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Money for Nothing: Audit Your Telco Bills

Many businesses are overpaying for telecommunications services -- such as cell phone accounts from former employees that were never closed. Third-party audit firms can help you save big bucks.
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Customers often complain about the complexity of their phone plans. Apparently, many of them are so complex that the carriers themselves can't even keep them straight; especially when it comes to billing. Estimates vary, but the Federal Communications Commission and most independent research groups that monitor the telecom industry agree that conservatively around 30 percent of all bills have errors.

Here's just one way that happens.

April 2008 was a bad month for Sprint, as it consolidated two billing systems into one system. It was even worse for the thousands of customers nationwide that got bills wildly off their normal balances, some topping more than $10,000. Sprint spokeswoman, Kathleen Dunleavy, explained to reporters at the time, 'The problem stemmed from decimal places misaligned by two places during the consolidation process.' 

As bad as that sounds, the good news is that the mistakes were so grandiose and widespread that Sprint's errors made immediate headlines and were, therefore, immediately corrected.

It usually doesn't happen that way and that's why many small and mid-sized businesses, are finding it worthwhile to hire an outside telecom expense management consultant to audit their invoices and often overhaul the way the accounts were set up in the first place. 'A lot of companies are overpaying by at least five to ten percent based on billing errors alone -- like paying for lines that were cancelled and never removed from the account,' says James Browning, a vice president of research at Gartner.

$93,000 in savings and counting

Mygrant Glass, a wholesale auto glass distributor based in Hayward, Calif., is a third-generation mid-sized business operating nationwide with some 60 locations. The next time a rock flies up off the highway and gives you a starburst crack in your front window, there's a fair chance Mygrant Glass will be the one to supply you with a new windshield so that you'll have a clear view of the road again.

While their stock and trade auto glass may be as clear as crystal, internally the company has struggled with not-so-clear telecommunication bills. 'With 60 locations, Mygrant had over 150 telecom invoices going to accounts payable each month and no one was looking at them,' says Tom Buckle, founder of Mygrotel, a voice and Internet expense management group based in Danbury, Conn. that was hired by Mygrant Glass to take over the bills.

Buckle points to his client, Mygrant Glass, as a shining example of what his group can do to save businesses big bucks off those Byzantine bills. 'Right off the top, we saved them $60,000 by migrating them from a frame network to a web-based network. Add to that, we immediately recovered $33,000 in mistakes in over billing,' says Buckle.

That adds up to $93,000 in immediate savings and that doesn't include the ongoing savings by hiring someone like Buckle to baby sit those invoices on a regular basis.

Some work on commission

Buckle's group, Mygrotel, is atypical in the way they bill their clients. They charge by a more traditional service contract. 'Most of these companies work on commission alone. They typically keep 20 percent of the savings they recover,' says Browning.

Whether a business owner wants to task out billing oversight to an inside staffer or an outside consultant, both Browning and Buckle suggest taking the following steps to thwart inflated invoicing:

  • Look at the bill. It's so simple, but it's the most basic and biggest mistake organizations make. Mygrant Glass is a classic example of how this happens with its 150 invoices going into one accounting department that isn't equipped to pour over what adds up to hundreds of pages -- including thousands of itemized charges -- each month. 'It's why more businesses are handing it off to an outside company. They just don't have the time or expertise to go over them with a fine tooth comb. There are a lot of boutique firms out there doing this. They know what to look for and where to find the mistakes,' says Browning.
  • Switch to Internet protocol (IP). 'You're going to save a lot by just switching from a WAN to IP. It's one of the first things we did with Mygrant. Simplify the lines,' says Buckle. And when it's done, businesses should make sure they cancel those old accounts in writing. Be ready to fight back if it takes a few months to get the charges dropped off the bill.
  • Consolidate plans. This usually isn't a problem with the company phone lines. But more employees are increasingly using their wireless company phones as their main point of contact. 'Most small to midsize businesses can save a minimum of 15 percent on its wireless bills if they standardize their plans with one provider and buy in volume,' says Browning.
  • Centralize billing. Whether it's the accounts receivable department or an outside consultant, no mistakes will be uncovered if they're buried in an expense report. Set up accounts to bill directly to the company.

Telecom expense management

When companies hear stories about error rates in billing, it's not a hard sell to get them to look more closely at their invoices. A harder sell is that perhaps someone on the outside should do it instead. 'A lot of small to mid-sizde companies make the mistake of using outside help one time. It needs to be ongoing,' says Browning.

Buckle points out just paying the bills are costly, without taking on the responsibility of auditing the fine print. 'Some companies pay $20 just to pay an invoice. Someone's got to open it, approve it and pay it. A lot of companies don't even know we're out there. It's very hard to evangelize what we do,' says Buckle.

With immediate savings perhaps as high as in the tens of thousands, once converted very few are likely to lose their faith however.




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