The Perils of Treating Energy & Utilities Invoices Like Every Other Payment

Every 30 days or so, I get the same alert on my phone—“Your electricity bill is available for viewing.” I take a quick look, make sure nothing seems too off-kilter, and promptly forget about it for the next 30 days. Because I’ve set my personal electricity bill up for auto-pay, the entire process generally takes less than 60 seconds from the time I open that email to when I’ve gone back about my business. It’ll get paid at some point over the next two to three days. Wash, rinse and repeat. The water bill, the internet bill, the waste bill—they all follow a similar process; they all kind of just…happen.

But what happens if we amplify this? Instead of a handful of invoices per month, maybe it’s a thousand. And instead of each invoice generally being less than $200, they’re $300,000 electricity invoices for the largest manufacturing operations in the state.

A “set it and forget it” approach simply can’t work with corporate utilities expenses.

Many companies already realize this. Sarbanes-Oxley, in particular, put more focus on internal controls to ensure someone, somewhere within an organization, approves an invoice before it’s paid. But a lot of companies stop there—“We’ve got processes in place for review and approval internally,” or, “We ensure all utility invoices are subjected to the same audit controls that the rest of our invoices are subjected to.”

Utilities Payments Are Different

I don’t doubt that most companies, particularly those that are publicly traded, have a documented and auditable process for paying invoices—and that they follow those processes to a “T.”

But lumping utility invoices in with the rest of a company’s invoices is a particularly dangerous and potentially highly punitive practice. Just like it is when dealing with monopolies, there’s not a lot of leverage:

You want to extend payment terms? For regulated utilities, no chance.

You only do weekly payment runs and pay by check? Hope it gets there quickly or else you’re facing a two- to three-percent late fee.

Someone at the site forgot to submit an invoice for payment? Not only are you looking at a late fee, but there’s a good chance the utility will show up and cut your power (or at the very least, threaten to).

There are so many ways for this process to break down, and with utilities being such a critical component to daily operations, why risk it if the driving force for staying status quo is only: “this is how we pay all invoices?” After all, there are no regulatory requirements dictating that all invoices be paid the same way—just that defined controls and processes around the payments must exist. So why are so many companies dead-set on lumping utility invoices into the same accounts payable (AP) process as every other invoice?

Reevaluating Utilities Invoice Management

A reluctance to create special category-specific circumstances is easy to understand as it can limit scalability. In AP—a business operation most commonly linked to KPIs around timing and how quickly an invoice is processed and posted—differing workflows can, at times, hamper performance.

This is the precise reason why the industry of outsourced utility bill management exists.

From a utility payables perspective, there are two absolutes—utility bills need to be paid quickly, and they need to be paid regularly. But let’s face it, with so much focus today on extending payment terms and managing cash on hand, modern AP organizations aren’t particularly well-suited to execute on utilities payments with that required speed and consistency.

Enter: managed service providers.

Utilities Bill Management: Unlocking Efficiency Through a Tailored Approach

The speed and consistency with which utility invoices need to be paid is something that has spawned an industry of its own. Utility bill aggregators are specifically dedicated to providing proactive management and utility invoice payment, reducing late fee occurrences and the number of payments and vendors to manage. Meanwhile, these providers streamline the auditing process and simultaneously support the day-to-day functions of procurement and sustainability with critical non-payables metrics that are extracted from the invoices.

When there is so much on the line—keeping the power on, mitigating late fees, ensuring procurement, operations, and sustainability have the information they need—why take on risk by forcing utility invoices into the same payables process as other indirect expenses?

So much can (and does) go wrong each month without proper dedication and treatment of utility invoices. Luckily, there are solutions out there.