If you own or manage multi-family residential units (apartments, condominiums, student housing, affordable housing, manufactured homes, or military housing), you are probably involved in utility billing in some way. Utility expenses for these types of properties can be substantial, which is why most homeowners are looking for effective ways to manage these costs.
The Master Utility Meter Dilemma
It is very common for multi-residential and multi-tenant commercial properties to be “master measures”. Master metered properties receive a single utility bill that includes utility usage for multiple tenants. The problem with master metered properties is that there is no way to bill residents for their actual individual usage.
This situation has led landlords to use a variety of methods to split the utility bill so that they have a means of recovering their share of the total utility bill from the tenants. In fact, transitioning a multifamily complex from owner-paid utilities to resident-paid utilities can be one of the fastest ways to increase net operating income (NOI).
Resident utility billing is handled in two ways: internally by property owners and managers or externally by a third party utility billing service provider.
While there may be advantages to managing utility billing “in-house,” billing companies have invested heavily in software tools and technologies to streamline billing so that it is an efficient and well-supported process. Utility billing is definitely a task that can be easily outsourced, saving owners and managers a significant amount of time and effort.
Utility Billing Service Options
The basic set of services offered by utility billing providers includes:
- Calculation, printing and delivery of resident bills
- Utility Payment Processing
- Presentation and payment of electronic invoices.
- Accounting/property management software integration
- Administration of delinquency and collections.
Billing companies also offer other services, such as converged billing, vacant cost recovery, and utility expense management.
Because multi-family owners have a wide range of requirements and billing companies offer a diverse set of services, it is often the case that a specific billing provider will be better suited to manage your portfolio. Therefore, it is important to clearly outline your requirements so that they can serve as a guide during your evaluation process.
Common challenges in utility billing
Understanding the most common issues plaguing the utility billing industry will help you select a provider you’ll be happy with. A list of issues that cause the most frustration and unnecessary work for property owners and managers includes:
- Inaccurate and late resident bills
- Customer service unresponsive to residents and management
- Manual data entry.
The quickest way to irritate tenants and generate a high volume of calls to the leasing office is to bill the wrong residents, miscalculate them, or deliver them late. Inaccurate bills undermine residents’ confidence in the billing process and lead to vocal complaints, sometimes to the utility commission. And late bills create difficulties for residents because they result in a shorter time to pay. Utility billing works best when it is managed consistently, reliably, and professionally.
Poor customer service, such as unanswered or returned phone calls and emails, or untrained call center staff providing incorrect information, is sure to draw criticism from tenants. Prompt, friendly and responsive service is the key to a successful resident utility billing program.
Utility billing generates a substantial amount of data that must be integrated into property management and/or accounting systems. If the only option available to staff members is to manually enter this data, the process can be time consuming, labor intensive and error prone. This is a key area to address when selecting a billing provider.
Asking a potential provider the following questions will help you make a thorough assessment and choose the utility billing company that best suits your needs.
billing services
- What types of billing does the company manage: submeter, RUBS, flat rate, etc.?
- What billing services are offered: convergent billing, electronic billing, vacant cost recovery, payment processing, etc.? [Which services do you require?]
- What type of electronic payment options are available, eg electronic check, credit card, ACH, auto pay, etc.?
- What are the costs associated with online payments? [It’s common for online transaction processing companies to charge a service fee of 3-4% for credit and debit card transactions.]
- What is the process the provider follows to ensure accurate utility bills? [Vendors should incorporate a data analysis and audit process to ensure that billing data is accurate.]
- How and when are utility bills estimated? [Some states have strict rules about when and if bills can be estimated.]
- If inaccurate or late bills are sent to residents, what recourse does the owner/property manager have?
- Describe the performance guarantees offered. [Many billing companies offer refunds or pay financial penalties if they are the cause of an inaccurate or late billing.]
- If the company has a performance guarantee program, what is its history over the last 1-2 years?
Customer service
- How does the business provide customer service to residents and management? [If the company provides a customer support line, ask for the phone number, call in and see what kind of response you get.]
- What is the typical turnaround time for a resident or staff member to receive a response to an inquiry? [Expect response times in the 1-2 hour range.]
- How are customer service representatives trained?
- Does the company track performance metrics related to its customer service department?
- What is the trajectory of the company in recent years?
- What is the issue escalation process for more difficult issues? [Depending on the type of problem, you want to confirm that staff members at the executive management level are available if needed.]
Integration of account and billing data
- How is input/output data exchanged? [The data exchange process should be highly automated and require very little manual data entry.]
- How is converged billing data transferred? [Rent, cable, Internet, trash and other fees can be added to utility bills to encourage timely payment.]
- What is the process for synchronizing billing and payment data with your accounting or property management system?
Legal and Regulatorythere
- Does the company understand the legal and regulatory issues related to your state, county and city? [Essentially you need to confirm that it is legal to bill for utilities using the method of your choice in your area.]
- How does the company help with legal compliance?
- Will the company review your lease?
- What type of billing contract is used?
- If the billing company does not perform satisfactorily, what options are available to terminate the contract?
Reporting capabilities
- What reporting information is provided to management? [Review sample management reports to ensure that the information you require is included and is easy to understand.]
- Can reports be accessed online? [It can save staff members a lot of time if the vendor offers a management portal or other web-based interface for viewing and printing management reports.]
- Can the reports be customized for your portfolio? What are the fees associated with customizations?
Sub metering services
- What submetering installation and repair services are offered? [If your property is submetered, working with a billing company that offers submetering installation and repair services can be advantageous because these systems require routine maintenance.]
- How are repairs scheduled and managed?
- What analysis is performed on usage data to detect leaks, meter problems, or potential maintenance issues?
other
- How are master meter bills handled?
- How are final utility (move-in) bills created for residents?
Summary
Developing a clear set of your own requirements and asking potential utility billing service providers these questions will help you in your evaluation process and ensure that the company you select can meet your expectations. Utility billing should be a very seamless process that requires minimal time and effort from your staff. You should also maximize the amount of money you can legally collect with a utility cost recovery program. The best utility billing companies are responsive, flexible, and committed to serving all stakeholders.