Resident Utility Billing Reinvented: Simplified Ways to Get Paid Faster
Times they are a-changin’. Those are the famous lyrics sung by Bob Dylan back in the 60’s. But those words are very applicable to the present day, especially in the multifamily industry. New markets are exploding, resident satisfaction efforts are a bigger focus than ever before, and innovative technologies have sprung up that make doing business easier and more profitable.
One operational aspect that has undergone a major transformation is the way multifamily operators manage their properties’ utilities. The biggest change is that the majority of multifamily companies now bill their residents for their utility consumption. What used to be the norm– padding the price of rent to account for utilities, or charging residents a flat fee – is quickly becoming an outdated process. Directly billing residents for utility consumption lets property managers recover most of these costs and helps maintain a strong Net Operating Income (NOI).
Even though billing residents for utilities has been a “thing” for some time, there have been a number of technological advancements over the past few years that eliminate some of the traditional pain points. In fact, so much has changed over a relatively short period of time that some apartment operators may not even realize they are using outdated models. Because the new methods offer significant time savings and improve funding, you’ll likely want to implement some of these strategies at your properties. Let’s have a look at what’s changed.
Automation to the Rescue
Old process: Property managers had to manually retrieve and share bills with vendor
New process: PDF’s of bills are automatically emailed to your vendor
It used to be that property managers needed to download or copy their utility bills in order to share them with their billing vendor. That process could be a huge time suck for property managers, and if they didn’t complete it right away, it would prolong the billing process. Now, a secure automated data feed retrieves the bills for the vendor. Property managers don’t have to do anything on their end, which is great since that’s not the best use of their time. The new automated billing retrieval also decreases the risk for human error and shaves time off of the entire process, resulting in quicker resident billing and payback for the property.
Old process: Prebill review was a time-consuming, manual process
New process: Automated prebill review is speedier and more accurate
Before monthly bills are sent to residents, many property managers want to review them to make sure everything is accurate. In the past, details of each resident bill could only be reviewed in an Excel spreadsheet. That would require property managers to comb through countless rows of data before they could complete the review process. Any errors would have to be manually adjusted on the corresponding bill. Like most manual processes, it’s more time consuming and comes with a higher chance for errors. With automation, property managers receive their prebills via a simple automated file, which can quickly be reviewed and approved, without the need for manual reconciliation.
Old process: Property managers were forced to use a manual or flat file reconciliation
New process: Seamless reconciliation with your management software
Reconciling utility data with your accounting software used to be a headache thanks to the long list of manual processes it involved. Now, resident lists are automatically pulled in, billing is calculated (including consideration for move-ins and move-outs), property charges are added and the whole charge file is automatically uploaded into your accounting software. Not only does this bring significant time savings, the chance of data entry errors is significantly reduced.
Buttoning Up the Resident Experience
Old process: Residents receive separate statements for their utility charges
New process: All charges are consolidated into one statement
In the past, if you used a billing provider to recover utility expenses, a statement would be sent to residents that only had their utility charges on it. Now, billing providers have the capability to add other line items to resident statements, like rent, and any ancillary charges. This eliminates the number of statements your resident receives and makes it easier for residents to understand what they owe. Plus, it lets them pay their entire balance at once so they don’t have to make multiple transactions.
Old process: Residents got a statement from a third-party billing provider
New process: The bill residents receive comes from your property management company
Imagine you are a renter for a moment. If you owe your property management company money, you’d expect the bill to come directly from them, right? That’s not how it worked in the past. Your billing provider would send residents a statement with their utility charges, but oftentimes, there would be no mention of their property management company. This would cause confusion for residents who were not sure they were receiving a legitimate bill. Nowadays, residents receive their statement directly from the management company. This ensures residents open, review, and more importantly, pay their bill.
Improving Cash Flow
Old Process: Property management companies wouldn’t be reimbursed for resident utility expenses until several months after the billing cycle
New Process: Residents pay their property management company directly, cutting the time it takes for you to get paid
Using legacy billing models, the vendor collects the utility payment on your behalf and then pays you back. Not only is this process inefficient, it creates a long lag in the time it takes for your property management company to be paid. Modern billing models are configured so the resident pays their management company directly. These payments are often made through your resident portal. This is not only convenient for the resident, but it significantly speeds up the funding time for the property management company.
Old Process: Collection efforts are handled by the billing provider with minimal success
New Process: Incomplete or delinquent payments are minimized when residents are on the hook with their property management company
In the past, if a resident didn’t pay their utility charges in full or on time, the only recourse was the collection effort of your billing provider. In the interim, the provider would charge late fees that are not given to the property management company. That isn’t enough motivation for some residents to pay, and ultimately, the property management company was out that money.
When residents pay their management company directly, the stakes are much higher for them to pay in-full and on time. If someone does not pay in full, you have the ability to follow up with them directly and assess penalties if/when needed.
Now that you know the latest utility billing innovations, can you say if any of these new processes are in use at your properties? If you have questions about how to implement any of these new technologies, contact us and we’ll walk you through what it takes.
In the meantime, for more detailed information about the financial impacts of using modern billing methods, download our white paper, Driving Productivity and NOI at Multifamily Properties.
Keep Reading! We’ve handpicked a few more articles you might be interested in:
Out of the Box Ideas for Increasing NOI at Multifamily Properties
Tidying Up for Property Managers: How to KonMari Your Property Operations
Utility Theft at Multifamily Properties: What is it and How Can You Stop it?