Quarterly vs. Monthly Tier Structure

When a multi-housing manager stopped by our booth at an Apartment Association trade show a few months ago, she asked me, “Why Read/Bill/Collect companies exist? I mean, we visually read our own water submeters and do the billing ourselves.”

Seriously?

Aside from the fact that doing the reads yourself is a great way to open yourself to at least the perception of conflict-of-interest, computing the correct rates (read correct as another way of saying legal) is not so simple.

You see, during our conversation, she mentioned that her property is billed quarterly and she bills residents monthly. Aha!!! I asked for a copy of her last quarterly bill and a sample resident bill that she sends out.

A couple weeks later, I received a copy of a quarterly property-wide bill and a resident bill. Guess what? The property manager wasn’t an expert on rate analysis and so she had been shortchanging the landlord for thousands of dollars per month for years.

How so? Their water and sewer tier structures are based on how many gallons of water the property consumes per quarternot per month. Since she was billing each resident on what that resident consumed per month, she was billing residents only in the first tiers. And their second water tier was 50% more than their first tier. Their second tier sewer rate was 70% more.  And ready for this? Their third tier water – which no resident had paid in years – was 300% of the first tier rate.

This is only one example of many in which what looks like a simple rate question is actually more complicated than it appears. Incorrect and illegal billing of electric, gas and water can result in massive penalties.

She signed on. A new and happy client!

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