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Why multifamily firms are outsourcing resident utility billing

Learn the advantages of outsourcing resident utility billing for multifamily operations.

People have a tendency to be lax with spending when someone else is picking up the tab. When it comes to utility usage in multifamily communities, the same concept applies.

Not billing residents for their utility consumption, or including it in the price of rent, leads to higher usage. And of course, that means you’re paying higher utility expenses. It’s been proven. A survey conducted by Fannie Mae found that when owners paid for all energy costs, the median annual energy use was 26% higher than when residents were responsible for paying the energy costs.

In-house multifamily utility resident billing is tedious

Charging residents for their utility consumption is arguably the most important component of a successful utility management solution. But, it’s not the easiest process to do in-house. For one, understanding the applicable state and local regulations is confusing. And it’s tedious for your staff to determine what each unit owes and produce invoices that detail those charges.

Take a look at the most important parts of the process. If you are performing resident utility billing in-house, you’ll need someone to handle the following tasks:

  • Understand and stay on top of utility billing regulations
  • Perform submeter readings (if applicable)
  • Calculate monthly charges
  • Prepare and deliver comprehensive resident statements
  • Track resident utility payments

Over 50% of multifamily firms are outsourcing resident utility billing

Luckily, there’s a way to avoid the headaches associated with the billing process and still recover utility charges from residents. By outsourcing this high-value task to a utility resident billing partner, property management companies save time, stay in compliance with all regulations, and gain valuable insight about usage within their communities.

The benefits of outsourcing resident utility billing are so plentiful that it’s becoming a popular trend among multifamily companies. A 2017 survey conducted for Zego (Powered by PayLease) found that of multifamily companies who bill residents for utilities, 53% choose to outsource the process.

What multifamily companies gain from outsourcing utility resident billing

Utility resident billing partners make sure that the cost recovery process is a seamless experience for both residents and apartment operators. If you are considering outsourcing the process, here are the advantages.

Time savings from outsourcing utility billing for residents

From start to finish, the process of billing residents for utilities is particularly time-consuming. Because there are so many complicated steps involved, it can be overwhelming for some companies. This is especially true if you have limited staff resources. A utility resident billing partner runs point on everything involved in the process. Because they are experts in resident utility billing, the process is smoother and keeps your team from being overwhelmed by the task.

Accurate and easy-to-understand resident statements

Your billing partner takes on the responsibility of determining what each resident owes. Some companies find this to be the biggest relief of having a resident utility billing partner. Depending on your circumstances, they will perform RUBS calculations or take reads from your submeters.

Once they determine the charges for each unit, they generate individual statements. Each statement will include your residents’ rent, utility charges, and any other applicable monthly fees (trash, parking, pet rent, etc). Each line item is clearly labeled, giving residents complete insight into their monthly charges.

Complete and on-time resident utility and rent payments

This is one of the biggest advantages of using a resident utility billing partner. Because residents receive one consolidated statement for all their charges, they pay everything at once. This saves your staff from collecting multiple payments throughout the month. It also benefits cash flow because residents pay for everything when their rent is normally due.

The ultimate guide to utility management for property managers

Proven tactics to lower utility usage, recover costs, and curb spending at multifamily properties.

Peace of mind about regulatory compliance

It’s extremely important to follow all the state and local regulations about utility billing. But, the regulations change frequently. If you aren’t regularly paying attention to regulatory laws, it’s easy to fall out of compliance. Resident utility billing partners have a dedicated team of regulatory experts who actively monitor these laws. When you begin your utility management program, they’ll advise you of the billing structure you need to adhere to. And if there are regulatory updates, they inform you right away so you can act accordingly.

Resident and staff support

From time to time, residents will have questions about their utility charges. Or they might need assistance making a payment. Instead of taking up their community manager’s time, your resident utility billing partner can help. Most offer 24/7 assistance dedicated to helping residents. Help isn’t limited to residents, either. Resident utility billing partners also offer comprehensive support for community staff too.

Better visibility into utility data

A billing partner will regularly provide business intelligence tools about utility usage, recoupment rates, trends, and potential leaks. This is a big deal. When you have this data in a clear and easy-to-understand format, you can use the information in many ways. For instance, you can discover and fix any anomalies that require maintenance. It also helps you benchmark your portfolio’s utility performance so install retrofits, or qualify for green loans.

Scale and specialization

Resident billing partners have the benefits of scale and specialization. No matter the size of your organization, you can expect fewer errors and a lower overall cost per bill.

Ability to bill service fees to residents

In some states, you are able to bill the vendor cost back to the resident as a service fee. This offsets any vendor fees, meaning the program pays for itself. Being able to fully recover resident utility charges without the hassle (or any out of pocket expenses) is worth its weight in gold to many property management companies!

More utility management strategies for multifamily property managers

If you’re looking for more advice about resident utility billing – either in-house or outsourced- check out our eBook, The ultimate guide to utility management for property managers. We offer step-by-step guidance on all aspects of a multifamily utility management strategy, including resident utility billing.

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