Every telecommunications audit should include a search for one-time credits and refunds. Telecom providers do make mistakes, and it is the job of the auditor to uncover and claim refunds, or credits, that are rightfully due.
Although sometimes touted as the "holy grail" of audit savings, in reality, credits and refunds are not as plentiful as many auditing firms would like you to believe. A thorough telecom audit, however, can uncover them so the time and effort spent searching for and/or creating them can pay off.
The following are the most common areas that one-time credits and refunds will be found, or can be created, during the course of an audit.
Overcharges (Billing Errors)
Overcharges occur when a telecom carrier erroneously charges a customer more for a service, or feature, than prescribed by a contract or a previous bill.
These types of billing errors will often take the form of "crams" and/or "slams", and will appear on bills month after month until the charges are removed.
Customers incurring overcharges are entitled to the appropriate credits or refunds. Always be sure that any taxes paid on the charges are reimbursed as well. If the overcharge is large enough, a carrier may consider adding interest along with the refund or credit due.
TIP: It is a good idea to check the subsequent month's bill to be sure charges were in fact removed as requested.
Equipment Installation Credits
Carriers will often credit customers after installation of equipment. For example, a purchase of frame relay service, or DSL, will necessitate the expense of purchasing routers. After installation, the carrier may agree to credit the customer's account to cover the cost of these necessary items.
When signing on with new telecom services, always be aware of the additional equipment that will be required, then inquire into the possibility of credits for those purchases. Your audit should include verifying that the proper credit was applied for equipment installation.
Tax Credits
Tax credits can be uncovered in the case of an organization that is tax exempt. For example, government agencies, non-profit groups, schools, etc. may qualify for exemptions on certain services because of their usage characteristics. If you find that you have paid taxes on bills that should be exempt from them, you will need file a tax exemption claim with the carrier for the tax in question.
FACT: When fixed services are taxed incorrectly, associated usage charges are many times taxed incorrectly as well.
Carriers are constantly coming up with new promotions to entice customers to sign on with them. Bonuses are often used to entice customers to sign lengthy contracts.
For example, a 24 month long distance contract may include a bonus credit during the 13th month of the contract. Be aware of these types of bonus credits when signing contracts and check to make sure they are credited when due.
One client of TelCon Associates received a $50,000 one time credit on a long distance contract. If not offered at the outset, always ask vendors for the possibility of such a credit during the contract term.
TIP: Contract negotiations are the optimum time to ask for promotions and bonuses. When given, be sure to make note of the date(s) these bonuses come due and check bills to verify that they are correctly applied.
Courtesy Credits
When carriers or customer service representatives are in error, they will often credit bills as a "courtesy" to instill good will with the customer. These credits are usually small and appear on the following month's bill at the time of the good faith gesture. As with promotions and bonuses, make note of when these courtesy gestures occur and check bills to determine if they were properly applied.
TIP: If a problem arises with your carrier, ask for courtesy credits to rectify the situation. More and more customer service reps have the authority to apply these types of credits to customer bills, so it never hurts to ask.
Although one-time credits and refunds are not always found during a telecom audit, the time spent finding them is worth the effort. When not readily found, always try to "create" them through shrewd negotiations with your telecommunications carriers and vendors.
Karen Thatcher is CEO of TelCon Associates, Inc., a 37-year old telecommunications consulting and bill management firm. To learn more about how you can reduce and control corporate telecom expenses more effectively, visit http://www.telconassociates.com
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