Wednesday, March 30, 2011

Is a Telecommunications Bill Audit Right For You?

The telecommunications of a company can often be a confusing task for those running a business. Many managers are unaware if they are saving the most money possible and using all the services provided to help them achieve maximum efficiency. For many companies, a simple telecommunications bill audit can verify if you are getting the most out of your telecommunications services. Read below to view answers to common audit questions and to see if a telecommunications bill audit is right for you. Digby 4 Group, Inc.’s Jane Laino breaks down the audit process below. 

Does a Telecommunications Bill Audit Make Sense for your Organization?

What is a Telecommunications Bill Audit?
A telecommunications bill audit is a service designed to validate the accuracy of your monthly telecommunications billing and arrange for refunds if overbilling is found.  The focus of an audit is typically your land-based voice and data services (as opposed to wireless-mobile services where refund opportunities are usually limited by the contracts.)
Overbilling falls into two general categories: either you are being billed for services you do not have or you are not being billed the correct charges. 
Validation of charges compares the billed rates against your contracts with your telecommunications service providers.  For services that are not under contract, the audit checks the published rates available from the service provider.
Some audits also look for potential savings for issues such as finding services you have in place, but do not use or identifying services that will cost less if you place them under a contract. 
When you sign up for an audit, it is important to understand whether it is a ‘refund only’ audit or includes ongoing savings as well. 
This is important because the auditor’s fee is based upon a percentage of the refund and/or savings – called a contingency fee (the fee is contingent upon the amount of the refund or savings.)  If there is no refund or savings, there is no charge for the service.

What makes your organizations a good candidate for an audit?
The most experienced telecommunications bill auditors know where the best opportunities lie and it is in their best interest to pursue them. Otherwise they can spend a lot of time and effort for little return.  Here is our experience in terms of what makes an organization a good audit candidate (meaning that it is worthwhile for you to pursue it as well.):
Ø      Spends at least $25,000. monthly on voice and data services. The greater the spend, the greater the chance of billing errors.
Ø      Has not had an audit for at least 3 years.   Refunds covering a longer historical time period are worth more.
Ø      Does not have a team of people on payroll whose job it is to find billing errors.   In-house teams generally do not welcome outside auditors and can make an audit difficult to conduct.
Ø      Has had contracts in place with telecommunications service providers for at least the past two years.  If auditing bills under a brand new contract and a billing error is found, it will only result in a credit of a few months.
Ø      Does not have contracts in place whose terms and conditions limit the amount of potential refunds for overbilling to several months – many contracts do.
Ø      Buys telecommunications services from the “traditional” providers such as Verizon, AT&T and Qwest vs. resellers or other types of telecommunications service providers who may be less regulated and not as likely to issue refunds.
Ø      Does business in a state where the public utilities commission requires billing error refunds to include high interest payments. (New York State requires Verizon to add 18% interest to refunds.  For other states 3% to 5% is more typical).
What does the audit process entail?
Once underway, the audit process will not take up a lot of your time.  Most auditors request the following to get the process underway:
ü      A list of your telecommunications services providers and billing account numbers with each.
ü      Access to current bills, preferably at the service provider website.  If you do not have this it may take a few weeks or longer to set up, so if you are considering an audit, it is a good idea to establish the ability to view bills and records online in advance.
ü      A complete copy of the contract you have with each service provider and any attachments, schedules and amendments that relate to the contract.
ü      A copy of your in-house records listing circuit numbers and business purpose (if you have this – many organizations do not.)
ü      A Letter of Authorization on your company letterhead stating that the auditor can speak to your service provider to request information about your billing and contracts.  Some service providers require additional documents such as non-disclosure forms to be signed by you before they will release information to the auditors.
Once the auditors have this information, they begin their discovery process.  Experienced auditors will know where to look for the most likely errors.  If you are looking for the maximum return, it is important to let the auditor use their judgment on which bills to prioritize.
It is a good idea for you to let your service provider representatives know that an audit is underway and you may want to introduce the auditors to your account executives on a conference call or in person.  Most account executives are familiar with the audit process. 
As the audit proceeds you should get regular status reports identifying and briefly explaining either claims that have been submitted on your behalf for overbilling or in some cases, items that are being questioned that may result in an overbilling claim.
Most service providers have their own teams whose job it is to handle billing error claims and to minimize the refunds paid out.  Discovering the errors is part of the auditor’s role, but knowing how to recover the maximum refunds depends on experience, knowledge and often diplomacy and negotiation skills.
A large refund from a service provider can take months to recover.  A refund may come as a check or a credit on your monthly invoice. 

What kind of results can you expect?
Audit results depend upon many variables as we’ve mentioned above.  If you have not had an audit in several years and meet some of the criteria for a “good audit candidate” you may receive refunds equal to 10% to 20% of your annual expense and reduction in ongoing expenses by the same percentage. 
If your auditing firm offers other services to help manage your communications expenses, the audit is often a good, low-risk starting point to test the company and see how the relationship works. 

By Jane Laino, DIgby 4 Group, Inc., 212-883-1191,
“We help our clients manage communications technology.”

DIgby 4’s services include Telecommunications Bill Auditing by a seasoned team of auditors, each with over 30 years of experience.
© Copyright Jane Laino, 2011


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