Posted by: Renodis
For mid-sized businesses with 500 to 5000 employees, most operational and financial controls center on assets, employees and other SG&A expenses. Total telecom expense control has become a much harder cost framework to manage due to various departmental budgets, multiple locations, lines of division that make telecom expenses difficult to tally in the overall finances of a business. Because of this dilemma, carriers and other service providers turn a blind eye when customers overlook complex invoices and service agreements.
Although some mid-sized companies have very tight controls on telecom assets, inventory, and invoice management, many of the businesses we audit are left in the dark. And when it’s dark, things happen that nobody is aware of.Here are the seven most common wireline telecommunications expenses that your company may find slipping through the cracks of financial controls.
1. Paying for Disconnected Service. This is the big one haunting most companies that consolidate facilities, shut down locations, or move employees from one place to another. Various parts of an organization are involved in the decision making that goes into consolidating or closing locations. During the process, it’s not uncommon to miss parts of the overall move, including line items on telecom invoices that are associated with discontinued services. Whether the carrier failed to remove the service, or the company just didn’t notify the carrier; it happens in nearly 60% of all cases we see at Renodis.
2. Unauthorized Slamming/3rd Party Charges Added to your Account. Carrier/providerinvoices for companies with over 500 employees can be quite complex. When most companies consolidate their vendors to just a select few, invoices can still become quite complex to manage and reconcile across multiple departments and employee types. On the contrary, if companies have not consolidated billing against one carrier, multi-vendor billing can also create confusion; letting unauthorized charges go unseen.
3. Unused Services. When an organization initially signs up for services, the intent is to use those services as initially planned. Some services are bundled, providing an opportunity to acquire a discount over a certain rate period for taking on services that might be fringe decisions. When special rate pricing and bundling terms come to an end, various services may be left unused. There are also times where technology innovation comes into play and services get replaced by newer technology, leaving older services dormant but still on the books.
4. Uncompetitive Pricing at your Current Rates. Unless your company is shopping rates on a consistent basis (and you have the time to allocate for this arduous task), it is likely that what your company is paying is not in line with current market rates. Most telecom billing rate structures are left forgotten and under analyzed over time. Implementing a check and balance system to keep carriers and providers honest and true is a large undertaking. In addition to reviewing rate cards, knowing the market by having access to multiple carriers and their rates is information that most companies are not privy to.
5. Non-Contracted Rates for Long Distance Billing. Long distance charges can cripple a telecom budget. If a contract is in place and new lines come on, the lines need to be linked to the contract to make sure that the contracted rate applies. It’s important that there is appropriate review of the connection between the line and the current contract. It’s not uncommon that a long distance contracted rate is at $.02/minute, and non-contract long distance charges are being invoiced at $2/minute. The variance in billing is significant. Most companies in the mid-sized market may not have the personnel to catch these mistakes, even when the carrier isn’t paying close attention to your usage.
6. Forgotten Call Forwarding Service. In relation to closing or moving locations, call forwarding is an important aspect of keeping continuity in a business. Even with phone number mobility, transferring locations typically requires call forwarding of the lines. Once a company makes the move and operations become “business as usual”, the call forwarding is long forgotten and remains as part of your monthly invoice.
7. Unnecessary Features. Call waiting, call transfer and 3-way calling features are found in nearly every audit we conduct. Whether the features are bundled or separate line items, the client ends up paying for services that aren’t needed because the premise equipment has these capabilities built into the platform. On the surface, all companies need these features to function as a business, but it’s almost never the case that the knowledge transfer from the phone system features are passed on to the person signing the telecom agreement.
There are many moving parts when it comes to managing telecom expenses. Tighter controls and regular audits can make a significant difference to the bottom line of a mid-sized company. In our experiences with auditing and assessing cost leaks in telecom expenses, these seven points are quite common among nearly 70% of all the companies we work with.