Resident Utility Billing is the most effective way to recover utility expenses from residents at multifamily properties. However, some property managers are unaware of the risks associated with using a flat fee model to bill their residents. Others are uncertain about the types of utility billing programs that are available, and how to determine which one is right for their portfolio. The second video in our PayLease Property Talk series, Your Best Billing Strategy, covers how property managers can choose the best strategy for their business. We breakdown the pros and cons of each of the following utility recoupment methods: Flat Fee, RUBS, and Submetering.
Watch this short video to determine the best billing strategy for your portfolio:
How to Find the Best Utility Billing Strategy
Because there are so many different methods and considerations for recouping utility costs, we suggest partnering with a provider that can help guide your strategy.
Watch the first video in the Property Talk series, To Bill or Not to Bill.
The first method property managers often try is charging a flat fee. Please note that this is not the same as including utility costs in the rent. A flat fee, for example, would be an extra line item on the resident’s bill with a fixed amount, specifically for utilities.
It’s the easiest way to bill back, but it’s not the best option because utility rates fluctuate. So when rates go up you’re undercharging and leaving money on the table. When rates go down you risk overcharging and getting in legal hot water. …Sounds like one stressful jacuzzi.
The flat fee method also doesn’t allow you to promote conservation because your residents don’t see the impact of their use if they’re charged the same amount for utilities every month.
A better alternative to charging a flat fee for utilities is charging based on actual usage determined by submeters, or using an allocation-based model like RUBS.
This brings us to our next billing method Ratio Utility Billing Systems, or RUBS. Essentially RUBS is a method for determining how much residents owe for utilities based on:
- the number of occupants in their household
- the square footage of the unit
- or a variety of other unit-specific factors.
The most efficient and precise way to bill back and promote conservation is to utilize a full-service submetering program. Submeters precisely track each apartment unit’s utility consumption, allowing property management companies to accurately bill their residents for their share of the bill.
If you already have Submeters installed, then you’re way ahead of the game, and you’re going places kid. Now the most important thing you have to worry about is choosing a billing provider who can:
- Capture the reads
- Run diagnostic tests and proactively identify faulty meters
- Provide maintenance support
- And offer expert regulatory guidance and ongoing audits to keep you in compliance
- RUBS is quick, easy to deploy, non-invasive and requires no capital investment.
- Submetering is dependable, accurate, legal, but does come at a high capital cost.
Decisions, decisions… either way, it’s imperative you have the right partner to ensure the billing process is easy, safe, and accurate.
“How on earth do I find this type of partner?!” – you implore with your hands to the sky. Well put your arms down, and let’s explain the two different types of vendors you could work with if you’re thinking about implementing a billing program:
- The more traditional method, Read-Bill-Collect or RBC Vendors
- A Full Service Partner with Convergent Bills
In our next video, PayLease Property Talk: Choosing the Right Provider, we’ll get into the pros and cons of each of these options.
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Podcast: Starting a Utility Billing Program