Why it is so important to Monitor your Utilities and Manage them properly!
Your Utility Costs can be a major factor that directly affects your bottom line. In most businesses, your electricity and water payments are generally “grudge payments”. You hate paying them because you do not know what all the charges are for; and why the bills always seem to be getting higher and higher even though you are trying your best to try to reduce them.
At Archon, we always presume the bill to be incorrect until we can prove it to be correct. Normally, you have a small Petty Cash account, and it balances to the very cent every month, yet you blindly pay your electricity and water account month after month without questioning whether it is 100% correct and not knowing what makes all the charges. Some big users we have come across do not even question the shortfalls and just “make budget” for it. How absurd is this! Without proper management you are possible cutting into your profits, with an expense that you do not have control of. You cannot plan properly for any further expansion because you do not know what is making up the costs and how you can reduce them. Therefore, auditing your account with Archon on a monthly basis is paramount to taking back control of your utility expenses. Putting yourself back in the driving seat and in control of your business.
These are some of the challenges we come across for Commercial Properties in our day-to-day activities that we would like to share with you. These can all be overcome by proper monitoring and management. Give us a call and let us have a look and see how we can make paying your utilities a pleasure, confident that it is correct and fair.
Challenges for Commercial Properties we encounter and how proper Archon monitoring and management can make that “grudge payment” a payment that you are comfortable with:-
Higher bills due to lots of estimations
Estimations occur all the time. This is the most common occurrence we find that does not reflect your correct consumption. If the meter reader cannot gain access, they just estimate the usage based on your average usage over the last 12 months. If your business has been closed, or production is down over that period that was estimated, you are being charged for something that you did not use. More often than not you are paying way more than you should be paying as it is worked out using your highest consumption in a 12 month period as the calculating factor. Sometimes an estimate is acceptable once in a while, but not month after month. With proper monitoring we can work out the difference between what you actually used and the estimate, and are able to keep a record of it so that when the interim adjustment is applied, you can be sure that it has been adjusted correctly.
Delays in receiving your bill
You are billed a month in arrears, so how are you supposed to keep track of what you already used last month and try to make sense of it all one month later. Sometimes you do not even receive the bill for a month and get two bills at once. How are you supposed to save and realize your saving methodologies you are putting in place when you only get billed next month for what you using today. Archon is able through effective monitoring, to accurately generate a preliminary bill for you before the council arrives. We can forecast what your bill should look like based on past trends and you can always know where your bill is heading. Perhaps you have dramatically increased production and afraid of what you bill is going to be. Wouldn’t you like to know that the hefty bill that is coming because you have been so busy producing, is not as bad as you thought it was going to be. So you can budget and put money aside to make provision for that bill when it comes at the end of next month. We can do this by forecasting based on past trends and factoring in any new production factors, so that you don’t spend all the profits before you have deducted the expenses you incurred to achieve that profit. Effectively lowering your profits again in the forthcoming month. Imagine making 1 million cans and only being able to determine what your electricity expense was in the following month when you only made 10 000 cans because the machine was broken. Real time billing makes more Rands and sense.
Problems in apportionment of bills
Are you billing the big users correctly for what they are using? Is the tenant just using their unit for storage subsiding the big user because they are being billed incorrectly according to their demand used? These are questions you should ask yourself, and an intelligent tenant could also be asking these questions. By putting the smaller use tenants on a lower tariff according to their breaker size and the bigger users perhaps on a demand charge as they put a heavier load on the system by drawing a high KVa, you can make sure all your tenants are as happy with their bill as they possibly can be. A happy tenant is a tenant for life. This data is only available if you are monitoring demand with the appropriate demand meter and are on a demand tariff.
Lot of manual and paperwork
For your administration department to go through piles of bills that they don’t understand can be tedious and overwhelming for them. This is a full time job and unless you have a dedicated Utility Management department to do this function, these matters can quickly swamp your administration and get out of control making everybody very frustrated. Why not empower them do what they know best and leave the Utilities to us. Let them do what they are experts in, and let them concentrate on what they are good at, and leave the the utilities to us, the experts. With over 27 years of experience there is very little we have not seen and very little we don’t know how to resolve in the most efficient way. Our AMR ( automatic meter reading ) interface, allows the data to be pulled in digitally in any type of flat file format, that can be exported into all property management programs you might be using. Not to mention the extra insight you will gain by trending usages and anomalies to get a multilateral picture of what is going on and where the best opportunities lie.
Illegal consumption of utilities due to non-disconnection when a tenant vacates the premises
When a tenant decides to leave your property, it is important to get a final reading to close off their account and create a starting point for when the new tenant takes occupation. What is also important is to turn off the water and electricity physically to avoid any losses that may occur due to leaks and faulty meters. If left unattended, it can slowly creep up and before you know it, there is a substantial bill that will then have to be assigned to the Landlord account. Pure wasted costs that could easily be avoided. Here it is also important when an existing tenant takes up occupation in the unit recently vacated and uses the utilities there for a period before the landlord re-assigns the meters and account. We have had in the past situations where tenants move into empty units, and no opening balance was taken and one month down the line nobody knows how much has been used. With Archon Utility Management, this cannot happen easily.
Leakages can cause havoc at any property and if it left without noticing it, can run into thousands of Rands of wasted costs. Usually at least a month goes past before anybody notices a leak in the consumption figures and by then it is too late as the costs have already been wasted. We put warning alarms in our systems that notify us and/or you if there is an unexpected usage at any time (especially at night when consumption should be zero) and allows the abnormality to be investigated before it is too late. On this topic we also have transformer loss which cannot be stopped in its entirety but can be accounted for and assigned to common area usage so as not to be a cost to the landlord.
Lack of skills of personnel eg. understanding of demand charges etc
This is self explanatory. Nobody can be an expert of all things at the same time. Rather do what you do best, concentrate on what has made your business successful, and your business divisions to do the jobs that they are good at. Leave the utility management to us the experts who have seen the different scenarios and obstacles many times and know the best way around them. We see lots of different usage profiles and the effect of the different tariffs on the end bill, and can advise you professionally and with our learned insight. Remember that our passion is Utility Management. We eat, breathe, and sleep it.
Payment of unverified bills due to supplier’s pressure
Its very easy for bully tactics when you have a monopoly as in this country. “If you don’t pay we will cut you off.” OR “Pay first and we will sort it out” ( this never happens ). With our monitoring and the way we can generate your expected bill before council issues theirs, we can let you know what your bill should look like before hand and you won’t ever be left totally in the dark and exposed not knowing why your bill is so high. These problems can range from wrong charges to somebody else’s meter number and usage. We have seen it all. Nothing surprises us… that is why we always presume the bill to be incorrect until verified correct by our continuous auditing of your account.
Billing and recoveries of common areas can be a serious challenge
It is very important to charge correctly for common area usage. Identifying common area components and establishing cost-centres for these added benefits and deciding who pays for what is fundamental in ensuring that the landlord does not incur these sometimes hidden costs. Costs associated with services like irrigation, security fencing, night lighting, air-conditioning, video cameras and public restrooms should be identified, and the cost shared amongst all the tenants. Unless the landlord is the proverbial good Samaritan, these are all expenses that add value to the property and should be quantified to ensure that there is no under-recovery by the landlord. Added benefits like lifts and escalators should be paid for by the tenants on the top floor and not by the tenants on the ground floor. We create virtual meters to account for these services and bill the tenants that use them and not the ones that don’t use them. An interesting application in common area metering we encountered was when asked to work out the cost of getting cool air to the top floor of an office block. The tenants on the lower floors pay less for the cool air than the tenants at the top as it uses more energy to get the cool air to the top floors.
Without proper Monitoring and Management the under-recovery of Utility Expenses can have a negative impact on the financial health and performance of your property. With the proper checks and balances in place, you easily can turn your under-recover to a over-recovery to ensure that there is always money available to do maintenance, replace faulty meters or upgrade the property so that in the long term everybody can benefit from the improved environment.
Let us have a good look at your property and see where we can add value. With the correct Monitoring and Management we can take you underperforming, under-recovering property back to her previous glory and make her shine again.