September 7, 2023
Picking a Utility Billing Company: 5 Factors to Consider
Outsourcing utility billing to an RBC can save property owners and managers time and labor, increasing cost recovery and bottom line. But you only benefit if you work with an experienced, reputable billing and submetering company. In this post, we’ll cover five factors you should think about before picking a utility billing company.
Why Multifamily Property Owners Outsource Utility Billing
For many property owners and managers, the time and effort involved in managing utility costs in-house can quickly start to feel like a second job. The responsibilities are big:
- Gather information for monthly billing, including utility bills and meter reads
- Verify the data
- Gather utility rates
- Assemble the verified utility to create bills
- Run bills through different billing methods, sometimes with multiple methods on the same property
- Add bills to your property management software
- Generate paper invoices
- Send paper invoices
- Field resident questions
- And finally, collect payments
- (Except when people don’t pay their bills, in which case you have to monitor delinquent accounts and assess late fees)
If this looks familiar, don’t panic – you’re not alone.
Most property owners and managers don’t have time to do utility billing on top of their day-to-day functions. That’s where a quality read, bill and collect (RBC) company – one that offers utility submetering or RUBS billing services along with solid customer support – can step in. What’s the upside? With the right partner, you can increase NOI, average tenant stay and cost recovery while potentially reducing utility usage and costs.
However not all outsourced utility billing companies offer the same services and solutions. This means if you pick the wrong utility billing company – one that can’t meet your service level needs – you’ll end up replacing one headache with an even bigger one. So, let’s take a look at five factors that can help you choose.
5 Factors in Picking a Utility Billing Company
Factor #1: Flexible Billing Methods
Every property is unique in design and the way it’s built. Because of this, the utility billing needs to be flexible enough to meet the needs and limitations of the property.
For example, many properties only have one utility that can be submetered, while the other utilities, logistically, cannot. In this case, the property would require multiple billing methods, such as submetering for electricity and RUBS for gas and water. Sometimes, it’s even necessary to use more than one billing method for one utility. To manage this complexity, you’d need a system to track different billing methods to ensure things are being deployed correctly.
To get accurate reads and utility bills, you’ll need a solution that can address complex situations with flexibility. If you’re thinking about outsourcing your utility billing, look for a provider that can give you the billing options you need rather than a one-size-fits-all solution.
Factor #2: Analytics & Monitoring
Many companies offer services that cover the auditing and bench-marking of bills. For example, they might compare your building’s performance to similar properties throughout the country to find ways to reduce the bill.
While this is a different service than utility billing, there is an advantage to working with an RBC that can provide billing analytics. Some utility billing companies will even check for consistent percentages and compare last year’s billing period to the current bill. They do so to confirm the property is performing over time.
It’s easier to analyze discrepancies, solve problems and catch errors if someone is monitoring the performance of your property. It also keeps expenses under control which is vital to increasing NOI.
Factor #3: Utility Consulting & System Design
The priority of utility billing is to figure out how to create a charge that residents will pay. This requires front-end consulting to make sure the solution being deployed results in a payable bill. There are a lot of decisions to be made during the consulting process, including, but not limited to:
- What billing methods are appropriate for the property?
- Should submeters be installed indoors or outdoors?
- What spread factor should be used to divide RUBS bills with uneven occupancy counts?
The decisions made here will determine the long-term success of your utility billing.
Because of this, it’s critical to have a utility billing company that will work with the property to ensure they’re billing a payable and accurate charge. For example, the point of RUBS is not to divide up a $10,000 bill and put it on an invoice. If the bill is unjustified, the tenant might not pay it or leave the property.
By working with a provider that starts with consulting, the utility billing becomes an asset to improve NOI, not a way to chase out tenants.
Factor #4: Full-Service Installation & Maintenance
Utility billing installation and ongoing maintenance range from fairly straightforward to highly complex. A billing method like RUBS – which relies on software – can be set up in a week or less. On the other hand, submetering takes more time because the provider needs to physically install the submeters.
However, the quality of installation can differ from vendor to vendor. It all depends on which methods the utility billing company uses. A submeter solution installed poorly and using low-quality parts will provide lackluster performance. This can lead to lost collections and reduced efficiency.
To get the most out of your utility billing solution, look for a provider that nails three key factors:
The first is the use of certified field services technicians for submeter installation. Many companies send the meters to plumbers to install. But plumbers are not trained to install submeters for optimized reads. Certified technicians who specialize in this type of install can ensure you get consistent reads for years.
When it comes to submetering, cutting upfront costs on equipment will cost more in the long run. If you use cheap submeter equipment and it breaks, you could miss three months of reads and, consequently, collections. High-quality equipment provides longevity and consistent reads.
The third factor to consider is ongoing maintenance. Submeters are sturdy and long-lasting, but, like any equipment, they require upkeep to maintain a certain level of performance. Because of this, proactive maintenance is critical to ensuring your submetering system lasts its full lifecycle.
Factor #5: High Cost Recovery
There is a whole industry dedicated to utility collection, with the aim of increasing cost recovery on utility bills. However most problems that impair cost recovery occur earlier in the utility billing process before the bill is even sent.
The resident billing experience is critical. For instance, residents are less likely to pay a bill they think is inaccurate or unfair. This is also true if they don’t understand why they’re being billed a certain way.
Alternatively, residents are more likely to pay a bill if it’s accurate and if the people billing them can explain how it’s calculated. When utility bills are accurate and easy to understand, delinquencies go down, and cost recovery goes up.
You can take care of 80% of collection issues and recovery on the front end by deploying submetering and RUBS solutions that provide accurate reads and fair expense allocation.
Conclusion: Pick the Right Utility Billing Company
More property owners and managers are turning to RBCs to manage their utility bills. But to get the benefits, you’ll need to partner with a provider that offers flexibility, insights, effective installation and great service. Onboarding the right utility billing provider can take utility billing completely off your plate while allowing you to scale your operations in the future.