#10 – Control Billing Drift
Many customers are surprised when, looking at the history of their telecom spend, they realize that their bill has gradually increased in small increments to an amount that is now a significant premium. What was once a great deal has gradually undone itself, and now you’re paying as much as you were before you changed. For many others, the shock is much more immediate, when the first bill is 50% more than what was listed on the contract. Very few customers report having never had a variance between what they expected and what they were actually billed. With misbilling affecting unbelievably large percentages of service provider customers, there are a few steps you can take to ensure your billing matches your expectations.
As many of those consuming service technologies can attest, the first you get is going to be higher than what you signed for on the contract. That’s not just because of sales tax, but because providers love to find ways to hide significant fees in surcharges and other forms that are clearly not a service being provided to you, but aren’t taxes or tariffs, either. Most clients find that anywhere from 10-35% of a provider invoice is comprised of these types of inflationary charges. Therefore, the first point you can express control over billing drift starts before you even place your service orders, when you require the service provider to confirm for you (preferably in writing) what charges are going to show up on your bill that aren’t explicit line items on your contract. This includes variable usage, such as voice minutes and cellular data usage, as well as regulatory and administrative surcharges and fees. Basically anything that isn’t a true tax should be on this list. On the front end this helps you get a clear expectation of the true cost of service. On the back end, if you have a pre-signature explicit agreement of what surcharges will be on your bill, you have significant leverage in your pocket should any unexpected charges show up later.
The second point of control occurs when you receive your very first invoice. You’ll need to ensure that first bill is compared against your contract, and any mistakes are promptly disputed. While many examples of billing drift are intentional incremental growth over time, there are a significant amount of billing errors that go uncaught for long periods of time. At the root of that, most billing errors can only occur when someone makes adjustments to the system, such as from change of services or, most commonly, new account setup. The lion’s share of billing mistakes we see are evident within the first 1-2 billing cycles of a new service. Furthermore, most providers limit their billing disputes to issues within the last 90 days, and it can often take more than one billing cycle to resolve a dispute. The intersection of these points means you have a limited window in which to report an issue if you want to be fully reimbursed. One key note when reviewing the first bill is to make sure you adjust for prorating. Service providers tend to bill on fixed schedules, and those are rarely determined by when your service actually went live. Therefore, almost every customer receives a prorated bill for the first billing period, sometimes for just a few days, sometimes for nearly two months of service. Make sure you’re comparing a single, complete billing cycle against your contract.
The third point of control is a regular review of your invoice. Quarterly reviews will ensure you’re minimizing any period that might not be covered by the 90 day limit on billing disputes mentioned earlier. If you have followed the first two points, then this periodic review does not take a lot of time. You’ll have a clear understanding of what your contractual commitments are, as well as the surcharges that are not on the contract. You’ll also have a clear expectation on what promotions are on your account, and when they end. The trick to this step is that you need to compare your current bill against your contract expectations. Many companies make the mistake of comparing the current bill against the last bill, but not looking any further back. This is where billing creep goes wild. Suppose Company A has their AP review any accounts that increase more than 5% from the previous bill. A multi-year contract provider who is slowly inflating their surcharges, adding 0.5% every other month, will slide under the radar, exceeding that 5% limit at 22 months without raising any alarms, and only going further from there. While it’s not a bad idea to look at a bill compared to other recent invoices, you also need to make sure you’re comparing against your original contract commitment.
If during any billing review, whether the first or the thousandth, you have reason to raise a dispute, the process to register that complaint is fairly straightforward, but extremely critical that you execute correctly, so let’s run over that briefly. Step 1 of a billing dispute is to gather your evidence: e-mails, previous bills, other billing dispute ticket numbers, etc. You might choose to keep this close to your chest to leverage any provider mistakes, or you might choose to lay it all out on the table upfront to preemptively remove any change for the provider to dodge responsibility, but either way you’ll want to have everything in front of you before you begin. Step 2 is to open a billing dispute ticket with the billing department, clearly stating which portion of the bill you are disputing, and capture the dispute ticket number. If you have an account manager, fill them in on the ticket number, but do not go through them for this action. The reason it is important that you directly contact the billing department to open a dispute ticket is because this specific combination of words and actions sets a legal standing that means you can withhold payment for the portion of the bill you are disputing, and the provider cannot penalize you or withhold services until the dispute is resolved and the allowed time for post-dispute payment is passed. In other words, when you call the billing department and open a dispute on a specific amount, you don’t have to pay for that amount on your bills while the dispute is being resolved. And this leads to Step 3: Pay the part of your bill you aren’t disputing! Some think they will have greater bargaining power if they withhold the entire invoice amount throughout an ongoing dispute, but ultimately this just gives the provider the legal position to discontinue all services due to non-payment, making this the weakest position to take. Instead, make sure you pay the full amount of your invoice minus only the portion you are disputing. Not only does this prevent the provider from arguing a non-payment scenario, but it also demonstrates a reasonable good will that tends to make the resolution of the original dispute go much smoother.
The fourth and final point of control is when your original contract expires, and the discussion for renewing begins. If you weren’t able to execute the first two control points, the renewal period is the best time to regain control of your spend. Along with any changes in technology you might want, renewing and upgrading is a great opportunity for you to renegotiate your price, especially surcharges and changes to contract language that prevent future billing drift. Even more to the point, your renewal period is really your only opportunity to reassess whether your current provider is still the best provider for you. Therefore, taking charge of your renewal process is key to being in control of your technology spend.
And, of course, if you don’t have the time or interest to handle these aspects personally, make sure you’re leveraging an agent that can do this work for you.
