4 Ways to Save More Now with TEM
With the evolution of technology continuing to grow forward, there’s no doubt that organizations across the globe are seeking new ways to update their invoice management process and complicated technology environments.
Accounts Payable and Chief Financial Officers understand the need to automate but proceed with caution. With automated procedures, the risk of accuracy is always an important variable in the process. Trusting automated systems can put the risk of accuracy on the side which can result in extensive overpayments and other overlooked fees which can make the automation process irrelevant and redundant.
According to the American Productivity & Quality Center (APQC), manual labor costs consist of 62% of costs related to Accounts Payable (AP) operations. Additionally, the larger the business the more possibility and room for error occur. Even at a very small rate of 1%, those errors add up. Let’s apply this simple mathematic equation to push the numbers into focus:
If your accounts payable employee’s annual salary is $75,000, the amount it may take to resolve one error or dispute equates to about $36 per hour, plus an additional $100 (on the low end) of bank fees. This means one simple error or dispute could cost your organization $136 per error.
If your organization makes 1,000 payments per year at a 1% error rate and 10 errors per month, you could be wasting $16,320 in valuable operating costs. Turn that up to 3,000 payments per year at the 1% base error rate of 10 errors per month and you’re losing $48,960.
The errors are costly, especially if you are adding late fees onto the costly bank fees or resolving disconnections with service fees. A modest 1% error rate can easily climb to 20% or higher! This is where telecom expense management (TEM) solutions and automated solutions come into help.
What is TEM?
TEM is an industry term that can often fall underneath the Telecom and Technology Expense Management phrase as well as Travel Expense Management. Both services are an excellent way to streamline your invoices and track expenses accordingly. In this circumstance, we will focus on the Telecom and Technology Expense Management side for your AP purposes.
TEM solutions generally include asset tracking, cost allocation, and invoice management. Whether you are managing one device like a household landline or 1,000 devices, tracking these devices, allocating these costs, and auditing invoices actively for accuracy are time-consuming and tedious which is why most organizations skip this step, resulting in copious unnecessary fees.
ONE. Understanding Common Telecom and IT Fees
There are five different kinds of costly fees you may find on your telecom invoices associated with your IT assets and invoice processing. According to Forrester Research, invoice errors can amount to 5% - 12% of total telecom budgets. These fees vary differently from state to state, country to country, and amongst various organizations and include:
Slamming and Cramming Fees: Slamming is the illegal practice of switching your telephone provider to another without your approval or permission. Cramming is the illegal practice of placing unauthorized or misleading charges on your bill which are occasionally discovered during monthly invoice audits.
Unprocessed Disconnection Fees: Nearly a quarter of all requested disconnections go unprocessed and require a secondary request submission. IT typically takes several months after the initial request for the disconnection to be processed and credited to your account. This is often overlooked by organizations across the globe because it requires such high-touch management to ensure provider service fulfillment.
Contract Compliance Errors/Fees: Rates and fees outlined within a contract are often overlooked, especially in the case of hundreds of wireless devices and lines. Contract compliance is often abused because IT managers don’t have the time or resources to review and ensure invoices are in accordance with contracts month over month. Other times invoice review is done under the assumption that the carrier is billing as agreed upon and rubbing stamping approvals without verifying costs.
Inaccurate Taxes and Tariffs: Tariffs for telecom services are astronomical. Are you paying tariff rates or are you paying what your contract states? Confirming that tax exemptions are being applied can save tens of thousands over the years and are extensive parts of the telecom expense management process that get overlooked as taxes vary from state to state.
Multiplicity: Occasionally lines may appear on two separate invoices from the same carrier. This can amount to a big problem, especially in large and complex telecom environments. If you know that a line has been billed multiple times, the credit recovery process can be time-consuming as many providers offshore their customer service.
TWO. Invoice Audits
Catching errors and recovering credits is a full-time job, part investigation, and part detailed project management as audits come in many shapes and sizes. In many cases, a physical audit isn’t necessary and can be overkill as IT management generally as these assets and infrastructure under control. Instead, strategic contract and invoice audits can be executed by creating an inventory through careful examination of line items, including historical audits and ongoing audits.
Historical Audits: This type of audit reviews the past six months of historical invoices to understand taxing and tariff accuracy as well as contract compliance.
Ongoing Audits: these are the monthly invoice reviews that analyze the billed assets and amounts in accordance with your contract terms. Since your IT environment isn’t a static environment and changes constantly, ongoing audits are critical to prevent overspending and missed errors as well as stopping issues before they occur.
THREE. Streamlining the Invoice Approval Process
Since most invoices require two to three different individuals to approve a single invoice, streamlining this process for multi-level approval is very important to expedite the approvals. With an invoice approval tool inside of a TEM platform, you can process any recurring invoice from telecom to utility and waste invoices and everything in between. The two-step invoice approval process includes:
Step 1. Assign Approvers: Invoices can be approved by multiple approvers; these details are included upon account registration and invoice setup.
Step 2. Email Notifications: Once an invoice has been processed and audited it is ready to be emailed to an assigned approver(s). Approvers can be assigned by cost, GL codes, department codes, or even by locations. These rules are assigned at implementation. A secure email with a link to the invoice queue is sent to the assigned approver. The user is prompted with a list of invoices pending their approval and provided with each invoice in the queue are sortable fields of charges, variance, account info, and any pertinent notes regarding the invoice.
Step 3. Added to Queue for Payment and Paid: Once an invoice has been approved, it is added to the bill payment queue and paid on your behalf should you use those complimentary services. If something looks incorrect, an invoice can be rejected and kicked back to Valicom for disputes or credit requests.
The following are four ways you will benefit by leveraging an intelligent TEM solution:
Save time by offloading recurring tasks.
Streamline processes with intuitive tools.
Add visibility through cost allocation and reporting.
Avoid late fees and service shut-offs with consistent payment.
FOUR. Bill Processing & Payment
Many TEM companies are offering complimentary bill payment services for a few reasons. This service offers further benefits to each client which offloads a heavy workload and additional corporate savings. This service fits well into the flow of invoice approval process and can offer rebates and other savings to the TEM vendor as well. Because this service offers a sizeable amount of soft-dollar savings, most organizations take advantage of bill payment.
ABOUT THE AUTHOR: JEFF POIRIOR
Jeff brings 25 years of telecommunications and information technology management experience in voice and data networking, server support, and telephony and security; with a significant emphasis on customer service. Prior to joining Valicom, he was chief of the infrastructure support section for the Wisconsin Department of Transportation. Jeff was the vice president of operations for CC&N, overseeing telecommunications, help desk, data, and desk side support services. Prior to that, he served as the associate director of technical resources for Covance, responsible for managing systems and network operations supporting 1700 users in Wisconsin and Virginia. He has also led data center operations at Magnetek Electric, supporting mainframe systems, client/server applications, telephony systems, and computer-aided design. Jeff holds a bachelor’s degree in business administration from Cardinal Stritch University and a master’s degree in business administration from the University of Phoenix. In addition, Jeff is a past board member of the Wisconsin Telecommunication Association.