Utility bills are a significant part of business expenses. According to experienced auditors, 95% of businesses have an invoice with an overcharge or error. These small errors can increase the utility bills substantially.
Imagine losing a large amount of money to these errors, and by the end of the year, you will see it affecting your bottom line. An audit of utility bills can check for these errors and ensure the money goes back to your bottom line.
What Are Different Utility Expenses for an Organization?
For most organizations, water, electricity bills, and property taxes are utility bills they have to pay monthly or annually. Depending on the industry type, some organizations also have utility bills for uniforms and linens.
Most companies consider these bills accurate and avoid going deep to check the overcharges. This article discusses the best ways to conduct a utility audit that saves you costs to help your business save thousands of dollars.
Check the Numbers
The audit should start with the current meter reading. You also need to check the energy usage number and make sure it matches last month’s bills. Check the meter reading on both bills to ensure you are not charged twice for a month or the same time period.
Look at the Rate Structures.
Though rate structures are standard, they can be different for your company. Some utility companies offer a range of rate structures to companies. If the utility company charges a standard rate, you need to conduct research and determine the best rate structure offered by the utility company to other clients.
If you find the utility company is offering special rates to selected clients, you need to approach the utility company and ask for the reason for higher rates. It would help if you did the groundwork of research in the utility audit and find the company’s best utility rates, as they will not tell you.
Monitor Increase in Bills
If you see a surge in utility bills, you need to find out the reasons. In most cases, the utility bills are expected to remain constant. For example, the water usage remains similar for all the months throughout the year unless there is some reason for increased usage like a construction activity on the premises or a company function.
The electricity consumption fluctuates as per season. If your office is located in a colder region, the winter season’s energy bills would be higher due to heaters in the office. Similarly, if your office is located in hot temperate zones, the electricity bills during summer will be significantly higher due to the increased use of air-conditioning systems.
If you see an unexplained increase in the energy bills or other utility bills, you need to contact the utility company and seek an explanation. If you find any anomaly with the utility bills, you need to get the reasons.
Take a Look at Tax Exemptions.
All utilities charge a service tax to businesses. However, they also offer tax exemptions to their clients at the end of the year. You need to perform research on the tax exemptions provided by the utility company. If you see that the tax exemptions are missing, make sure the mistake is rectified and reflects in the final bill.
The tax exemptions change with company policies or consumption. Please make sure the utility company is offering you tax exemptions as per their agreed business policies.
Check for Errors
Even though computers generate the utility bills, there is always a possibility of clerical errors. Make sure the math is correct. The number can get inverted, and the system might make mistakes in calculations. So take a calculator and check the utility bills for clerical errors.
Check Merchant Accounts
Most organizations have merchant accounts with banks. There is always a possibility of overcharges due to wrongly calculated fees. The audit company will check all merchant account statements and ensure the bank or credit card companies have not overcharged you or levied wrong fees for the transactions.
Realize Savings in Waste Recycling
The audit companies take a holistic approach at the business expense and dig deep to know the wastage of resources. For example, the audit service can help you find overcharging by the trash vendors by checking the bills. It will help minimize your time and maximize your profit.
These are the best ways to conduct a utility audit that saves you costs. However, the savings are not here. The audit companies can also help the organization realize more savings by checking all business expenses in detail and reduce expenses by correcting overcharges.