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Outsourcing Utility Billing: 3 Questions to Ask

image to showcase symbolism of outsourcing utility billing for multifamily

Hiring a third-party to handle your multifamily utility billing and expense management is a common practice in property management – after all, utilities are typically the single biggest variable monthly expense for a property. And this expense can be a lot to manage internally. This results in many property managers and owners moving to outsourcing utility billing altogether.

If you’re considering doing this for the first time, or switching outsourced partners, you need to be able to make a smart decision. And that starts with asking the right questions.

When considering outsourcing your utility billing, ask yourself:

  1. Can I afford outsourcing my utility billing?
  2. Will working with a utility billing partner affect my tenants’ renting experience?
  3. Are we complying with utility billing laws?

While these are top-level questions, it’s critical that we dig a bit deeper to help you manage this decision.

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1 ) Can I Afford Outsourcing Utility Billing?

When making financial decisions, it’s important to weigh the cost of the decision against the return you expect to see on your investment. If you’re currently handling utility billing or utility expense management on your own, it may seem counterintuitive to bring in a third-party.

However, consider the potential savings and benefits that outsourcing brings. This moves the question from, “Can I afford it?” to “How can I afford not to?”

If you’re new to outsourced utility billing it’s important to know that there are typically no additional costs to the property to implement this service.

Here’s how it works: A third party billing company usually charges the resident a monthly fee for the service.  This fee covers the cost of managing and processing the bills, plus customer service and support to both the property and residents.

Sourcing of savings include:

  • Save time and/or human resource costs by allowing you to shift billing tasks away from your team
  • Save on added costs that your property may have to absorb resulting from miscalculation of tenant bills

In a nutshell, outsourcing your billing can help reduce the costs of running your property by taking time-consuming and complex tasks off your plate and making sure billing is done accurately.

Are you paying more than you should?

We often see situations where properties were paying far more than they should. This is largely due to their team being short on time and/or expertise that results in the bills not being monitored as closely as they wanted to. And that’s understandable!

Running a successful leasing office requires property managers and leasing staff to have many other things on their plate, and juggling all of that can be a struggle.

An outsourced partner can do the monthly work by gathering the various utility bills, keep their eye on the utility rates, validate the bill charges each month. They can also alert you if something goes awry – potentially saving you in the long run!

2) How Will This Impact Tenants?

Like the rest of us, tenants don’t love paying bills. However, they’ll be much happier if their utility bill is accurate. For example, they don’t want to be (and shouldn’t be!) charged for things like a water main leak in the lower level of your building.

Residents have a right to understand their utility bills.

Often times, residents will become unhappy if they feel there has been an error, or they simply don’t understand the bill.  This is where the third-party biller can step in and explain the issue and frankly, take the heat for the bill.

This distances your leasing office from utilities. Plus, it protects your team from having to explain an expense based on a resident consumption or a rate or regulatory change.

If a tenant notices errors in the calculation of their utility expenses or higher than normal costs that don’t seem to add up to their usage, they can become rightfully unhappy and eventually hold this against the property.

Why not position your leasing managers to have strong, positive relationships with tenants rather than addressing billing questions?

Residents find this valuable

Outsourcing your apartment utility billing often improves the resident experience in a number of ways.

  1. Accuracy of utility bills: Working with a utility billing partner can address the worry that billing is inaccurate since a knowledgeable and experienced team will handle billing for your multifamily utilities.
  2. Built-in customer service support: In addition to accurate billing done by professionals, outsourcing also comes with the added benefit of customer service support. If tenants do notice issues with their utility bill, or even if they just have questions, your utility billing partner can take those questions—taking the burden off of your team to research solutions and provide answers.
  3. Better budgeting and planning: Outsourcing can also mean that tenants receive their bill at the same time each month, allowing them to better plan their finances and pay what they owe. This is particularly important if billing is handled in-house and staff may be short on time or resources to deliver bills to residents on time. This can make it harder for tenants to budget their expenses or even pay their bill when it’s due.

3 ) Are We Complying with Utility Billing Laws?

If you’ve handled your utility billing over the years, then you’ve probably done your research on the laws that relate to billing practices.

For instance, you may live in a state that doesn’t allow ratio utility billing service or RUBS billing. If that’s the case, you likely are using another method for billing residents directly for utilities like submetering or flat charge billing.

Regulations can be more complex, such as not allowing property owners in certain areas to bill residents directly for certain types of multifamily utilities. When handling your own utility billing, you’re responsible for making sure your practices are in line with the law.

If you’re unsure that you’re doing everything needed to avoid legal trouble, outsourcing can put the work in the hands of a utility billing partner who can make sure your processes are compliant.

Is outsourcing utility billing right for you?

Outsourcing work that your team has traditionally done can be a complicated financial decision. Understanding the effect of outsourced utility billing on your bottom line and the resident experience is very important. The ROI of outsourcing to a utility billing partner can impact revenue, It can also save time that your team could focus on higher priority responsibilities.

Now that you have answers to common questions that go into the decision of outsourcing to a company like Liss Technologies Group, you can feel confident making a choice for your property!

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