Enhancing financial efficiency and receivable collection in the water sector: Insights from structural equation modeling

Author

Listed:
  • Murrar, Abdullah
  • Paz, Veronica
  • Yerger, David
  • Batra, Madan

Abstract

This research aimed to identify the factors influencing the water sector's financial efficiency and receivable collection. Financial efficiency is measured using the financial efficiency ratio (FER), which is obtained by dividing the operating cost of the water service by the revenue generated from it. The receivables collection ratio (RCR) is calculated by dividing the total fees collected from water customers by annual water billed sales. The study utilized secondary data from 260 water providers and employed structural equation modeling. The analysis revealed that using prepaid meters, ensuring water continuity, employing dunning actions, adhering to tariff compliance, and offering various payment methods positively influenced the receivables collection ratio. However, while all of these factors have a significant impact, the effect of payment discounts was not statistically significant. Additionally, the study uncovered that using prepaid meters, ensuring water continuity, employing dunning actions, and adhering to tariff compliance negatively impacted the financial efficiency ratio. This finding implies that these factors could improve water providers' financial position. The study suggests that using prepaid meters, ensuring water continuity, employing dunning actions, adhering to tariff compliance, and offering various payment methods can reduce costs relative to revenue and enhance the collection of receivables. Ultimately, these actions can strengthen water providers' overall financial performance.

Suggested Citation

  • Murrar, Abdullah & Paz, Veronica & Yerger, David & Batra, Madan, 2024. "Enhancing financial efficiency and receivable collection in the water sector: Insights from structural equation modeling," Utilities Policy, Elsevier, vol. 87(C).
    • Handle: RePEc:eee:juipol:v:87:y:2024:i:c:s095717872400016x
    DOI: 10.1016/j.jup.2024.101723
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S095717872400016X
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.jup.2024.101723?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Mahmoud K. El-Jafari, 2013. "Palestinian Household Willingness and Ability to Pay for Public Utilities in The West Bank: The Case of Electricity and Water," Working Papers 784, Economic Research Forum, revised Oct 2013.
    2. Giuseppe Marotta, 2005. "When do trade credit discounts matter? Evidence from Italian firm-level data," Applied Economics, Taylor & Francis Journals, vol. 37(4), pages 403-416.
    3. Ukaegbu, Ben, 2014. "The significance of working capital management in determining firm profitability: Evidence from developing economies in Africa," Research in International Business and Finance, Elsevier, vol. 31(C), pages 1-16.
    4. Briggs, Elten & Deretti, Sandro & Kato, Heitor Takashi, 2020. "Linking organizational service orientation to retailer profitability: Insights from the service-profit chain," Journal of Business Research, Elsevier, vol. 107(C), pages 271-278.
    5. Pinto, Francisco Silva & Simões, Pedro & Marques, Rui Cunha, 2017. "Raising the bar: The role of governance in performance assessments," Utilities Policy, Elsevier, vol. 49(C), pages 38-47.
    6. William Black & Barry J. Babin, 2019. "Multivariate Data Analysis: Its Approach, Evolution, and Impact," Springer Books, in: Barry J. Babin & Marko Sarstedt (ed.), The Great Facilitator, pages 121-130, Springer.
    7. Singh, Ramendra Pratap & Singh, Ramendra & Mishra, Prashant, 2021. "Does managing customer accounts receivable impact customer relationships, and sales performance? An empirical investigation," Journal of Retailing and Consumer Services, Elsevier, vol. 60(C).
    8. Rita Martins & Luis Cruz & Eduardo Barata, 2013. "Water Price Regulation: A Review of Portuguese Tariff Recommendations," Public Organization Review, Springer, vol. 13(2), pages 197-205, June.
    9. Abbott, Malcolm & Cohen, Bruce, 2009. "Productivity and efficiency in the water industry," Utilities Policy, Elsevier, vol. 17(3-4), pages 233-244, September.
    10. Frank Sylvio Gahapa Talom & Robertson Khan Tengeh, 2019. "The Impact of Mobile Money on the Financial Performance of the SMEs in Douala, Cameroon," Sustainability, MDPI, vol. 12(1), pages 1-17, December.
    11. Herrmann, Andreas & Huber, Frank & Braunstein, Christine, 2000. "Market-driven product and service design: Bridging the gap between customer needs, quality management, and customer satisfaction," International Journal of Production Economics, Elsevier, vol. 66(1), pages 77-96, June.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Guangyang Wang & Junwei Bai & Jian Xing & Jianfei Shen & Erli Dan & Xinyuan Zheng & Ludan Zhang & Peng Liu & Renchi Feng, 2023. "Operational Efficiency and Debt Cost: The Mediating Effect of Carbon Information Disclosure in Chinese Listed Companies," Sustainability, MDPI, vol. 15(2), pages 1-18, January.
    2. Fabio De Matteis & Alessandra Tafuro & Fabrizio Striani & Daniela Preite, 2023. "Totally Publicly-Owned (TPO) Utilities and Financial Performance: What is the role of some aspects of governance?," MANAGEMENT CONTROL, FrancoAngeli Editore, vol. 2023(3), pages 89-111.
    3. Iyer, Pooja & Bright, Laura F., 2024. "Navigating a paradigm shift: Technology and user acceptance of big data and artificial intelligence among advertising and marketing practitioners," Journal of Business Research, Elsevier, vol. 180(C).
    4. Sony, Michael & Aithal, Sreeramana, 2020. "Transforming Indian Engineering Industries through Industry 4.0: An Integrative Conceptual Analysis," MPRA Paper 102872, University Library of Munich, Germany.
    5. B. James Deaton & Bethany Lipka, 2023. "Cooperation between First Nations and Municipalities: Do Water-Sharing Arrangements Improve Drinking Water Quality?," Land Economics, University of Wisconsin Press, vol. 99(3), pages 433-457.
    6. Al-Shaer, Habiba & Uyar, Ali & Kuzey, Cemil & Karaman, Abdullah S., 2023. "Do shareholders punish or reward excessive CSR engagement? Moderating effect of cash flow and firm growth," International Review of Financial Analysis, Elsevier, vol. 88(C).
    7. FuloP ARPAD ZOLTAN & BAKO KINGA ERZSEBET, 2017. "The Analysis Structures Of The Costs And Of The Relationship Between Costs And Revenues In The Sector Of Sewerage And Wastewater Treatment In Romania," Annals - Economy Series, Constantin Brancusi University, Faculty of Economics, vol. 2, pages 188-196, December.
    8. Shivendra Kumar & Andrew Groth & Ljubo Vlacic, 2015. "Cost Evaluation of Water and Wastewater Treatment Plants Using Water Price Index," Water Resources Management: An International Journal, Published for the European Water Resources Association (EWRA), Springer;European Water Resources Association (EWRA), vol. 29(9), pages 3343-3356, July.
    9. Nida Shah, 2016. "The Impact of Working Capital Management on Firms Profitability in Different Business Cycles: Evidence from Pakistan," Journal of Finance and Economics Research, Geist Science, Iqra University, Faculty of Business Administration, vol. 1(1), pages 58-70, March.
    10. Khalil Nimer & Muath Abdelqader & Cemil Kuzey & Ali Uyar, 2024. "Emission targeting and carbon emissions: The moderating effect of female directors," Business Strategy and the Environment, Wiley Blackwell, vol. 33(4), pages 3480-3504, May.
    11. Capece, Guendalina & Cricelli, Livio & Di Pillo, Francesca & Levialdi, Nathan, 2012. "New regulatory policies in Italy: Impact on financial results, on liquidity and profitability of natural gas retail companies," Utilities Policy, Elsevier, vol. 23(C), pages 90-98.
    12. Md. Mosharraf Hossain & Md. Kamrozzaman & Md. Mehedi Hasan Manik & Rahima Akther & Atiqur Rahaman & Md Sahab Uddin, 2024. "Antecedents of Job Satisfaction among Higher Secondary Teachers: Moderating Role of Training," International Journal of Science and Business, IJSAB International, vol. 42(1), pages 52-70.
    13. Michael Zschille, 2014. "Nonparametric measures of returns to scale: an application to German water supply," Empirical Economics, Springer, vol. 47(3), pages 1029-1053, November.
    14. Hellwig, Michael & Polk, Andreas, 2021. "Do political links influence water prices? Determinants of water prices in Germany," Utilities Policy, Elsevier, vol. 70(C).
    15. Luo, Xi & Cheah, Jun-Hwa & Hollebeek, Linda D. & Lim, Xin-Jean, 2024. "Boosting customers’ impulsive buying tendency in live-streaming commerce: The role of customer engagement and deal proneness," Journal of Retailing and Consumer Services, Elsevier, vol. 77(C).
    16. Jinjin Zhao, 2020. "Productivity change in the privatized water sector in China (1999–2006)," Journal of Productivity Analysis, Springer, vol. 53(2), pages 227-241, April.
    17. Goh, Kim Huat & See, Kok Fong, 2021. "Measuring the productivity growth of Malaysia's water sector: Implications for regulatory reform," Utilities Policy, Elsevier, vol. 71(C).
    18. Henriques, Alda A. & Camanho, Ana S. & Amorim, Pedro & Silva, Jaime G., 2020. "Performance benchmarking using composite indicators to support regulation of the Portuguese wastewater sector," Utilities Policy, Elsevier, vol. 66(C).
    19. Tarkom, Augustine & Ujah, Nacasius U., 2023. "Global policy uncertainty and working capital management: Does national culture matter?," Technological Forecasting and Social Change, Elsevier, vol. 196(C).
    20. Wang, Siqi & Lim, Xin-Jean & Luo, Xi & Cheah, Jun-Hwa, 2024. "To hesitate or not to hesitate: Can popularity cues minimize the hesitation to checkout in e-commerce?," Journal of Retailing and Consumer Services, Elsevier, vol. 78(C).

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:juipol:v:87:y:2024:i:c:s095717872400016x. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: https://www.sciencedirect.com/journal/utilities-policy .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.