Telecom’s trouble with chronic over- and underbilling
Let’s cut to the chase … on average, how accurately do you think you bill your customers? On a regular basis, do you believe you’re billing the right amount for at least 80% of your customers? 85%? Maybe you’re an eternal optimist and you’d say more than 90% are billed correctly every time.
I applaud your positivity, but unfortunately, I have some bad news. Of the large B2B organizations I’ve worked with as part of the Pramata team, we found on average as much as 30% of all their customer accounts had substantial billing errors. That means up to 70% of their quarterly or monthly billings were the victims of chronic under- or overbilling errors.
And when we’re talking about some of your largest, most highly negotiated customer accounts, those errors add up fast to immense revenue leakage, or serious risks to customer retention and lifetime value.
That’s because billing errors create a no-win situation. Underbill and you lose out on thousands in revenue. Overbill and you run the risk of frustrating customers to the point of losing them!
It’s not your billing analysts’ fault
It’s a massive lift for anyone to find, organize, interpret and compare contracted terms and entitlements against what product or services are actually billed. Let alone reconcile the differences and determine how to permanently correct them.
Large B2B customers are sold numerous variations of complex or modified products, services or assets. Each of these possess unique pricing schemes, covering numerous customer locations and often include special bundling and/or discounts to win the deal. Once the customer is provisioned, MACD (move, add, change, disconnect) activities happen every day causing ever-changing terms, dates, and services and this creates additional fees and new states of entitlement.
These are the complex conditions and actions that complicate commercial relationships and can become an ongoing source of costly billing errors.
Improved billing accuracy starts with the fundamentals
Ensuring an accurate bill means knowing without a doubt that you’re billing for the right product or service at the right time and for the right amount to the right business entity. But the million dollar question (literally) is how do you know what is “right”?
It starts with fixing the fundamentals—the Commercial Relationship Baseline. The Baseline encompasses the contracts, orders and statements of work that define everything the customer intended to buy. The quest for billing compliance begins when you are able to make an accurate comparison of the Commercial Relationship Baseline to the Actual, meaning what was actually billed to the customer. But as we hit on earlier, that’s a monumental lift for anyone, given the myriad billing systems and systems containing contractual information.
When you find mismatches between Baseline and Actual, that’s where you’ll find those repeating under- or overbilling errors. If you underbill, you’re are underachieving on your revenue forecast. If you overbill, you have to refund money to customers and call into question your ability to ensure billing compliance. In both cases, you are not performing as planned, and the customer is far less happy than if you had billed them accurately.
How do you make billing accuracy sustainable?
If only you could eliminate billing errors for good and be certain you are billing the accurate amount for each customer with every billing cycle. Here’s the good news: You can. At Pramata, we’ve created an automated, systematic billing accuracy solution that works in four essential steps:
Commercial Relationship Baseline: We take your contractual documentation (MSAs, orders, amendments), organize them in order of precedence, and determine the most current pricing and billing terms by product and site for each account to create an accurate commercial relationship baseline of what you should be charging.
Audit & Reconcile: We map your actual transactions in your billing systems to the appropriate commercial relationship baseline, then reconcile this information to identify any discrepancies or opportunities.
Resolve Exceptions: We enable the Billing Team to collaborate with the various stakeholders to resolve the error(s), apply needed changes and generate an accurate, compliant bill every time. And we keep doing this every month, so you can remain confident in your compliance.
Implement Changes & Track Performance: We allow you to track the root causes of the billing issues and monitor trends over time so you can quickly see the source of the errors. This data lets you prioritize which existing processes need to be enhanced or where new steps need to be introduced in order to new prevent future errors.
I invite you to take a closer look at Pramata’s Billing Accuracy solution for telecommunications companies. Or if you’re ready to take the first step right now toward ending the vicious cycle of under- and overbilling, let’s talk!