What’s the Difference Between Utility Expense Management and Utility Bill Management?

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These two popular terms are like the difference between the NFL and the New York Giants. The NFL is the broader arena in which the NY Giants exist. And so, it goes here. Utility expense management is the more general term used to define the more comprehensive arena of expense management for enterprise utilities. 

It is focused on the overall strategic management of utility operations and effectively managing all associated costs for the enterprise throughout the utility expense management lifecycle. 

On the other hand, utility bill management is a subset of utility expense management focused on the narrower scope area of invoice management, which concerns itself with all activities related to efficiently processing and paying utility bills. It’s the NY Giant team, so to speak, not the league.

UEM vs. UBM: Understanding the Differences for Utility Management Discovery

In this article, we’ll cover aspects that define each of these areas to assist you in understanding what each area entails. A clear understanding of the differences between these terms will hopefully become helpful in any discovery sessions you may have with 3rd-party expense management providers that offer support in these areas. (Note: Many telecom expense management providers also offer utility expense management services like Tellennium.)  Expense management providers will provide a specialized technology platform and a full suite of supporting services to support all your utility expense management needs, including bill management.   In any discussions with potential utility expense management providers, you will want to inquire about their overall utility management capabilities, not simply their approach to utility bill management.   However, both are important for the reasons we’ll cover below.  Utility Expense Management Scope  As mentioned, the scope here is all-encompassing and is the overarching umbrella for the utility expense management program. For example, let’s review some of the other common areas outside of utility bill management that utility expense management providers offer support for: 

Sourcing and procurement support helps obtain utility services at competitive costs

  • Rate negotiation services are essential to effectively managing utility costs from the start of the utility expense management lifecycle. 
  • Having electronic, contractual information within the technology platform is essential for fluid and effective contract management negotiations.  
  • Supplier risk analyses conducted before starting a sourcing engagement can reduce risk for your organization.

This type of review seeks insight into essential variables that could expose the enterprise to unwanted risks, such as potential operational issues of working with a supplier, performance considerations, and the supplier’s financial stability. Bottom line: If we do business with this supplier, will this relationship serve us well over the long term? 

Inventory support can help build a clean and comprehensive utility inventory

  • A highly detailed services inventory assists in close monitoring of energy bills, which reduces the chances of overlooking incorrect billing. 
  • A highly detailed asset inventory aids in more effective asset management, another vital inventory area that needs to be managed vigilantly to avoid financial waste of critical assets.
     
  •  A comprehensive and highly detailed inventory of utility services and assets supports close infrastructure monitoring, essential for enterprise risk mitigation, i.e., minimizing operational vulnerabilities and strengthening business continuity plannin

Dispute management support is vital to expediting the realization of savings

  • Identified savings opportunities can be expedited via the support of experienced subject-matter-experts, increasing the ability to realize savings as quickly as possible.
     
  • A highly configurable technology platform supports detailed reporting capabilities around disputable claims (e.g., aging info, open/closed, win/loss, etc.), allowing for the efficient management of the dispute process.
     
  • Dispute management efforts can be time-consuming. Reputable utility expense management 3rd-party support will save your organization significant time and effort, keeping your internal team out of the weeds of minutiae and focusing on mission-critical objectives.

Contract management support is critical for managing the universe of utility services

• Continual monitoring of contracts is vital to all ongoing utility lifecycle management efforts. A robust technology platform assists in efficiently maintaining this extensive repository of information in electronic form for quick access and reference.

• Critical information for effective utility management will be highly organized and easily referenceable:

       • Contract term information (e.g., beginning and end dates) 

       • Contract rate and pricing plan data 

       • Contract addendum information 

       • Contract commitment terms  

       • Utility vendor data such as remit addresses, account team contacts 

       • Letter of authorization details (LOA)

• The technology platform can be set up to automate alerts around crucial variables such as contract end dates, commitment tracking, and support notifications for other essential areas for flagging that may be a priority to your organization. 

Usage management for utilities helps to monitor usage behavior

  • Avoiding overconsumption and assisting with other support areas such as audit and optimization strongly support enterprise expense management efforts. 
  • Comprehensive usage data strengthens forecasting and budgeting activities. 
  • Energy usage modifications can be made more effectively with comprehensive and accurate usage data.

Audit and optimization activities for utility services are vital to containing costs

  • Rate audits help to monitor service rate compliance. 
  • Purpose audits help verify services are working as intended or even needed. 
  • Optimization reviews identify energy services and plans that may serve operational needs at lower costs.

Reporting and business intelligence capabilities are enhanced with a robust platform

  • Customizable drill-down dashboarding capabilities within the system are critical to centralized and effective utility management. 
  • Comprehensive and customizable reporting capabilities allow management the visibility to make quick, real-time decisions. 
  • Predictive analytics can be employed via the system to assist in ongoing utility management.

Accounts payable and accounting tracking capabilities enhanced

  • Detailed system tracking supports organizational hierarchies for reporting costs per divisional assignments. 
  • Summary of charges by location assists centralized management for accounts payable functions. 
  • A modern utility expense management platform can interface with various enterprise accounting systems (e.g., SAP or TA), which helps support utility accounts payable processes and makes intercompany systems communications extremely effective.

All the above service offerings can help your organization manage your universe of utility services and their associated costs. This is done in an ongoing and continual way; it’s a never-ending process of forward-leaning proactive management. When enterprise expense management programs are executed well, it’s not about “one and done” exercises in a vacuum.  

The above said, your organization may not enlist outside support for the full suite of expense management services for business reasons unique to your business and situation. And that’s fine.  

You may have internal teams you are presently satisfied with within some of the support areas outlined here. Or you may want to ease slowly into a partnership with a 3rd party utility expense management provider, especially if working in this type of business relationship is new to you. 

In any case, we hope that distinguishing between a fuller suite of utility expense management services and utility bill management, which is popular, can help better inform the lens with which you entertain all options during your upcoming utility expense management discovery process. 

Let’s now look at utility bill management in more detail – akin to invoice processing in traditional telecom expense management  – as this can be a great gateway service offering for those looking for more help in this area but choose to do so perhaps more cautiously and incrementally. 

Utility Bill Management Scope

This is a subset of utility expense management. Utility bill management focuses on the key activities relating to initial bill processing and on-time payments, initial bill verification and dispute resolution support, and cost allocations to relevant business units. 

For many large enterprises, this is easier said than done. Seeking outside 3rd party support can help to minimize delays or errors and reduce unwanted expenses such as late payment fees.  

Moreover, desired services could even be disconnected for very slow or non-payment due to poor internal communications in some cases. Therefore, getting it right is essential to modern-day utility expense management programs. 

Let’s review the main areas of responsibility under utility bill management  

Utility bill processing that is highly effective and efficient will help contain costs. Saving time is extremely important in managing utility bills. If you have a robust technology platform that serves as the bedrock and foundation for solid processes, A.K.A “best practices” in the industry, and managed by experienced subject-matter experts, this is tremendously valuable. 

What your organization gains in terms of overall effectiveness, not simply efficiency, will serve overall operational aims and save your organization money. This could be hundreds of thousands or perhaps millions of dollars over several years for larger enterprises not engaging in proactive utility bill management. 

For example, consider a decentralized large enterprise with hundreds – or even thousands – of locations across the country or world. Suppose each location tries to manage and pay utility bills ad hoc (e.g., spreadsheets in a PC) without leveraging all the resources noted above, i.e., technology platform, proven centralized processes, and skilled subject-matter experts.  

It’s almost a certainty that material problems will arise and be costly. Specifically: 

  • The absence of a robust technology platform is a handicap and will cost your organization time and money. For large enterprises, spreadsheets will not cut it anymore. Too much detailed data and operational requirements for a well-run expense management program make this approach antiquated. The specialized technology platform is one of the three key pillars that we speak of constantly: (1) technology, (2) processes, and (3) people. It starts there. 

It’s not just about housing all data but having the capabilities to organize it and distill it into meaningful information (e.g., dashboards, reports) that can be acted upon smartly and quickly. It’s also about automating all that can be automated (e.g., process workflows) and continually embracing digital transformation, which is vital to all large modern-day enterprises. 

Bottom line: The benefits of a technology platform help pave the way for the value that solid processes and skilled personnel will additionally bring. A capable utility platform will serve processing bills in an automated fashion and reduce manual workload and human errors in processing and paying utility bills. 

This all means saving time and money, essentially the same within the world of expense management. 

Utility bill reviews that are processed efficiently and automated will reduce overcharges. The opportunity for overcharges is immense for organizations not leveraging a centrally managed utility bill management program. This means employing a capable technology platform and the other benefits of proven processes and experienced personnel.  

Invoices managed centrally within a utility bill management program will be reviewed for errors within the process and paid promptly, and all activities will be appropriately documented within the system. 

This means high visibility and translates to real-time control over this core utility management area. 

Again, this translates to saving time and money. Review processes are highly automated and reduce the opportunity for overpayments and manual labor costs. By doing so, they also reduce all the time and effort needed to recapture overcharges down the line when done in a non-optimal fashion.  

These may seem like basic points, but when absent, they will lead to unnecessary time and money costs (same thing) for your organization over the long term. 

Utility bill disputes will be effectively documented for follow-ups with applicable vendors. Despite our best efforts, we do not live in a perfect world, so occasionally, mistakes will occur. Even the best utility bill management programs sometimes experience billing errors that go through front-end review and processing.  

This could happen for many reasons: 

  1. Perhaps a contract addendum came through whereby a mistake was made with input into the system. This could result in overcharges not initially caught at the front end of bill processing.

     

  2. A change in tax rules could have been enacted but not entered within the system on time due to innocent human error. 

Whatever the reasons, mistakes will happen. So, the team will need to properly document the errors and then work with all appropriate parties to resolve the issue(s) and capture savings owed to your organization. 

A reputable 3rd-party utility bill management provider will have the know-how and valuable experience in skillfully working with utility service providers. They will be able to shorten the timeline for making your organization whole and fully realizing all rightful dispute savings. This could mean the difference between realizing savings in 5 months instead of 10 months or longer. 

Final Thoughts on Utility Bill Management

Utility bill management – the close sibling to TEM invoice management – is a core service within utility expense management, and its objectives are essentially the same: process vendor bills effectively and efficiently, apply cost allocations correctly to their respective business units, avoid overpayments, and avoid late payments and unwanted service disconnections. 

It’s a great place to start if you are considering outside 3rd-party support to assist with processing your organization’s utility bills. Your organization may also desire support for other areas within the utility expense management arena, but utility bill management is an area that likely needs initial attention. 

If you’d like to consider Tellennium in your utility bill management platform vendor comparisons, contact us to schedule a brief demo of our solution.

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