There’s Lots Wrong with Tenant Submetering; Here Are 10 Fixes

by | Aug 30, 2017

By Comly Wilson, enertiv

Many commercial real estate (CRE) companies bill their tenants each month based on the amount of electricity, water and/or gas they consume. Generally, this is a smart business move. Not only does it guarantee that management won’t underestimate their tenants’ consumption and end up on the hook for the difference, but increasingly, savvy tenants are including utility billing as a factor in lease decisions.

There’s just one little problem. The current process of billing tenants for their actual consumption is inefficient, inaccurate, frustrating and costly. Here are the biggest problems with tenant submetering as it stands today and how technology can help alleviate them.


#1 – Manual Readings

The hallmark of technology innovation has been the automation of repetitive tasks that used to be performed by humans. Unfortunately, in the world of submetering, things have not changed in decades.

In the vast majority of CRE portfolios, an individual (usually a vendor) has to go around to each building of a portfolio and literally write down the numbers displayed on the meters. After the numbers are recorded manually, the data then must be transcribed into a spreadsheet or other document and passed back to the management company.

How to fix this:
A much better approach is to have devices installed in your building to automatically collect tenant submetering data and transfer the information over the cloud to a system dedicated to utility billing.


#2 – Meters are Difficult to Read

If having to manually read every meter at every building wasn’t inefficient enough, the actual process of reading an electric meter is not always simply reading numbers. Old meters can be extremely difficult to read due to broken glass, dirt, obstructions and general wear and tear.

When the meters are displayed with dials (as opposed to digitally), the instructions on how to read them can be quite confusing. Even if this is a normal part of the job for individuals who perform meter readings, it’s not exactly conducive to accuracy when multiplied across thousands of meter readings.

Here’s an example of instructions for reading a ConEd meter with dials:



How to fix this:
Instead of complicated meter readings, devices that automatically record consumption can send 100% accurate data to billing software that can visualize the information in an easy-to-understand way.


#3 – Versioning Issues

Assuming every meter has been manually recorded correctly, the process is still far from complete or safe from errors. What happens if an error or typo is discovered by the management company?

If they decide to send it back for an updated reading, multiple versions of the same document may exist simultaneously. Multiplied across many buildings and many departments in complex CRE portfolios, this either leads to incorrect data (and thus potential for lost revenue) or valuable man hours being wasted reconciling different versions.

How to fix this:
The solution to this problem is simple. By storing everything in the cloud, there are no spreadsheets to send back and forth between departments and only one version of the data.


#4 – Manual, Paper Billing

At this point, the management company hopefully has accurate data in one version of spreadsheets. Now, the figures can be transcribed into invoices and printed out for distribution to tenants.

Each time data must be transcribed from one source to another, there is the risk of human error. This process is both inefficient for accounting and bothersome for tenants, who are increasingly becoming used to paying their bills online.

How to fix this:
The better way to manage this process is to have bills automatically sent to tenants online. This also makes payment easier by closing the gap between how tenants pay and where they receive their bill.


#5 – Binders on Shelves

Now that the bills have been printed and sent to the tenants, accounting is done, right? Not so fast, copies of the bills must be stored for record keeping purposes.

This leads to binders full of old billing statements just sitting on shelves. If there turns out to be a reason to look at them, sifting through the piles of paper makes for a daunting task.

How to fix this:
Software dedicated to tenant billing allows you to review any tenant’s past bills instantly and from anywhere. Even the tenants themselves can have access to a dedicated portal so they can do the same.


#6 – Slow Revenue Recovery Rate

The time it takes to complete these manual processes eventually adds up. For most CRE portfolios that have tenant submetering, there is an average delay of 30-45 days between the end of the billing period and when costs get recovered.

These cost outlays could be put towards productive investments if they were recovered more quickly. Instead, slow recovery means that cash flow is stifled and investments are delayed.

How to fix this:
When tenant consumption data is uploaded to the cloud in real time, bills can be sent the moment a billing period is over and costs can be recovered in a matter of days instead of a matter of weeks.


#7 – No Integration with Current Systems

When bills are finally paid by tenants, the updated status of the bill must be input back into the accounting or property management software.

The disconnect between tenant billing and normal accounting adds additional work and duplicates effort unnecessarily.

How to fix this:
A dedicated tenant billing software can connect to your current accounting or property management software to streamline efforts and make the process seamless.


#8 – Move-ins and Move-outs

When a process isn’t dynamic, it doesn’t do well with unusual situations such as move-ins and move-outs.

In these cases, it would be ideal to invoice for a portion of the billing period. But if you won’t get a reading until the end of the month, it quickly becomes an estimation game, which is not good for property managers or tenants.

How to fix this:
Transition to a dynamic invoicing process, so you can easily prorate bills for exact move-in and move-out dates.


#9 – No tenant engagement

As tenants become more knowledgeable about energy costs, they are expecting to be able to have transparency into their bills. They want to know why their bill is a certain amount, and ideally, what they can do to reduce it.

Beyond that, the utility bill is something that every tenant must look at once a month, this is an opportunity for tenant engagement and marketing that the vast majority of portfolios miss out on.

How to fix this
Instead of simply providing bills to tenants, engage them with web and mobile apps that provide transparency into their usage. By providing more details and comparing their usage to neighbors, the tenant billing process can be turned from a hassle into an amenity that commands higher market prices.


#10 – Lack of transparency

Showing a commitment to sustainability can be a very effective way to attract tenants and command higher market prices.

Providing amenities such as real-time data and notifications when things get left on can be a very effective way to fulfill this commitment, but is simply impossible with the traditional submetering and billing process.

How to fix this:
Management portals that are updated with real-time consumption data can be used to better understand where operating costs are going, view trends over time and let tenants compare themselves to neighbors.

Enertiv’s Automatic Tenant Billing tool has solved these problems for some of the biggest real estate organizations in the world. Request a demo today to see how it works!

This article originally appeared on the enertiv blog and was republished with permission from enertiv.

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