Utility Payment Processing: The Cost of Managing In-House

Jami Marler

Multi-site companies with 50 or more locations generate a lot of bills for their accounts payable teams to manage. With the large volume of bills pouring in, it often means that utility bills get treated just like any other bill…but they are not. Utility bills fit into the complex payables category. Unlike other payables, utility bills typically lack purchase orders, require manual GL mapping, and vary greatly from one utility provider to the next, with varying bill systems, bill periods, and bill level detail. These factors add up to time consuming, resource intensive, utility payment processing efforts, and simply paying the bills isn’t enough.

The Importance of Effective Utility Payment Processing

Effective utility bill processing and data management is necessary to identify billing errors, including those caused by estimated bills, overlapping service dates, incorrect meter reads, and more. While internal accounts payable teams are fully capable of managing most payables, utility bills often have a short payment cycle, and it is extremely time consuming to audit and reconcile billing errors.

Utility Payment Processing Questions to Ask

Do you have an effective utility payment process? Is business data management a priority for your company? Do you know if you are you overpaying? We invite you calculate the cost of managing your utility bills in-house by asking yourself the following questions.

  1. How many full-time employees are in your accounts payable department? The median annual salary for an accounts payable manager is roughly $62,000.
  2. How much does your company spend on utilities each year (electric, gas, water/sewer)? Utility expenses often follow labor and materials as many companies’ third largest budget item.
  3. Does your AP department capture both cost AND usage details by location from your utility bills? Purchasing and facility teams can leverage site, regional and portfolio wide consumption data to support informed energy sourcing.
  4. Does your AP department identify and resolve billing errors on your utility bills? Up to 6 percent of utility bills are reissued due to error or revisions on previous bill estimates and over 9 percent of utility accounts have missing or late bills at any given time. Variability in usage charges and potentially extra hidden fees buried in the detail invite higher error rates and can be easy to miss.
  5. Does your AP department have an automated process for capturing utility bill data, for example, Optical Character Recognition (OCR) or Electronic Data Acquisition (EDI)? The average time for enterprises to internally process a single invoice is 17 to 21 days, but the average time a utility gives you to pay an invoice is 21 days. That leaves little time to pay, much less extract and analyze data for savings opportunities.
  6. How does your AP department pay utility bills? Paper checks, purchasing card/credit card or automated clearing house (ACH)? The average cost to process and pay a bill is $21.43 per payment – including both labor and initiating either check or ACH payment (Aberdeen Group 2010 Payables Report).

The Sad News is, You’re Likely Overpaying

Companies that have 50 locations or more are very likely overpaying if they are managing utility bills in-house. Even if you are doing several things right, you still have opportunity to reduce costs. Savings opportunities exist within the management of utilities as well as on the actual resources themselves.

Best Practices for Reducing Costs

Utility Payment Processing Best Practices eBook

There are many ways to ensure that your utility costs are kept to a minimum while reducing your internal cost of processing a bill. Download your complimentary copy of our ebook, Utility Bill Data: Accounts Payable’s Secret Weapon for Managing Costs, to learn these best practices.

ENGIE Insight processes over $21B in energy and resource expenditures annually for its clients and delivers an average ROI of 285% via our utility bill processing services.

We welcome the opportunity to discuss your savings opportunities with you further. Contact us to schedule a no obligation consultation with an ENGIE Insight team member.

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Comments:

  • PJ Connolly

    Hi Engie, great article, thank you for the information. Impressive ROI at 285%! I was wondering how Engie’s bill processing specifically works? Do you guys collect the bills and then pay them for us, then we pay you? Or how does that work?

    Thanks again!
    PJ

    • Regulatory Update

      Hi PJ, thanks for your question. Yes, we receive and pay bills on behalf of our clients. Consolidated summary statements provide clients with a single file for multiple invoices and sites, significantly simplifying their bill payment process.

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