December 15, 2022
Need to Increase NOI in 2023? Look to Utility Billing
The challenging economic conditions of today are expected to continue into the new year. Here’s what property investors and owners can do to help recover costs and stave off negative economic impacts.
Many economists are predicting a recession in 2023. And while most indicators suggest that an upcoming recession wouldn’t be anything like the 2008 crash, there are still some causes for concern that property investors should prepare for.
One such concern: the rising cost of utilities.
Utility Costs Are Rising in 2023
Over the past couple of years, utility costs have risen dramatically, and those rises don’t seem to be slowing down moving into 2023.
- In 2021, retail residential electricity experienced the biggest price increase since 2008, jumping 4.3%.
- This year, the average price of electricity for residential consumers was 5% higher than 2021.
- Analysts expect another 3.3% increase in 2023.
If this forecast is accurate, that will have represented a total increase of 16% in electricity prices over the last four years.
So, what can you do to prepare?
Going into 2023, property investors need to consider a sound utility billing strategy. If you include utility costs in rent or charge a flat fee to your residents, your utility cost recovery efforts will get worse as prices increase.
Let’s investigate how a utility billing strategy can help.
How Can Utility Billing Help with Rising Costs?
As you prepare for a year of uncertainty, there are a lot of strategies you can use to make sure your investments are still profitable despite the challenges. The key to weathering any downturn in the market is to control what you can control.
One area that investors and property owners often overlook in this regard is utilities. Regardless of economic conditions or the price of utilities, you can fully recover this cost with a sound utility billing system and strategy.
The problem is investors and property management teams have enough work on their plate. Adding utility billing to that workload simply isn’t feasible. But working with a utility billing expert can help.
The Benefits of Working with a Utility Billing Expert
Yes, working with an outside vendor is an added cost. However, if you’ve been charging a flat fee or including utilities in rent to your residents, then the added cost recovered from a RUBS or submetering system can help pay for those services … and then some.
Working with an expert utility billing provider can help you set up the system that’s right for your properties. Let’s dig into the benefits of working with an expert utility billing provider.
Benefit #1: Higher Collection Rates Thanks to Accurate and Timely Billing
Having a system in place that reads meters and bills residents accurately, first and foremost, makes your resident experience much better. Of course, nobody likes to receive a bill, but making that experience as easy and predictable as possible can help ensure that bill gets paid on time every time.
A utility billing expert can ensure your billing method follows best practices for generating defensible bills and sending them out at a predictable cadence with great customer service. The key is working with a provider that always asks, “What can I do to make sure this bill gets paid reliably on time?”
Benefit #2: Decrease in Utility Usage and the Ability to Track with Real-Time Metrics
A utility billing provider can give you access to a dashboard with real-time usage metrics and other key insights on utility usage. These insights can allow property managers to fully optimize their billing system and quickly detect when usage is spiking, indicating a possible problem.
Without that access, a leak in a large multifamily building can go undetected for months and end up costing you thousands. With real-time metrics, you can spot the spike, pinpoint the possible location and solve the problem before it gets out of hand.
In addition to resolving problems quicker, your residents can gain access to their usage metrics. With this information, they can feel empowered to lower their usage and lower their monthly bill when times are tough. This, in turn, helps lessen your master meter bill each month.
Benefit #3: Greater Cashflow Meaning Greater Flexibility for You
When the market slows down, steady cashflow becomes much more valuable. If you’ve never billed back utilities to your residents before, now you’ll have another line of cashflow each month. That extra cashflow can be the difference between profitability and taking losses. It also allows for greater flexibility month-to-month, should problems arise like unexpected repairs or an unexpected number of residents moving out.
Conclusion: A Utility Billing Partner Is a Wise Investment
In challenging market conditions, having secure, predictable investments is the key to weathering the storm and remaining profitable. Onboarding a utility billing expert can help you recover rising utility costs and ensure that your property investments remain profitable month to month.
If you’re looking for a better way to recover utility costs in 2023, then get in touch with Synergy. Our utility billing experts are on hand to help you better recover costs when you need it most.