What is Utility Expense Management and Why Do I Care?
If you are a Property Manager, you have a lot on your plate. You are worried about finding new residents, the behavior of your current residents, insurance, repairs, evictions, finances – the list is long. So you probably don’t have the bandwidth to worry about Utility Expense Management. And what is it anyway?
Really, it’s all about money. And having more of it hit your bottom line.
A good Utility Expense Management program can help you (1) save money that you are spending today, (2) make money that you aren’t today, (3) recoup money, meaning have someone else pay for something that you are covering today, and (4) save resources, which means they can focus on making more money. Allow me to explain.
Utility providers are an interesting beast, bound by all kinds of weird regulations and governing bodies from state governments to small municipalities. As a result, some utilities have strange payment cycles – often far shorter than your typical 30 days – and they are not shy about tacking on late fees. For some Property Managers, their processes don’t allow for the bills to be opened, analyzed, processed with a check request, cutting and mailing the check before the bill is already late. It’s insane! You can almost instantly save money by working with a utility expense management provider who tracks and manages all due dates and ensures that bills are paid on time.
What about errors? Utility providers are also notorious for having errors in their billing programs. It can be extremely difficult for a lone Property Manager to know what to look for to adequately audit a utility bill. Again, this is where a utility expense management provider can help. We know what to look for and we have automated programs to detect variances from one bill to the next. Finding and resolving a single error can fund your entire utility expense management program.
Did you know that you can charge residents for failing to handle their utilities correctly? This can create a new revenue stream – albeit small – that doesn’t exist today. What does it mean to ‘fail to handle their utilities’? Read on….
When a unit becomes vacant, many property managers have a ‘continuous service’ stipulation in their utility agreement, also referred to as Revert to Owner (RTO), that move the utility bill from the departing resident’s name into the Property Manager’s name. How do you know if those utilities are then moved into the new resident’s name in a timely fashion? Without a strong provider, you probably don’t. Vacant Unit Recovery is a well-scripted process that reviews utility bills in the property manager’s name and compares them to your resident file looking specifically at move-in dates. When a discrepancy is found, we can not only produce a bill for the resident for the charges that they incurred, but we can also tack on a penalty for failing to move the utilities into their name in a timely fashion – hence, the Make Money item above.
If you don’t have a utility expense management provider, someone in-house is paying those bills today. Think about the amazing work that those resources could do if they had more time in their day. Outsourcing your A/P may seem like a scary prospect, but it is really about freeing up your talented and knowledgeable resources to work on things that add value to the business. Let your utility expense management provider take care of the logistics of invoice processing, so you and your team can improve your property and your resident experience to grow your business.
At the end of the day, we all want to make more money. Why not partner with someone who can add dollars to your bottom line in not 1 or 2 or 3 ways – but in 4 different ways? That is worth exploring!