How Vendor Billing Errors Cut into Your Bottom Line
Companies struggling to save money should take a look at your monthly bills. Whether you’re overpaying for your services, missing out on tax exemption opportunities or incurring accidental late fees, fixed cost bills can quietly drain your financial resources without you even noticing.
Businesses with multiple operational facilities experience frequent billing errors–with staff members stretched thin, it’s difficult to keep track of invoices. Over time, inaccurate monthly bills end up being extremely costly, with billing errors in telecom alone costing businesses upwards of 12-20% of over-spending per month.
Are you concerned monthly billing errors are cutting into your bottom line? We’ve compiled a list of some of the most common–and some of the most outrageous–vendor billing errors we’ve seen.
6 Common Vendor Billing Errors with Outrageous Examples
1. Meter Reading Errors
Meter reading errors are one of the most common causes for inaccurate monthly utility bills. Whether it’s human error or a glitch in the system, inflated meter readings may end up costing your business hundreds, or even thousands, of dollars per month.
Additionally, some businesses with multiple properties might be paying for too many meters. According to Cost Control Associates , “We have seen many examples where organizations are paying for electric meters not tied to their facilities. For multi-site organizations, it may be nearly impossible to ensure you are paying for only your meters.” Since utility companies are still getting paid for their services, they may not be concerned with where the payments come from.
2. Tax Exemption Errors
Many businesses don’t realize that they qualify for certain tax exemptions. It’s common for businesses such as grocery stores—that are technically exempt from paying sales tax on supplies—to unwittingly pay sales tax on their inventory. Over time these small tax payments add up and hurt your return on investments.
This happened to one of our clients who was charged sales tax, even though it is a credit union that is by definition exempt from those taxes.
3. Contractual Errors
When a business enters into a service agreement with a power company, telecom provider or waste management facility, it is beholden to the terms of the contract. Unfortunately contracts with non-regulated power companies can contain errors and false information, resulting in inaccurate monthly charges and inconsistent rates. Or your company might be unintentionally paying a rate that’s well above market average without realizing it. Research average market rates to see how your expenses stack up.
A linen vendor was charging one of our clients for annual increases of almost 30% for years before we came in to review their expenses–even though their contract specified a cap of 8 percent! With some negotiation, SIB was able to get this contract back on track.
4. Utility Rate Errors
Power companies usually offer clients several different billing structures depending on their budget, operational requirements and size. Although some companies might use the same billing rate for decades, most businesses outgrow their initial billing structure. They are usually better served with a different plan.
One of the most egregious examples we caught was for a national big box retailer with an exceptionally high water bill at one location. As it turned out, they were being billed for the water used by the entire shopping center!
5. Late Fee Errors
Beware of unintended late fees! Utility companies with unusual billing cycles or delayed online payment systems might ding you monthly with an unforeseen late fee. Glance back at previous bills to see if there are frequent unexplained late fees. Then double check your payment history and billing cycle to discern the cause of those errors.
6. Overbilling Errors
For non-utility expenses such as laundry, cleaning or inventory supply services, watch out for accidental “upgrades.” If your restaurant only needs to pay for basic table linens, be sure you are not accidentally paying for luxury linens at twice the cost. This expense can sneak by unnoticed, damaging your bottom line.
An Invoice Audit Can Save Your Business Money
Instead of sifting through piles of paperwork and service policies on your own, hire a utility bill management expert to audit your overall expense and reduce costs. Utility auditors conduct a thorough review of all your monthly expenses from gas to electricity to internet and cell phones. Research your billing history to identify discrepancies.
Invoice auditors find billing errors and provide effective solutions for your business. They conduct interviews with service companies and investigate market rates in order to discern whether or not your current payment structure aligns with industry norms.
Once an auditor finishes his investigation, he’ll provide your business with insights on how to reduce your monthly bills, eliminate false fees and charges and navigate future contracts.
SIB offers professional cost reduction services aimed at reducing your monthly bills. We analyze your company’s utility bills for an in-depth report on spending and offer creative savings solutions. We work with you and your vendors to ensure that you receiving excellent services at the best rates possible, usually without changing vendors.
Improve your bottom line by eliminating unnecessary expenses with a closer look at your usage and payment record.