June 23, 2023
4 Steps to Ensure a Successful Utility Billing Audit
It’s critical to regularly audit your utility billing system to ensure it’s helping you recover as much utility cost as possible. Here’s how to conduct a complete utility billing system audit.
A utility billing system audit is a vital step in the due diligence process before purchasing new property, but it shouldn’t stop there. This is an ongoing effort to make sure everything works as it should.
Metering hardware breaks. Leaks can go undetected for months. A RUBS formula may need to be adjusted as the building utility usage evolves over time. Other things can go wrong with a utility billing system, like inaccurate bill calculations and low or inconsistent cost recovery.
Because of these reasons, it’s always good practice to audit and optimize your utility billing system over time. Here are the basic steps to take when looking into the performance of your utility billing system.
Step #1: Review the Bills from the Utility Company
The first step in any utility billing system audit is to make sure your multifamily building is getting billed for the right amount each month.
Check your billed amount against the amount used and the billing rate at the time to see if there are any discrepancies. If you notice any, you should contact your utility company to resolve the issue.
Step #2: Check Your Metering Hardware or RUBS Formula
Next, you should check your master meter and all submeters to make sure they are in working order.
Make sure all submeters are getting a full and accurate read and transmitting that data correctly into your system.
If you use a RUBS formula, you should check to see if that formula is still the best way to approximate usage from month to month. If you notice growing discrepancies between what you’re billed and what you recovered with that formula, it could mean it’s time to revisit.
If you see room for improvement in your RUBS formula, try testing new billing factors like billing by bedroom count, by person or by square footage.
Step #3: Look at Your Analytics
The next thing is to check your utility analytics.
See how much of each utility the building is using each month. Keep track of trends and look at the change from year to year and month to month.
If you see usage spiking when it shouldn’t be or any other concerning trends, try to pinpoint the cause. It could be something as damaging as an undetected leak.
Also, if you keep track of your utility analytics and take steps to curb usage, you may be able to take advantage of any conservation incentives from your local municipality.
Step #4: Review Your Resident Billing Procedures
Finally, you should check in on your billing process to make sure you’re doing enough to make your utility bills as easy as possible to pay.
Of course, nobody ever wants to pay a bill. However, there are best practices for sending bills you can follow to ensure your residents pay their utility bills on time and in full all the time. Here are the main best practices to follow:
- Create fair and defensible bills with all usage noted and utilities itemized.
- Send bills to residents at a consistent and predictable cadence, so they know when to expect the bill each month.
- Create a positive tenant experience by giving them access to a variety of payment options and customer service.
The Benefits of Regular Utility Billing System Audits
If you’ve never done a full utility billing system audit, then this process will create extra work for your team. However, it doesn’t come without its benefits. In fact, you can save a lot of money each month by acting on the things you might find in the auditing process.
Ultimately, auditing your utility billing system can help you:
- Find costly problems like undetected leaks.
- Uncover ways to reduce utility expenses by reducing usage in common areas or incentivizing your residents to use less.
- Detect where your billing system infrastructure needs to be upgraded.
- Find ways you can conserve.
Should I Outsource a Utility Billing Audit?
While you and your team are more than capable of auditing your utility billing system, it will take time away from other critical tasks like monitoring rent, conducting showings and coordinating maintenance staff.
The good news is there are professional services out there that can take that burden off your team. A utility billing company can perform system audits to find new ways to improve cost recovery and fully optimize your system.
Take the time to find a utility billing firm that takes a consultative approach to fully optimizing your utility cost recovery and improving your net operating income (NOI).
Conclusion: Audit Your Utility Billing System
Cost recovery in utility billing requires constant vigilance. Auditing your entire system is essential to recovering utility costs each month so your property continues to be profitable.
If you and your team don’t have the bandwidth, consider working with a utility billing expert like Synergy. We take a unique approach to ensure your utility billing system is fully optimized and recovering every bit of your utility costs.
Get in touch with Synergy to see how we can improve your utility billing system and cost recovery.