Managing utilities is as critical of a component as anything else in property management, impacting both operational efficiency and overall cost. To dive deeper into the strategies available, we sat down with Angela Mackey, Industry Principal for AMS Billing (the Inhabit solution that powers ResMan Utilities) to shed light on the pros and cons of each approach to Utilities as well as how property management companies can leverage utility billing solutions to streamline processes and recover costs.
There are several options for how properties can recover utility expenses. (1) You can implement a RUBS (Ratio Utility Billing System) program based on an allocation of your utility bills. RUBS can calculate based off occupancy, square footage or both and pass those charges back to the residents less common area deductions (in some cases common area billed back is also allowed). (2) Submeter bill back based on actual usage. This approach requires submeters to be installed so that actual usage is tracked for each unit. Smart Meters are more technologically advanced sub meters that wirelessly transmit usage data in real time for billing, leak detection and conservation purposes. (3) Flat rate utility billing, where every unit is charged the same amount, is also another option but it is more often used for utilities that don’t vary each month – for example, trash and pest control. It is also possible to do a combination of flat rate billing and allocated billing.
Submeters are always the better choice since they allow you to bill back actual usage. In addition to being the fairest approach, submeters also encourage water conservation and result in residents reporting leaks sooner – reducing the risk of damage to properties. In some states it is required to have submeters and you can not bill back using a RUBS method. Depending on budget, some organizations may not have the flexibility to install submeters, so RUBS can be a good alternative. However, the use of RUBS is regulated in some states and municipalities, so submeters may be the only option in some locations.
Yes, you can look into installing submeters or smart water meters to existing equipment. There are a variety of different approaches available to retrofit a property with submeters. If you are interested in exploring submeters for one or more of your properties, it’s best to work with an established submeter company that services the multifamily industry to learn about options and get a quote. ResMan Utilities has submeter partners that we routinely work with, and we’re happy to help you begin the exploration process.
Utility Billing service providers handle the logistical and operational aspects of recovering utility costs from residents for you. They help you set up a cost recovery program that meets state and local guidelines if you don’t already have one in place. This includes assisting with your lease documents and utility addendums to make sure that you are able to bill back the maximum amount allowed without risk. They take the information from your utility bills and/or submeter readings, allocate or determine charges for residents on your behalf, post charges to your resident ledger, and send out monthly utility bills (or resident one-bills that include both rent and utility charges) to residents.
Using a third-party utility billing company at your properties allows you to effectively recover utility costs from tenants by streamlining the billing process, saving time for your property management staff, ensuring accurate calculations, and providing transparency for both residents and owners, ultimately improving your bottom line by minimizing the risk of over- or under-charging for utilities
Invoice Processing is an add-on service offered by Utility Billing providers that takes the administrative burden of collecting, reviewing, posting, and paying for utility services (e.g. water, electricity, gas) off of property management teams. These providers help ensure all bills are received and paid on time. They check for leaks and billing anomalies by tracking and reporting year-over-year and month-over-month usage. They help with budgeting and Energy Star reporting requirements, and they make sure you are billing back the maximum amount allowable. Vacant Unit Cost Recovery is the process of ensuring that residents pay for all utility expenses they incur while their unit is under lease. The process involves examining move-in and out dates of each resident and comparing them with the property's utility bills to identify discrepancies and recover charges and administrative fees from residents in situations where residents started service too late or terminated service too soon.
From a financial standpoint, it is a crucial process for businesses to ensure they receive, review, and pay their utility bills accurately. The process of doing this for multiple utilities across multiple properties all which have different billing cycles can be time consuming and error prone – especially when team members have a variety of other responsibilities. Because third party providers are focused on offering this solution, they have technology and systems in place to ensure bills are received, are accurate and are paid on time. They are also able to detect leaks, billing anomalies, and resident utility theft and prepare Energy Star reporting with efficiency and ease. Many property management companies find that using a third party for these services saves significant time and is highly cost effective.
Many property management companies find that using a third party utility service provider solves resource challenges and is very cost effective. That said, all providers are not the same so it’s important to make sure you understand the services that they offer and the total cost of each service, including add-on fees. Some providers, like ResMan Utilities, have simple pricing that includes all services. The total cost of this model is often less than with other providers that may have a low monthly base price but charge lots of addition fees like a fee for each incremental utility billed to residents, new resident account setup fees, moveout fees, meter reading fees, integration fees, etc. It’s important to also consider how well integrated a provider’s technology is with your property management system. If your team needs to log in to another system and manually transfer data between systems, it may not be as efficient or cost-effective as a solution that is fully integrated. Finally, the reputation of the service provider is a very important consideration. Check references carefully because when you or your residents have questions or you need to add new properties, you want to make sure your provider will pick up the phone and provide the support you need.
Utility expenses are going up not going down, so it is more important than ever to have a RUBS or submeter solution that will ensure you maximize utility cost recovery.
State and local utility regulations are always changing. Having the support of a third party provider working on your behalf will help ensure you stay in compliance with any new regulations.
For properties that have submeters in place, it’s important to know that those meters have a useful life of about 10 years. As meters age, they slow down and impact your ability to fully recover costs. If you aren’t budgeting for replacement, it’s important to start doing that. And if your submeters have been in place for more than 10 years, it’s time to reach out to ResMan Utilities or another utility or submeter provider to evaluate replacement options.
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