5 ways you might be overspending on your Telecom Costs

If you are like most businesses you have significant telecom costs.  Between internet, telephone, data, long distance and wireless the costs can become quite high. 

In our experience, we’ve found that the vast majority of businesses are overspending on their telecom expenses and don’t know it. 

As we pointed our in our article on customer service records, the telecom industry is quite complex.  Unless you have an expert consultant working on your behalf there’s a good chance you will overspend.

Below are 5 ways you might be overspending on your telecom costs.

 

1-  Misapplication of Tariff –   A telecom tariff exists as an agreement between the telecom company and the public.  Government regulations require that these tariffs exist for the telecom carrier to provide service.  The tariffs are also approved by the government and become the binding force governing what a telecom company can and can not charge the client.

These documents can range from 50-500 pages and are often quite complicated.  We have seen dozens and dozens of instances where employees of the telecom companies themselves can not properly understand the charges.  This results in the charges being misapplied to the customer account, which in turn can create large billing errors.  

Proper investigation of the tariff to see if it is applied correctly is paramount to ensure you are getting what you are paying for.

2 – Incorrect application of fees and surcharges –  As most people who have seen a telecom bill know, there can be a dizzying amount of fees and surcharges applied.  These range from 911 surcharges to Universal Service fees and everything in between.  How can you know which ones are valid and which ones are profit centers for the telecom providers?   This can be very difficult to discern.

Furthermore, even the valid fees and surcharges are often misapplied incorrectly.

3-  Incorrectly applied taxes and fees-  Many aspects of the telecom industry are highly regulated.  These regulations govern how every line item can and should be charged.  These companies are human though and they make errors. 

Below is an example of an access recovery charge. After our audit began, our experts identified this as a potential error.  Upon investigation, it was determined to be billing inaccurately based on the tariff and regulations. 

After an in depth look at the customer service record and tariff it was determined the PRI was being billed incorrectly.  The vendor had mistakenly applied the fee at 12 times the legal rate.  Because of the complexity of the existing tariff the vendor was convinced they had billed it correctly.  After several phone calls, and escalating it up the ladder, we were able to show the vendor where they had made a mistake. 

The vendor initially offered a 3 month credit.   Certain types of billing errors are legally allowed more of a refund per the tariff.   In this particular case we knew this error should be refunded back to the point of error.  After a thorough billing history review, it was determined this error occurred almost 8 years prior.  The incorrect charge was removed from the bills immediately resulting in substantial monthly savings.   

The vendor, after many months of follow up on our end, reluctantly refunded over $150,000 back to our client to account for the 8 years of billing error.   

4.  Make Up Charges-

Telecom providers often charge ‘make up charges’.  These charges are not ‘made up’.  They are real and valid charges per the telecom tariff.  The issue is, that they are often applied incorrectly, or they are often being utilized in a way that it is costing the customer large amount of money inadvertently. 

An example might be where that hidden somewhere in the contract and customer service record a client has a MARC (minimum annual revenue commitment).  If the customer spends less than that commitment the difference in charge between what they spend and their commitment is ‘made up’.  This results in a large additional fee that can be quite costly.   Knowing how to identify and remove (where applicable) these can go a long way to driving down costs. 

5.  Disconnection of Unused lines-

This may sound simple to do, but even the smallest organizations often have phone lines that have ‘rat nested’ themselves in complex and confusing ways.

Route treeing, extensions, faxes, security lines, and alarm systems are just a few of the things that phone lines run off.  Untangling this mess, and ensuring you are only paying for what you need and use can be very confusing and time consuming.

Many times you have to have the vendor come out and ‘tag’ lines to physically figure out where they go.  Everyone has seen what it looks like behind their entertainment center.  Imagine what a business with even 15 employees looks like? What about 100 employees?  There are lines for countless things, and figuring out what is needed/not needed and what goes where can take an immense amount of resources.  Furthermore, we have seen clients who have tried this on their own inadvertently disconnect lines for fire alarms and theft protection systems. 

However, if there are savings to be had, and if executed correctly, it can be very good way to drive costs lower. 

These are just 5 of the 12+ different cost areas we look at for our telecom audits.  If you would like a professional and risk-free telecom cost reduction audit we’d love to help out.  Give us a call today at 1-877-843-7579.

5 Ways you might be overspending on your electric energy bills

If you are like most organizations you think that there’s not much that you can do about your electric bill. Sure, in open markets you may be able to get a better price but in most places around the country your electric bill just is what it is right?

Wrong…While electric charges are highly regulated and governed by tariffs, there are a myriad of errors and inefficiencies that can cost your company or organization valuable dollars.

Below are 5 ways you could be overspending on your electric bills.

 

1. Estimated Meter Reading – An estimated meter reading occurs on your bill when the utility does not give an actual reading. In this case, they are simply estimating what your usage was that month based on historical averages. The reason for the supplier not reading the actual meter can range wildly. It could be as simple as they did want not send someone out to read the meter that month, or it could be because a dog was blocking the path to the meter. As you can imagine, estimated meter readings can be rife with errors or overcharges. They are relatively obscure on your invoices too, often only designated by a tiny ‘e‘ near the reading. 

2.  Key Punch errors – People make simple errors in data entry all the time.  We often find key punch errors that resulted in the incorrect rates, fees, and taxes being applied for our clients.  These can result in large refunds if you know where to find them.  

3. Incorrect Application of Tariff –  As we outlined in our article on tariffs, if you are on the wrong one it could cost you money. Most utilities have between 5-50 tariffs that govern everything they can charge you. There are a host of factors that go into determining which tariff you qualify for, and calculating which one is best from a financial standpoint is a daunting task. 

4. Demand Ratchet – Ratchet clauses in a tariff can also have significant effects on your bill each month. A ratchet clause is something suppliers have written into their tariffs to help them recoup expenses they incur during high demand times (i.e. summer). The ratchet is typically based off the peak demand you use (kW) during a particular set of time. The nasty part about a ratchet is that whatever ‘peak’ you hit, may be applied for up to 12 months across subsequent bills. This results in you being billed as if you were ‘demanding’ that same ‘peak’ amount of energy.  When in reality, you were using much less. Understanding these clauses in the tariffs, and knowing how to avoid them will go a long way to keeping your costs down.

5.  Multiplier/Constant – Most electrical meters only have the capacity to read up to a certain voltage or current. When the actual usage is higher than the meter can read, a ‘multiplier’ is used to determine the actual amount of usage. This directly impacts the amount of the bill as a result. The multiplier is made up of internal (customer) and external (determined by the tariff) factors. Sometimes the multiplier can simply be input wrong by the vendor (key punch error), resulting in errors and overcharges. And other times it’s necessary to look at all the variable factors that make up the multiplier to see if there is an opportunity for improvement.

The above are just 5 of the 15 things we look for when we do electrical audits for our clients. If we are able to uncover errors, overcharges, or deliver cost reductions we simply share in the savings 50/50 each month with our clients. If our expertise does not uncover any savings there is no fee.  Contact us today to begin your risk-free, shared savings utility audit

 

Top 7 Things to do for your City’s next Waste and Recycling Contract

Attention, Mayors and City Finance Directors 

Nothing seems to ignite public passion and debate quite like the local trash and recycling service. While every municipality needs trash service, handling the bid process internally can often be a confusing and frustrating task. And if handled incorrectly, it can result in considerable public outcry. Here are a seven important considerations and helpful hints for navigating your next waste contract.

1. What kind of Contract Does Your City Have or Need?  

Residential Services –

The vast majority of municipalities have exclusive contracts for residential service. This means either the city themselves or a private contractor provides exclusive service for all residents. Other cities allow a full open market where any private hauler can pick up a resident’s trash and recycling.

There are positives and negatives to each scenario.

Cities that provide service directly to residents aren’t bound by some of the profit metrics of private haulers.  However, the cost of owning and maintaining large equipment, running transfer stations or recycling centers, managing employees, and administration within a governmental system often ends up being more costly to residents than private providers.

Cities that use exclusive residential contracts with a private hauler often point to the benefit of having a single contractor using city infrastructure. Since the city is responsible for maintaining roads and managing traffic congestion, reducing the number of large trucks on the road during daytime hours can reduce stress on roads and limit public complaints. An exclusive contract gives the city a single entity to address issues and can increase the ability to provide expanded services. The selected waste hauler may be willing to offer specialized recycling services or help fund public outreach if they have exclusive access to residential waste.

That said, an exclusive residential contract doesn’t come without risks. If trucks break down, companies merge or change leadership, new needs arise, or your community experiences extreme weather or natural disasters you are contractually bound to handle the issues and associated waste with the exclusive hauler. Forethought when negotiating contractual terms can help plan for such situations, but ultimately an exclusive contract can leave you with a single option.

Cities that have open markets for residential service may not have some of these advantages, but when a provider’s service starts lacking the city doesn’t have to field complaints. Residents can simply choose a different provider.

Commercial Services –

In contrast to residential services, the majority of municipalities operate under an open market for commercial services. The most evident reason for this is that commercial businesses require specialized services. Most residents need a standard rolling cart for trash, possibly in a few available sizes, and a container for recycling. In contrast, businesses may produce anywhere from a few cubic yards of trash per week to a hundred times that.

Manufacturing businesses especially can produce materials that have to be disposed of as hazardous waste or collected in bulk to reduce costs. A municipality, negotiating on behalf of all the businesses within city limits, runs a high risk of excluding services that businesses need or tying their hands to use operators that may not offer services at the schedule they want. Furthermore, the price of commercial service is generally 10-100 times as expensive (or more) than residential service. Thus, it’s much more politically expedient to leave those issues up to the businesses themselves.

However, there are many municipalities that service businesses themselves or successfully operate under exclusive franchise agreements with private haulers.

Determining what type of residential and commercial service your city has or needs is the first and most critical step to a successful Waste and Recycling RFP.

2.  Research, Research, Research.

Doing market research is one of the biggest keys to success in the RFP process and securing a new contract. Competition in the waste industry is constantly evolving. There has been a drastic increase in mergers and acquisitions within the waste industry in the last five years, increasing both risk and opportunity for municipal waste contracts.   Mergers that gobble up local competitors can limit market competition; on the other hand, the combined resources of a newly merged company can provide needed capital for the services your city needs. Want that giant recycling center paid for? The newly merged company may be able to provide that. Conversely, smaller companies can often provide a more tailored approach to your municipalities’ needs provided their equipment and operations are adequate. Just because a particular waste hauler isn’t currently servicing your market, doesn’t mean they wouldn’t if given the opportunity. Many companies would drive the extra mile or even purchase infrastructure to service a municipal contract. This can lead to added competition and lower contract prices.

At the end of the day, market research is the name of the game. Look for government, non-profit, or private entities that provide information or advice on regional waste opportunities. Investigate regional players looking for infrastructure investment opportunities. Find out how your waste stream is currently sorted and where the different streams go. Set up facility tours of potential bidders and program reviews. Find municipal entities of comparable size for case studies.. The more market knowledge you have the more likely your new waste contract will be the envy of the region.

3.  Establish and Maintain Your Criteria for Selection.

Having a well-defined set of criteria for selecting your provider is paramount to the process. State law not only establishes the criteria defining responsible actors to service your municipality, it also defines what should be considered in selecting a winning proposal. Make sure to research and clearly print the criteria in your Request For Proposal and on any paperwork relevant to selection committees. When judging proposals, build a prioritized list of criteria. Choose the values that best reflect your community desires (price, infrastructure investment, recycling opportunities, etc.) and tie them to your state’s criteria for adjudicating proposals.   This will make the bidding process clear and help guide an objective selection process.

4. Assign a Value to Fringe Benefits.

When reviewing bids for waste service, put monetary and social value on any services or equipment offered for free. Often haulers will include amounts to pay for roads, community outreach, and education programs. These gifts of infrastructure, equipment, or services should be quantified and weighed against the total cost of the service to make sure you have the most accurate comparison between bids. When well documented, this also ensures that you have met a justification of your decision. 

5. Build Room in Your Process for Clarifications.

If needed, extend the bidding process to allow for typed clarifications between the proposal submission and committee selection. Make any clarification questions universal so you can send an identical sheet to each responsible actor. Ask for pictorial descriptions of equipment or signage as well as the specific monetary commitment of each investment to be made (e.g. $20,000 for a recycle drop-off facility or $15,000 for education programs). No matter how perfect your Request for Proposal is, there will always be some back and forth with bidders for clarification. Keeping the channels of communication open and transparent will lead to the best proposal for your municipality and limit recourse of non-selected parties.

6. Fees and Price Increases are Negotiable.

When drafting an RFP or negotiating a final contract, ask for language that specifically addresses any current or future fees. Base rates for scheduled trash are often increased by as much as 35 percent by internal hauler fees, especially when your contract covers commercial service as well as residential services. One way to protect against this is to specify in the RFP that any pricing bids should be inclusive of all fees and represent an ‘all-in’ price. Also, work to address how the price can or should increase over the term of the agreement. If the provider wants to work with your municipality enough you may have a contract that has no price increases for the entire term of the agreement. Other contracts may allow for annual CPI increases or passing through of landfill price increases.   Either scenario may make sense, depending upon, your local market conditions and what your research has shown. At the end of the day, you need your provider to be happy. As with any contract, the most important things are that it’s clearly defined, understood and fair for both parties.

7. Begin the Process Early.

Getting started with adequate time before the contract end date will allow for a smooth process. Most municipal waste and recycling contracts range from one to five years with a heavy emphasis towards longer-term contracts as it’s not desirable (or necessary, when done right) to be constantly reworking an agreement. When determining how far out to begin the process, consider if there are going to be any changes to the level of services needed. For example, are you going to go from an open market to an exclusive franchise arrangement? Have you had any perpetual issues or requests from the public? Are you hoping to change or expand your city’s recycling program?

If there’s any change to the status quo, we recommend getting started at least one year prior to the end of your current agreement. Big changes will require a large amount of research and public outreach to ensure it goes smoothly. If you are keeping the same services but wish to re-bid to ensure your city gets a quality provider at fair market rates, we recommend getting started about six months prior to the contract expiration. This will allow enough time to manage the formal RFP process and execute a new contract with ample time for auditing your current operation, soliciting bids, and asking for public feedback.

Any RFP or contract for your municipality requires hard work and attention to detail, especially when it comes to waste and recycling. While rare, everyone has heard of haulers failing to honor their agreement, trash piling up, and public outcry pouring in. Following these seven points will help ensure your municipality gets a quality waste contract and provider, and your trash affairs come out smelling like a rose.

Rob is a Senior Consultant at P3 Cost Analysts. P3 works with thousands of clients across the US and specializes auditing and reducing telecom, waste and utility expenses for businesses and governments.  If you are interested in our consulting services you can reach out to us at info@costanalysts.com.  

5 Cost Reduction Ideas for Thrifty Business Owners

Good businesses are constantly looking for ways to save money and improve their bottom line, and most business owners would love to do that without having to cut employee pay or benefits. If you’re looking for non-payroll cost reduction ideas, here are a few below.

1. Waste Audit

Almost every business has waste and/or recycling expenses. These costs can add up dramatically at high volume or multi-location businesses. Furthermore, these costs have been rising at one of the highest rates per the government statistics.

As a result, waste haulers are relying more on ancillary charges to boost their bottom line. A litany of fees can dot even the simplest of waste bills. These fees can range from: fuel, environmental, overage, extra yardage, container maintenance, recycle recovery charges, franchise fees, delivery, exchange, swap out, snapshot, regulatory cost recovery, etc. The list goes on.

Changes to recycling markets in recent years have also drastically changed the cost structure and landscape.

Determining what fees, costs, services and recycling programs are valid and necessary for your business will help drive down costs in this expense category.

2. Utility Audit 

Think of a utility audit as forensic accounting applied to your natural gas, water, sewer, and electric bills. There are hundreds of tariffs and calculations that go into arriving at what your costs are each month. How do you know which ones are right and what you should be paying?

Furthermore, any time there is a human involved there is a chance for an error. In our experience we’ve found that over 95% of business have at least one invoice that contains a billing error. This can result in significant refunds as well as large and ongoing monthly savings.

One example would be a misapplied tax on your invoice. If you identify one of these keep in mind in many states the vendor should refund these back to the point of error. Do not accept a 3-month credit, or even the state statute of limitations (typically 3 years). These issues can take months of follow up with many road blocks being thrown up by the vendor, but if your case is valid the effort is often worth the refund you are owed.  

3. Telecom Audit

Consider conducting a telecom audit. Telecom expenses can spiral out of control over time. You should really audit your telecom expenses every single year. If left unchecked you will find overcharges, incorrect charges, and a myriad of services and lines you do not use.

Request a copy of the Customer Service Record from your vendor (you will likely need to submit Letters of Authorization with entity EIN #’s and account numbers to complete this request).  Here is an example of a very simple telecom customer service record.  Depending on the complexity of your organization these customer service records could be hundreds of pages in length.

From here you will be able to determine exactly what you are paying for and where the lines you are paying for go to. This is the only way to verify the accuracy of your telecom expenses and look for errors and overcharges.

Managing and staying on top of the various vendor contracts, expiration dates, rebates and promotions, and market rates can also yield substantial savings.  

4. Merchant Processing Fees

If you accept credit cards and receive more than $100,000 per year via credit card transactions you should be monitoring these statements each month. There may be significant savings hiding in the additional charges you incur.

Most business owners know credit card processing and charges well enough to know there is a fee associated with each transaction, and most are effective at getting a very reasonable base fee for that transaction. 80% of the savings we have historically identified come from the ancillary charges associated with taking credit cards. These charges can cost our larger clients tens of thousands of dollars each month in unnecessary fees.

If you are spending significant money in this expense category it warrants a close look and ongoing monthly audits.    

5. Property Tax Audit 

Consider conducting a property tax audit. Each time your property comes up for assessment the county has the opportunity to raise or lower your assessed value.

This can result in giant swings in your tax bill and as a result, giant swings in the net value of your property (and cash flow).

You should take time to look into these charges and assessments and see if there is an opportunity to appeal.

If you do decide to appeal the taxable value you will want to make sure you are armed with market data (both market comps of comparable properties as a well as other comp data. A local appraiser should be able to assist you here.) Be sure to apply as soon as the appeal window opens too. Most counties allocate a certain amount each year to reducing assessed values. Once that amount runs out it may be more difficult to win an appeal, even if your case is just as strong.

Summary

These are just 5 ideas for non-payroll cost reduction to get you started. If you decide you want to employ professional help we’d love to help out.  We’ve helped thousands of clients across the country save money with our risk-free, shared savings audits.  You can call us today or send us an email at info@costanalysts.com to get started.  

What is a Telecom Customer Service Record? And why you need to know.

What is a telecom customer service record?

If you are like most people you have never heard of or seen a telecom Customer Service Record (CSR).

A telecom CSR however, governs everything that goes into your actual bill. It’s the behind-the-scenes litany of computer-generated numbers and letters that outlines where your telecom lines are going, what rates they are on, and how your charges are determined.

The paper (or electronic) invoice you receive from your telecom provider tells you very very little information about what it is exactly that you are paying for.

You can only get access to the customer service records of your account by requesting them directly from the vendor. These CSRs can be thousands of pages long, depending upon your organization’s complexity.

Why a telecom CSR matters to you

Without getting access to and correctly interpreting the Customer Service Record, you will not be able to determine if the charges you are paying each month are accurate and efficient.

Here is a screenshot of a small section of a telecom CSR.

As you can see, it’s written in industry jargon and reads like a foreign language.

Understanding and piecing all of this data together is crucial to determining where efficiencies can be gained and where any errors/overcharges be identified and refunded.

Summary

As you can see, interpreting a telecom CSR is a bit like reading hieroglyphics. If you don’t have this expertise on staff (in our experience even large IT departments do not understand these) then you need a telecom cost-reduction audit to know if the money you spend in this area is accurate and cost efficient.

Electric Tariff Test – Can you calculate an energy bill?

Understanding your electric tariff is paramount to knowing how to calculate your electric bill. And calculating your electric bill is not as easy as multiplying your kWh rate * your usage.

We’ve posted a Duke energy tariff below and sample invoice. See if you can figure out what the total billed amount should be. The below information is all you need to arrive at the correct answer. The answer is posted at the bottom of the post, (no peeking).

North Carolina Industrial Service Tariff
Duke Energy Invoice

 

Click here to see the correct amount you should have calculated.  

 

 

 

 

 

 

What is a Telecom Cost Reduction Audit?

So what is a telecom cost reduction audit? 

A telecom cost reduction audit is where you have your telecom, wireless, and Internet expenses audited by industry professionals to verify your expenses are accurate and free from errors and overcharges.

At P3 Cost Analysts we apply over 100 years of combined expertise on our clients’ behalf to save them money on their telecom expenses on a risk-free/shared savings basis.  If we can find them savings, we share in them 50/50 each month.  If we can’t, then it doesn’t cost them a thing. 

How do we find savings? 

Specifically our telecom auditors are looking for things like:

Telephone/Data/Internet

  • Billing errors/savings opportunities
    1. Misapplication of tariff
    2. Misapplication of contract
    3. Double billing
    4. Incorrect application of surcharges
    5. Billing for disconnected lines
    6. Incorrect tax
    7. Non-removal of charges
    8. Cramming
    9. Slamming
    10.  Discounts not received or misapplied
    11. Contract rate
    12. Incorrect usage of lines/equipment

Why do you need a telecom audit? 

Telecom companies make errors on invoices all the time.  We find that almost 95% of our clients have invoices that contain an error.  Many of these can be quite large.  Anytime there is a human element to invoicing mistakes can be made and telecom companies are no different than others. 

Furthermore, below is a screenshot of one section out of a 60-page telecom customer service record we recently audited.  Being able to effectively read and interpret this document is the only way for you to truly know what you are paying for. 

And interpreting the customer service record is only one of dozens of things our auditors look at. All of our clients have IT and Accounts Payable departments monitoring these expenses every month for spikes in costs.  Yet we still find savings in 9 out of every 10 audits we perform.

If you or your staff don’t have the time, energy, or expertise to truly dive into and dissect your customer service records AND you have a desire to be cost conscious and to save money, then you need a telecom audit. 

Ok, so how is it done?

An audit is conducted by getting recent invoices (2-3 months of invoices for each account) for each location and a letter of authorization for each vendor. 

  • We review all the invoices and associated contracts for accuracy and contract/tariff compliance
    • We use the bills provided an online logins to look back historically at past invoices (as far back as 36 months in some cases) 
    • We conduct a thorough market analysis of options, providers, and regulatory requirements and compliance.
    • After 4-6 weeks we deliver our findings to the client for their approval. 
    • Once our findings are approved we spend the next 4 weeks implementing the savings measures outlined
    • Only once savings begin hitting the client’s bottom line do we begin to share in the savings.
    • We then monitor their invoices every month for accuracy and overcharges, ensuring savings stay intact and remain in place.

If you are spending over $1,000/month combined on your telecom expenses then you qualify for our risk-free, shared savings cost reduction audit.  Give us a call at 1-877-843-7579 or email us at info@costanalysts.com and we can get started for you.  

 

What is a Utility Cost Reduction Audit? And why it’s important for your business

When most people think of a utility audit they think it means finding ways to reduce consumption of energy or water. And while that is certainly a worthwhile endeavor that is not what we mean when we are referring to a utility cost deduction audit.

So what is a utility audit?

A utility audit is where we apply our 100 years of combined utility expertise on our clients’ behalf to save them money. If we can find you savings, we share in them 50/50 each month. If we can’t save you money, it does not cost a thing.

Specifically, our utility auditors are looking for things like:

Electric/Natural Gas

• Billing errors/savings opportunities

  1. Key punch
  2. Meter reading
  3. Demand based
  4. Incorrect rate application
  5. Incorrect tax
  6. Multiplier/constant
  7. Incorrect implementation of contract
  8. Incorrect application of tariff
  9. Erroneous fees and taxes

Water/Sewer

• Billing Errors/Savings Opportunities

  1. Key punch
  2. Meter reading
  3. Multiplier/constant
  4. Incorrect application of surcharges
  5. Incorrect meter usage

Why is a utility audit is important for your business?

In our experience, 95% of organizations contain an invoice with at least one error or overcharge. These errors can be quite substantial. This can result in lost money each month that could go directly back into your bottom line.

Industry tariffs, codes, bills, and terminology are all written in industry jargon. This makes it almost impossible for anyone to be able to confidently determine what they are spending. Just have a look at one example of an electric tariff to see for yourself.  And calculating what your costs are supposed to be is no cinch either.  You can try your hand at utility industry math here (we’ve yet to have someone get this right).  

Simply put, if you care about the money you are spending each month then you should have your utility expenses audited by a professional.

Ok, so how is it done?

A utility audit is conducted by getting invoices for each location and a letter of authorization for each vendor. From there we conduct the following series of steps:

• We review all the invoices and associated contracts for accuracy and contract/tariff compliance
• We conduct a thorough market analysis of options, providers, and regulatory requirements and compliance.
• After 4-6 weeks we deliver our findings to the client for their approval.
• Once our findings are approved we implement the agreed savings measures.
• Only once savings begin hitting the client’s bottom line do we begin to share in the savings.
• We monitor the invoices every month for accuracy and overcharges, ensuring savings stay intact and remain in place.

Summary

Verifying the accuracy of these expenses is difficult and complex.  If you value the money you are spending in this category you should have it reviewed by industry professionals. 

If you are spending over $5,000/month on your utility bills you qualify for our audit service.  Having been in the auditing business since 1991 we’d love the opportunity to perform our risk- free/shared savings audit and see what we can do for you. 

If you are interested please reach out to us at info@costanalysts.com or give us a call at 1-877-843-7579.   

What is a Utility Tariff? And Why Does It Matters to Your Business?

What is a utility tariff? 

A utility tariff is how an energy provider (electric or natural gas) charges the customer for their energy and natural gas usage. 

Electric and natural gas vendors must submit their tariffs to the government for approval. 

There are many different types of tariffs and they can range from 2-10 pages in length.

Here’s a link to an example electric tariff

Why does an energy or utility tariff matter to your business?

It matters because ALL of your charges are governed by it.  It is THE document that determines exactly what you will pay and when you will pay it.  If you think there’s been a billing error, you must refer to the tariff.   If you think there’s an opportunity to get rebates on new energy-efficient purchases, you must refer to the tariff.  If you think there may be a way to reduce your kWh charge or demand charges, you must refer to the tariff.

This is how the energy and gas markets work.  The tariff is the governing document. 

The different types of Tariffs

Fixed rate
Variable rate
Simple large
General usage
Small general usage
3 Part flat rate block rate
Power factor
Maximum demand
Time of use
Economy 7
Economy 10
Green tariff
Duel fuel
 
And many more….

What tariff do you qualify for?

Knowing which tariff you qualify for is paramount for knowing your options, and how they will financially impact your business. Each of the above tariff types can have numerous variations each. 

For example, in one supplier market, you might qualify for a large general usage tariff if you use over 500,000 kWh per year AND generate over 100 Kw in demand each month. 

But if you drop under that amount for even one month, you don’t qualify.  In other markets, if your heating costs are funded by 30%natural gas (for example) and 70% electric, and you are a manufacturer, you might qualify for a different tariff.  The list goes on as far as variances and qualifications are concerned.   

In most markets we see about 75 different variations and qualifications. 

Calculating the tariff

Beyond reading through all the tariffs the provider has (which can range from 10-100 different varieties), you must be able to then calculate which tariff will be right for you. 

It’s not as simple as finding a tariff with a better kWh rate.  The amount of demand you generate, when you generate it, ratchets, on-peak/off-peak, historical usage, load factor, maximum demand, etc. all factor in. 

The scary part is, if you change your tariff, in some cases you can NOT change it back for 12 months.  We’ve seen this result in large additional costs for clients in the past who attempted to implement a change on their own without doing the calculations correctly.

Here is an example of a simple electric bill and tariff: https://costanalysts.com/can-you-calculate-an-electric-bill/

Figuring out what the costs should be is quite complex on your own (we’ve yet to see someone get this math problem correct).  

Some tariffs can result in significant savings but in some months it results in net losses.   The net gain over 12 months might be substantially positive or it might inadvertently be net negative.  So, again, you must be confident in your math and ability to interpret the tariffs.  

Summary

The tariffs in the utility industry are critical in determining the costs that affect your business and are only one of dozens of factors our highly trained experts review.  

If you would like our industry experts to help you out on a risk free/shared savings basis simply call us at 1-877-843-7579 or send us an email at info@costanalysts.com. 

What is a waste and recycling cost reduction audit? And why it’s important to your business

Let’s face it. Unless you are an industry guru or are dealing with waste and recycling day in and day out, you probably have no clue what a waste and recycling cost reduction audit really is.

This is article is intended to shed some light on the process and how it could be of benefit to your organization.

So what is it?

To answer this succinctly, a waste and recycling audit is where we apply industry expertise to audit your waste and recycling expenses for errors, overcharges, and opportunities for savings. We apply all of our decades of industry expertise on our clients’ behalf. If we can find them savings, we share in them 50/50 each month. If we can’t, it does not cost them a thing.

Why would you need a waste and recycling audit?

The waste and recycling market is worth over $100,000,000,000 nationwide. In our experience our clients are overspending, on average, about 30-40%. 

So why do you need a waste and recycling audit? Simply put, there could be substantial financial benefit to your organization.

How does it work?

An audit is conducted by getting 1-2 recent invoices for each location and a letter of authorization. From there, we conduct the following series of steps:

• We review all the invoices and associated vendor contracts for accuracy and compliance
• We conduct a thorough market analysis of options, providers, and regulatory requirements and compliance.
• We conduct a thorough needs-based analysis to determine exactly what your organizational service needs are. (Occasionally, haulers will claim to provide this service for customers. But there is an obvious conflict of interest when they provide it as they have no incentive to reduce your costs.) Depending upon organizational complexity this may involve site visits and dumpster audits. We get as dirty as we need to, to help our clients save money.
• After 4-6 weeks we deliver our findings to our client for their approval.
• Once our findings are approved, we spend the next 4 weeks implementing the savings measures outlined
• Only once savings begin hitting our client’s bottom line to we begin to share in the savings
• We monitor the invoices every month for accuracy and overcharges, ensuring savings stay intact and remain in place.
• Furthermore, for clients’ that wish to take advantage of it, we offer our ongoing waste service. This allows managers and supervisors to call our 1-800 number or email us for support issues. This saves valuable employee time instead of waiting on hold and hoping the issues get resolved. One call to us and we handle it on our clients’ behalf.

Summary

Verifying the accuracy of these expenses is difficult and complex.  And managing this expense category is a full-time job that requires decades of industry expertise to do it properly.

If you value the money you are spending in this expense category you should have it reviewed by industry professionals. 

If you are spending over $1,000/month on your waste/recycling expenses you qualify for our audit service.  Having been in the auditing business since 1991 we’d love the opportunity to perform our risk free/shared savings audit and see what we can do for you.

If you are interested please reach out to us at info@costanalysts.com and we will put you in touch with one of our local franchise experts to get started.