Don't Mis-Manage Utility Transitions
- How we helped one Fortune 500 retailer to avoid an estimated $6.75 million in lost revenues.
- Five reasons to consider optimizing your approach to the utility open and close process.
For rapidly evolving companies that are opening and or closing multiple locations every month or even every week, a utility management process for setting up (or shutting off) utilities rarely tops the list of things executives are concerned about the most. But, maybe it should.
Obviously, companies can’t operate without power, telecommunications, and the rest of their utility services. So, getting everything turned on at the right time is critical. Nevertheless, busy executives often tend to underestimate or overlook the financial ramifications of utility delays or shutoffs, despite the fact that these events can quickly add up to millions of dollars in missed opportunities, waste, and inefficiencies, especially for companies growing at a rapid clip.
Now, with high inflation making every dollar count even more, it’s the ideal time to take a closer look at the true costs involved in mismanaged utility account set up and shut off. Here are the top five reasons to consider optimizing your approach to the utility open and close process.
Ensure ongoing operations and avoid missed revenue opportunities.
When transitioning account ownership following the construction of a new facility or the acquisition of an existing facility, it’s not uncommon for companies to miss utility account transition deadlines. Even when ownership of the account is transitioned from the construction company or previous owner, utility bills can get lost in the shuffle or never properly set up in the new owners’ accounting system, leading to missed payments.
When this happens, utilities are not turned on in time, delaying location openings. Or they are shut off unexpectedly, causing locations to temporarily close. Both events can frustrate customers and damage brand reputation. Worse, they lead to major missed revenue opportunities compounded by the fact that companies still have to pay employee salaries even though no work is actually getting done.
The costs can add up fast, especially when problems are happening across multiple locations. SIB helped one Fortune 500 discount retailer opening more than 1,000 locations per year avoid an estimated $6.75 million in lost revenues by taking charge of the utilities initialization and transfer process and preventing utility-related store opening delays in locations across the country.
Prevent product/inventory loss.
A more direct cost associated with utility shutoffs that companies often don’t recognize until it’s too late is the loss of any product that needs to be kept in controlled environment, such as perishable refrigerated food items. Product like this can go only so long without power for cooling. When utilities are shut off unexpectedly, companies rarely have options in place to protect this type of inventory. Depending on the type of business, companies risk losing tens of thousands of dollars or more in product if utilities are not restored within a few hours.
Redeploy employees to more productive work.
While utilities might not be top-of-mind for executives, somebody has to handle getting them turned on or off. With four to five different services per site, and the inherently manual and inefficient processes involved in establishing or closing accounts, that’s a lot of time multiple employees are spending on initial calls and multiple follow up calls—much of it waiting on hold—that could be put to much better use.
Avoid costly mistakes and inconsistencies.
Opening and closing utility accounts is notoriously error-prone work. The various people engaged in the process rarely have access to centralized information and often use different tax IDs, phone numbers, emails, and service addresses to establish accounts. This paves the way for invoicing issues, missed bills, and, ultimately, shutoffs down the road while also making ongoing account management even more challenging and time consuming.
Save money on deposits and ongoing billing. Nine times out of 10, companies can avoid or reduce costly utility deposits. But most employees doing the work are unaware that opportunities to save money even exist. Or they lack the time, negotiating expertise, or insider knowledge into the utilities industries to secure pricing concessions or better terms and conditions over the lives of their contracts. Even when employees successfully negotiate competitive rates or discounts, there is rarely time to follow up or audit bills to ensure the savings are applied.
Utility bills are notorious for errors, and they are almost always in the utility’s favor, not the company’s. Companies also stand to lose money on account closings if final bills are inaccurate or deposits are not fully secured in a timely manner. Again, the problem typically comes down to lack of time and resources to double check every detail. And when companies are managing thousands of vendors and accounts, the costs of missed savings can escalate quickly.
Utility experts can help you optimize more efficiently and capture more savings.
On the surface, opening and closing utility accounts can feel like a minor item in the laundry list of to-dos associated with opening and closing hundreds or thousands of locations. But the work consumes considerable resources, and the costs of managing (or mismanaging) accounts can add up fast, especially for companies experiencing rapid growth or changes.
Whether your company is tired of paying the high price of delayed openings, unexpected shutdowns, or wasted inventory, or you simply don’t have the people to dedicate to the time-consuming work of opening and closing hundreds of utility accounts, now may be the right time to consider outsourcing this work. Partnering with utility experts introduces efficiencies, processes, expertise, connections, and technologies that streamline workflows and allow the tasks to get done faster and with greater accuracy, typically at a lower total cost. And it can save millions of dollars by ensuring openings happen on schedule and preventing shutoffs that halt operations and lead to wasted products. When companies do the math, they find that outsourcing pays for itself many times over while opening the door to additional opportunities to spend smarter and rein in costs across all aspects of their utilities spend.