If there's one thing that users universally complain about, it's the prevalence of billing errors. Telecom managers routinely tear their hair out from the frustration of wading through the pile of impenetrable bills and spreadsheets delivered each month by the carriers. Just trying to match the bills to the underlying contracts can be a nightmare.
But recently, customers have been getting more relaxed about billing errors because of the increased use of Telecom Expense Management (TEM) software and firms. And that's a mistake.
In theory, TEM services check all of your bills for all kinds of errors every month, but in practice they tend to catch only the most straightforward billing errors. The problem is that today's telecom contracts are riddled with complex fee waivers, discount schemes and tiered pricing models, which are then coupled with an ever-changing taxation and surcharge system. This complexity results in billing errors that are complex and buried deep in your billing records and contracts. Such errors can be found only in the course of a dedicated billing review, not as part of software-based monthly TEM reviews.
The success of such a comprehensive billing review depends on several key preparation steps. First, make sure everyone is on the same team. The internal customer resources responsible for reviewing and approving telecom invoices often regard a third party billing review as a threat. The result may be a conflict of interest in which the internal team isn't motivated to support the outside experts, and that can limit the success of a billing review project.
So make sure to position all internal stakeholders appropriately. The internal team needs to be an integral part of the process and to be assured that the project complements their role and will be seen as their success, too. The results of the project can be used to modify internal review procedures to prevent "like" issues from happening again, making it an opportunity to train and improve.
Second, recognize that billing errors are not always black and white. When a mistake is as simple as "the carrier is billing $0.03 per minute even though the contract says $0.02 per minute," the TEM provider will find it. The root cause of more subtle errors is almost always more complex. They often depend on whether certain waivers apply, whether custom pricing is being correctly applied, or whether a particular discount applies in conjunction with (and on top of) another discount.
Third, use common sense and materiality. Generate a list of all of your telecom accounts by vendor and account numbers. Start with the largest accounts first. As Willie Sutton famously never said when asked why he robbed banks: "That’s where the money is." Companies may have hundreds, or even thousands, of telecom accounts, but most of the spend is concentrated in a small subset of this total. If you find errors or anomalies that exist in the larger accounts, you can expand your audit to cover more accounts that may have similar charges.
The project should also be structured to generate billing recovery claims with as much supporting information as possible. The recovery process may become as much a negotiation as a billing review--especially when claims reach six and seven figures. Having the right resources on your team (i.e., negotiators, not just billing analysts), can be vital to the success of the project.
Once the process becomes a negotiation, it will be as much about your leverage as about the merits of your claims. Suppliers routinely leverage all kinds of issues in these situations. That unrelated contract extension you are negotiating? Suddenly, the pricing concessions that had been offered "include" release of your billing claims, perhaps for pennies on the dollar. Those accounts receivable issues you've been working through with the supplier? Suddenly, the supplier will only address your billing errors if you pay up on all open amounts.
It may seem unreasonable for a supplier to tie the resolution of billing errors to unrelated issues, but that's often what happens. You need to anticipate that and be ready for it.
But even before starting to correlate your contract's rates and terms with the actual billing, you have to check what your contract says about the billing process itself. Standard carrier contract forms routinely, and often drastically, limit the time that a customer has to dispute invoiced amounts and raise billing errors. Three to six months from the invoice due date is not uncommon--i.e., if you do not spot a billing error within three months of paying an invoice, you waive any rights to seek a refund of any overpayments.
Contract clauses like this eviscerate contract compliance and billing review projects. If the contract states that a carrier only has to repay the last three months of overcharges, then the value of the billing review is substantially reduced, and your carrier will hold on to most of its overbillings. So negotiating extended timeframes to raise billing disputes (not the same thing as more time to pay the bill) should be a key item in your original contract negotiations. With good leverage in a competitive procurement, you can expect to negotiate up to two years to reclaim overcharges (which, not coincidentally, is the standard written into the Communications Act).
Finally, don't make the mistake of bringing counsel into the negotiations too early or too late. Bringing the lawyers in too early will just lead the supplier to bring its lawyers to the table, slowing down the already very slow claims recovery process. Bringing them in too late, even when the supplier is dragging its feet unconscionably or hiding behind obviously inapplicable contract language, risks compromising or waiving your claims.
While the recovery of historical billing errors tends to be at the center of a billing review project, it should not be the only priority. An optimization review--the identification of various service adjustments, minor configuration changes and pricing tweaks in order to optimize telecom costs--can be performed in parallel with a billing review with little additional effort.
Cost reductions driven by optimization opportunities often present areas of significant savings, over and above the recoveries from correcting billing errors. In fact, the most fruitful billing review projects are those that combine contract compliance (confirming that your supplier is charging you the correct prices) with optimization.
Optimization opportunities run the gamut--from wireless to wireline to managed services. Many optimization opportunities stem from idiosyncrasies in the way carriers put contracts together.
For example, it's not unusual for a contract to include negotiated custom pricing for the circuit speeds that you typically use, but nothing better than list price for service speeds that were not expected to be used when the contract was signed. Over time some of the undiscounted service speeds are likely to be unwittingly ordered even where a circuit with a higher speed that is subject to discount might actually cost less. An optimization review identifies such instances and drives cost reductions either by adding discounts to the undiscounted circuit speeds or upgrading circuits to a higher speed but lower price.
This optimization concept can also be extended to identifying prices that are just unconscionably high. Per-minute rates to foreign countries--even nearby ones like Mexico--can exceed $1 per minute at the very moment that your company expands your business to that country. The optimization exercise can identify these spend points in time, and even if you're nowhere near the end of a contract, your carrier may be willing to substantially reduce the rate to something more reasonable.
Wireless rate plan optimization in particular can yield very significant returns. Matching users' usage profiles to the most cost-effective wireless rate plan can largely eliminate overage charges and minimize the number of users subscribed to plans with more minutes than they need. But these days, wireless rate plan optimization is not just about voice minutes. Optimization of messaging plans, data plans, international calling plans and a range of other miscellaneous features and add-ons can drive big savings.
A more straightforward optimization analysis, but one that routinely yields a considerable return, is checking current bills against company locations that have been closed. Most enterprises have a facilities site list that includes both open and closed site addresses. Ideally, the site list will denote whether a location was owned or leased, which makes a difference in terms of whether or not alarm and security lines (for example) are required after closure. Incorporating headcount figures into the detail is also valuable, particularly in environments that have downsized over the past few years. A comparison of the site addresses to the service addresses on your bills can identify suspect charges.
As with everything in enterprise telecom, the work is never done!
Julie Gardner and Theresa Knutson lead TechCaliber's Contract Compliance and Optimization practice and specialize in recovering telecom billing errors for the world’s largest companies. They can be reached at [email protected] and [email protected].
