Leave Utility Audits to Experts

Release date: 9/1/2004

Utility bills are complex transactions that most people don't understand.With deregulation utility bills have become even more difficult to understand and to interpret. To develop a system that can effectively audit utility bills would require massive implementation costs and the allocation of valuable IT resources for what is essentially a non-core business function.Moreover. once the system is implemented a company would have to hire scores of resources to enter and analyze the data in order to control this on going expense.

Auditing utility bills is not just about making sure your utility companies and your landlords are paid on time. It's about being able to gain an understanding of your utility costs and to use this understanding to improve your bottom line. With utility costs rising controlling energy costs has become a number one priority to many companies. Why? According to page one of the March 2004 issue of Energy User News the U.S. wholesale power prices jumped 50% in 2003, reaching record levels in many eastem states due mostly to surging high natural gas prices.

Utility bills, particularly landlord utility bills are complex transactions. Most lease administrators and accounts payable departments do not have the time or the expertise to audit these transactions.

Energy expenditures represent the third largest expense in most companies next to payroll and rent. However it is the one expenditure that is often overlooked as an opportunity to improve the bottom line.

Without having to pay the bills a utility audit company can effectively audit these transactions, while gathering all the data pertinent to drive down utility costs. Utility bill payment companies can effectively audit and pay the bills as well, however there is a great deal of control that must be given up whenever a company makes a decision to give up its check book. We live in a day and age where corporate accountability is under constant examination and scrutiny. Thus if a retailer out sources both the utility audit and the bill payment function to a single provider, it must insure that the proper controls are in place to guarantee appropriate levels of integrity, compliance and audit ability in accordance to Section 404 of the Sarbanes-Oxley Act of 2002.

As a non-core business function, should this process be outsourced? If so what are the benefits of outsourcing the utility audit function and what is the criteria one should consider when selecting a utility audit company.

In today's constantly changing energy market, meaningful energy information can make a big impact on energy spend. How companies manage and utilize and audit this information makes a direct impact on the bottom line. When choosing a utility audit company you need to chose a company that is totally independent and objective in order to maximize all the opportunities that are available to reduce energy costs. This includes utility bill tracking, verification, validation, exception reporting, rate auditing, billing resolution (both landlord and utility company), deregulation contract negotiations, identification of inefficient facilities, expert analysis of existing energy data.

In order to develop and manage relationships with landlords and utility companies one must have an intimate knowledge of not only energy but how utility companies and landlords overcharge or make mistakes. This knowledge is not quickly or easily acquired and is constantly changing. If a company does not have the internal resources and is not outsourcing this function chances are they are overlooking an opportunity to save up to 10% of their total utility costs.

A utility auditing company annually audits millions of utility bills each year. Each time a utility auditing company audits a utility bill there are issues that are identified which can be applied to other clients. Over time, any new customer who enlists the services of the audit company will gain from the knowledge and expertise, which was derived from past audits.

In general, companies that don't outsource their utility audit function are incurring much higher costs. These costs are not simply absorbed by the company; they are passed on to the end customer, which translates into higher costs and less sales.

An experienced utility audit company will have a track record that demonstrates whether or not the they can live up to its promises. In other words look beyond the hype and research the company. Find out how long they have been in business, how many customers they have and whether or not they audit both landlord and utility company bills.

Many companies are under pressure to outsource the audit of their utility bills. Turning over this audit function will not only cut costs it will drastically improve the bottom line.