Most major purchasers can expect to shave between 2 and 4 percent off their utility budgets by challenging incorrect bills. Systematic bill-checking covers four aspects:
Under the heading of 'authenticity' the issues are these: is the bill addressed to the right customer by the right supplier? Are the data and prices correct? It is not unknown for a customer switching supply from one gas company to another to end up being billed by both. One particular gas company has a notorious reputation for getting the price wrong on bills. In another recent case an office building in Edinburgh had bills citing two water meters, one of which was found to be serving the neighbouring shopping complex.
For the large multi-site utility buyer, whose purchasing clerks cannot be expected to recognise such errors, two things are absolutely essential: (a) a tight site-by-site budget coding scheme which clearly identifies individual points of supply (a key concept) and forces expenditure to be allocated accordingly; and (b) an effective system for notifying the accounts staff of disposals of buildings, alterations, and other changes to the property portfolio.
Authenticity of the figures in the bill will be easiest to check if there are meter readings which can be checked against in-house readings. A relatively constant value (such as a maximum demand level or power factor on electricity bills) can be verified against earlier bills.
Authenticating bills for bulk deliveries of oil can prove a real headache. We recommend, as a prudent minimum, retaining all delivery notes and collating each one with its corresponding invoice.
'Continuity' means no time-period overlaps and no discrepancies between previous and present bills. It is easiest to check when meter readings are given, because the previous meter reading can be checked against the previous bill. Where no meter readings are shown the bill may indicate the start and end dates of the period to which it refers, and these offer some small measure of protection. There is still a serious problem with such things as oil invoices where the commodity is delivered in bulk drops, since it can be very difficult to confirm (a) that you are looking at every bill in the sequence and (b) that you have not been billed twice over for the same delivery (or even for a delivery which you never had).
'Integrity' addresses the issue of whether the bill is arithmetically correct. Arithmetic errors in bills are now becoming a rarity, but they can occur, more usually when a manual bill or a corrected or amended bill is rendered.
Some bill formats are extremely simple to check (a bill for a single delivery of oil, or a fixed-price gas contract for example). Other bills, notably for trade effluent and especially for electricity, can be quite complex.
Where the tariff is complex, it may be convenient to set up a computer spreadsheet which mimics the billing tariff calculations. The current bill's meter readings and other input figures can then be entered, yielding a calculation of the expected cash total which can be compared with the actual billed amount. Such a spreadsheet might be nothing more than a simple table with a row for each bill and a column for each item on the bill. But with today's three-dimensional spreadsheet programmes it is possible to construct a 'stack' of replica bills for a particular account, in which the continuity and integrity are automatically checked by appropriate watchdog formulae embedded in the sheets.
'Deviation' refers to the reasonableness of the bill relative to earlier billing periods. This provides a safety net which will flag up any errors not been detected in the earlier stages. Various validation strategies can be used depending upon the circumstances; a rough-and-ready check against the previous month, or against the corresponding month last year, is the bare minimum. With complex electricity contract tariffs and to some extent with effluent charges, where it may not be clear which of many billed items to use for comparison purposes, it may be useful to derive a parameter (such as pence per unit) which can be used as an overall yardstick for comparison purposes.
These are the so-called 'internal' consistency checks. It should not be forgotten that it is possible to apply external yardsticks as well, including production-related or weather-related variable targets where appropriate. These give the user a handle on whether an excessive quantity was purchased in the first place.
Whether you employ manual checks, off-the-shelf bill-checking software, or DIY spreadsheets, make sure that the procedures that you implement enable you to check your bills for authenticity, continuity, integrity and deviation - the ACID test.