Suppliers

Budgets Utility Management

by Southwest Utility Solutions

I have worked with very few clients that look forward to budget season. It is one of the many traditions that unite all owner/management companies across the country. Most companies start in late summer and try to finalize by the end of October. I have seen some creative efforts by client companies, such as “budget retreats” or other workshop-type events aimed at taking some of the monotony out of the process while educating employee partners on the key factors to consider when setting budgets for the year ahead. The current economic environment can add to the stress of the budget season.

According to Forbes, 2023 brings a different flavor of uncertainty due to global unrest, supply chain instability, and soaring inflation, pointing to an economic slowdown (Leaver, 2022). An NAA study found that Total Revenue, measured as a percent of Gross Potential Rent (GPR), fell nearly 200 basis points from the prior year, while operating expenses rose 60. This resulted in a 3.3% loss in year-over-year Net Operating Income (NOI) per unit, the first decrease since 2010 in the aftermath of the Great Recession (National Apartment Association, 2021). At the same time, utility costs have risen by 35% in the past few years, and projections for 2023 expect another 12% to 62% hike depending on the market (NAA, 2022). Given these factors, it is even more critical than in previous years to re-evaluate your company’s utility management solutions. Are you using a utility solution that is effectively auditing your monthly utility bills, or are you relying on in-house teams to review utility bills for accuracy? About 17% of all utility invoices contain an error of some sort (Energyprint, 2021). Due to the high rate of errors in utility billing, your utility invoices must be audited every month before payment. Utilizing a company like Southwest Utility Solutions to audit and process every vendor utility bill can ensure that trained eyes are auditing your statements, clearly communicating with your accounting/onsite teams, and seeking resolutions from your utility vendors on your behalf. This not only saves potentially hundreds of thousands of dollars lost due to utility billing errors, but it also helps identify issues like leaks or broken master meters and reduces the payroll expenses involving the personnel needed to review bills and work with utility companies to seek a resolution. Your utility management solution should also be aggressively monitoring for utility bills that should be in your resident’s name, but you are receiving the invoice. Regulations allow these charges to be billed back to your residents with an additional fee (usually around $50) for each invoice not in their name as required by their lease.

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