Twenty-five years ago, I was in the business of auditing phone bills for many companies and saving them hundreds of thousands of dollars a year. Back then, that was a lot of money. I felt like Santa Claus and had lots of happy clients.
Today, the utility and phone bill auditing business is even more important, but it’s completely different. It can save much more money because there are so many more services companies buy. This week, I’ll focus on the opportunities offered by this sector.
Then, as my Pick of the Week, I’ll you about Star2Star Communications, a young and rapidly growing business IP phone service provider.
Ignoring Mistakes Is a Big Mistake
Phone bill auditing was a cottage industry when I was working in it. I met others who audited freight bills, utilities and many other expenses.
Today it’s a mix. There are large auditing firms that specialize in helping large corporations manage expenses, reduce costs and get refunds. There are also quite a few very small auditing firms that still help the small and mid-sized market.
One thing I found was that almost every company overpays and does not realize it. How much is the question. For some, it’s worth the effort to audit and win refunds, while for others, it’s not.
Generally speaking, companies don’t audit bills themselves. First of all, they typically don’t know how. Second, they don’t know what problems to look for or how to solve them. They also don’t know the proper contacts at each vendor who can get these issues resolved as quickly as possible.
Many vendors today have special people or departments to handle this because it is such a pervasive problem. I don’t believe they overcharge purposely. There are many reasons, but mistakes do happen. However, don’t just assume your huge bills are accurate. That is a costly mistake most companies make.
Large corporations get thousands, even tens of thousands of bills every month. Managing them can be impossible. Some are electronic, while others are paper. Electronic bills are the easiest to audit. Run the information through your software and it spits out the results. OK there is a lot more to it than that, but you get the point.
Smaller companies often continue to get paper bills requiring manual audit, which often takes longer. Years ago, I had to lug home big boxes of phone bills and sort through them manually to find overcharges and errors in the bills. It was like sorting through a haystack, but now and then I found a needle and it was worth the effort.
As long as you talk to the right people and can justify your claims, your client company usually gets the refund. Imagine that you closed an office five years ago but have been paying the phone and power bills ever since. Or you downsized and cut half the phone lines, yet charges for them stayed on the bill. It happens. There are many slam-dunks like that. There are also many areas that are a little more difficult to prove.
An audit consists of things like understanding what a client company looks like — then sorting through the bills to find any discrepancies. There always are plenty. The only question is, are they worth going after?
Today, clients pay many more bills every month, and they can all contain overcharges and errors. Imagine the bills for all the telephone and wireless phones in the company, including voice and data. Imagine the bills for VoIP lines, cable television, Internet access lines and network connections.
Same with freight bills, medical, power, utilities and water. Imagine the bills for all the offices and homes for workers. Getting the point?
Market Is Ripe
I think the timing is perfect for this. I am even tempted to jump back in myself. Companies are paying more and using more services and getting more bills. They are also looking for ways to reduce costs.
There are so many ways to save so many companies so much money, it can make your head spin.
So I think it is a good idea for every company to contact one of the better auditing firms and take a look. Often, the first time they take a look, they’ll spot problems that are complicated and time-consuming to address — but doing so will result in substantial savings.
There are many different ways these auditing firms work. Some charge a flat fee for a job. Others charge an hourly rate. The most popular is to split the savings on a contingency basis. That way the client pays nothing if nothing is won, but an auditor who saves the company big money does very well.
I’ll be writing about this topic again, so I invite client companies to write me an email and tell me their stories. What are their experiences with good firms they would recommend, and with those they would advise staying away from?
I also invite auditing companies to write me and tell me their stories. Share your ideas about winning and losing. Remember, companies want to save money. Once they understand there is real money to be recovered, they may be looking for good auditors to help them.
Most companies have billing errors. Once corrected, they often save between 5 percent and 25 percent. So you can see, this can be a worthwhile endeavor.
The auditing business has gone through enormous changes. The methods have changed. So have the results. Companies use more services, but that means more overcharges and more can be recovered.
Plus, today there are many more areas that companies need to keep an eye on — like cellphones, the Internet, networking and so on.
There is a gold mine in savings for many companies to find. It is too easy to be overcharged and to overpay and not know it. So roll up your sleeves and dig in. There’s gold in them thar mountains of phone bills. 
My Pick of the Week is Star2Star Communications, a young and rapidly growing company in the business IP phone space.
I spoke with CEO Norm Worthington and Director of Communications Les Freed last week, and they had a very interesting story to tell.
While other companies are struggling, Star2Star is growing rapidly and competes directly with legacy systems like the local phone companies, selling IP phone lines and the gear to make them work in the IP space.
Worthington said this is an IP pure-play that serves businesses, not consumers. It started in 2004, had its first product in 2006 and was profitable in 2009. Star2Star has had a very strong year so far in 2011 and expects to double in 2012. Not a bad story, these days.
It has some big name customers, including Dollar General Stores. It does not sell to the customer. It typically sells through distributors that sell their gear to the end users.
Ten years ago, this kind of company was not possible. Today, it is growing rapidly and is one of the firms that is shaking up a corner of the industry. This is the kind of healthy, growing business we should be talking more about.
Star2Star’s website claims it is the world’s most reliable business grade Internet phone solution. Its management has a contagious positive spirit that comes with entrepreneurial success. It is refreshing to see.
Keep up the good work, Norm and Les. Yours is the kind of company and success we need to see more of.
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Dear Jeff Kagan ,
I was searching for Phone Audit Business Opportunities and i got your fabulous write up .
I AM from India , and I AM planning to launch a Phone Bill Auditing Business and i will appreciate
help from you in setting up technical requirements.
It will be really kind if u can email me to [email protected] , to take the discussion to the next phase .
regards
Shiyas Veliyath