Should You Manage Utility Billing In House?

Handling utility billing duties can be a struggle for multifamily property owners. Especially those trying to maximize cost recovery. In this post, we examine whether to keep utility management in-house or outsource to a specialist.

Doing It Yourself

There’s a lot that goes into managing a multifamily property. Conducting showings. Processing rent payments. Monitoring financials. Tracking maintenance requests. Screening tenants. The list goes on and on. And the average multifamily property owner either manages these responsibilities themselves or hires a specialist to take care of everything.

Because many property owners are able to manage a number of responsibilities in-house, they often assume they can handle utility billing.

And why wouldn’t you? If you can take care of everything else involved in running a property, you can manage utility billing yourself, right?

Some property owners and managers find a way to make it work. They might use their property management software or spreadsheets to manage the billing of utilities back to tenants.

However, utility billing is more complex than it might appear. While managing things in-house can seem like a good idea upfront, a simple mistake or error can have significant downstream effects on your property’s finances.

What You Might Be Missing

In-house teams can read, bill and collect utility expenses. The devil, however, is in the details.

Simply being able to capture meter readings or implement a form of RUBS is one thing. An expert, strategic approach to utility billing and management is quite another.

Your in-house team, for instance, won’t be able to identify opportunities for cost savings or keep up with the latest regulations. They also won’t be able to handle technical support and maintenance of system infrastructure like submeters or AMR devices.

That’s not a bad thing, necessarily – it’s just not what property management teams are trained to do. But any unrecovered utility costs will come straight from your bottom line.

So, what’s the answer? Augmenting your property management team with a technology-enabled utility billing service.

Working with a Utility Billing Company

The best utility billing vendors deliver two core components: 

• Hands-on expertise and service
• Access to best-in-class software

This combination of domain expertise and dedicated technology provide a number of benefits for owners.

Domain Expertise 

Properly managing utilities – and maximizing cost recovery, in particular – requires experience and focus. Regulatory compliance, utility analytics, tenant education, advanced ratio allocation, delinquency monitoring and technical meter installation are all essential parts of managing utilities. That’s not something you learn overnight.

Working with a focused utility billing company allows you to leverage domain expertise that isn’t available in-house. This makes it easier to solve problems and improve cost recovery.

Suppose, for example, the logistics of your property allow you to submeter only half of the units. A billing company could set up an advance billing method – like allocation by metered reduction – that uses both submetering and RUBS – to create bills that are fairer and more accurate.

Return on Investment

A well-managed utility billing system delivers a significant ROI throughout the life of the property. You’ll likely more than cover the cost of a utility billing company through increased recovery and decreased waste.

Better Experience for Tenants

 Poorly managed utility billing creates a bad experience for tenants. Errors like late invoices or unfair bills can lead to complaints and turnover.

Working with an experienced utility billing company lets you provide the consistency, flexibility and payment options that tenants want.

Billing fairly and offering control over expenses creates a happier tenant. And a happier tenant will tend to stay longer, which is more profitable than turnover.

Conclusion

There are many factors that affect whether you should manage utility billing yourself or work with an expert who knows the ropes. The circumstances will be unique for each property. Understanding your needs – and more importantly, your limits – will help make the decision easier.