How do you bill for multiple units?

In the two weeks since the last issue, I’ve seen a listserv post and had a subscriber e-mail me with similar questions.

Both dealt with billing multiple units (apartments or businesses) served by a master meter.

Best practice

Many utilities have policies that require newly constructed apartment complexes and shopping centers to meter each unit separately. However, many of these same utilities have master meters that have been grandfathered in.

If your utility doesn’t have a policy requiring individual meters for multiple unit buildings, I encourage you to adopt one.

Multiple unit billing methodologies

For those utilities that don’t have such a policy, or have grandfathered master meters, this issue discusses two common billing methodologies.

Assuming your rates have a base charge which includes a minimum usage level, below are the two most common ways I’ve seen multiple units calculated.

Average bill method

The first method is based on calculating the bill for a single unit with the average usage of all units.

To accomplish this, divide the total usage by the number of units and calculate a bill for the resulting usage. Then multiply the bill for a single unit by the number of units to arrive at the total bill.

Multiple minimums method

The second method involves multiplying both the base charge and included usage by the number of units.

To calculate a bill using this method, multiply the base charge by the number of units. Then multiply the usage included in the base charge by the number of units, and calculate a bill for the remaining usage. Finally, add the multiplied base charge to the usage charge for the total bill.

Which way is better?

The answer to this question depends on your rate structure.

When most utilities had decreasing block rates (the more you use, the less you pay per unit), the average bill method was very popular. The rationale behind this method being more usage is billed at higher rates, resulting in a larger bill and more revenue for the utility.

If your utility has shifted to increasing block rates but still uses the average bill method, you may want to reevaluate your policy because it may have unintended consequences.

Is it time to review your policies?

If you haven’t reviewed your policies recently, it may be time to do so. Give me a call at 919-232-2320 or e-mail me at gsanders@logicssolutions.com to learn how a business review could assist you.

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© 2013 Gary Sanders

Are you paying too much in credit card fees?

If you’ve been reading the Utility Information Pipeline for any time, you’ve probably realized I’m a strong proponent of utilities accepting credit cards.

The most common excuse I hear for not accepting credit cards is “the fees are too expensive”. While it’s true there are fees associated with processing credit card payments, there are also ways to keep these fees to a minimum.

Utility program rates

In a retail environment, disputed charges and returns are two factors that impact the cost of processing credit card transactions.

Utilities don’t deal with returns and, by the nature of your business, have fewer disputed charges than retail merchants. For this reason, both MasterCard and Visa offer utility programs that provide significant savings over traditional retail merchant fees.

You can read more about these utility programs here:

Convenience fees

Traditionally, these utility programs have required that you not charge a convenience fee to participate.

I’ve heard the new checkout fee rules have relaxed this requirement, but recommend you contact your merchant processor if you have questions.

Contact your merchant processor

Are you taking advantage of your merchant processor’s utility program rates? If you’re not sure, give them a call to find out.

Merchant processors want your business and it’s in their best interest to offer you the most competitive rates they can. If you feel like you’re paying too much in credit card fees, give your merchant processor a call and see if you can negotiate a better deal.

Are you providing enough ways for your customers to pay?

If you are interested in offering your customers more ways to pay or if you want to streamline the way you currently accept payments, please give me a call at 919-232-2320 or e-mail me at gsanders@logicssolutions.com to learn how a business review could help your office.

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© 2013 Gary Sanders

Cycle billing – do you have too many cycles…?

The last issue dealt with moving to cycle billing. This week, we’ll take a look at the flip side of that coin.

Do you find yourself wondering if you bill too frequently and should reduce the number of billing cycles?

Improvements in meter reading

For years, one of the most common reasons for moving to cycle billing was the length of time it took to read meters. As a way to minimize days of exposure, many utilities moved to cycle billing.

For example, let’s take the example of a utility that used to take three weeks to read all their meters using handhelds. They’ve successfully made the move to automated meter reading and can now read the same meters in three days. In this case, it may not make sense any more to continue billing three times a month.

Does it seem like every other day is cut-off day?

The most common reason for moving to cycle billing is to balance office and staff workload. However, as improvements in technology and automation have reduced the amount of time it takes to do billing, perhaps it’s time to reexamine the reasoning behind the number of billing cycles you have.

This is especially true for utilities with more than four billing cycles per month. If you have five or six billing cycles, some weeks will have two cut-off days in them. Does this pose a scheduling issue for your field staff? If it does, consolidating some cycles may be the solution to your problem.

More efficient mailing

Another reason to consider reducing the number of billing cycles is mailing efficiency. Do you take advantage of the automation discounts offered by the Postal Service?

If so, it might be in your best interest to mail more bills at one time to be sure you meet the minimum requirements for discounts at each sorting level.

Does your office suffer from TTWWADI syndrome?

Many offices suffer from what I call TTWWADI (That’s The Way We’ve Always Done It) syndrome. If this describes your office (or if you’re not sure, but suspect if might), perhaps an independent review of your office policies and procedures is in order. Please give me a call at 919-232-2320 or e-mail me at gsanders@logicssolutions.com to learn how a business review could help your office.

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© 2013 Gary Sanders