Telecom Expense Management Blog

A significant source of gross profit for telecom carriers is late payment fees. Carriers often set unreasonably short payment intervals that begin at their invoice date. They then take their time mailing their monthly invoice to you. As a result, many customers receive their invoices with less than two weeks to process them and remit payments. When customers are not able to process invoices this quickly, carriers charge them late payment fees of as much as 6.5% of the unpaid balance!

Your goal should be to get the carrier to waive late payment fees. This goal is very hard to achieve, as there is a time value of money and businesses typically do not extend free credit to each other. If your carrier will not waive late payment fees, see if they will agree to extend the payment interval to something your accounts payable process can make every month, like 45 days. You can also ask your carrier to specify that their payment interval begins on a date you can verify; such as the date you receive their invoice. Do not put yourself at the mercy of the carrier’s inefficient invoicing process. It can be expensive!

Two carriers we know of try to include language in their agreements that limits the amount of credits or refunds they will provide for billing errors to the most recent six months’ overcharges. We recommend rejecting this type of limitation for obvious reasons. Additionally, these limits are not competitive and they signal that the carrier has low confidence in the accuracy of its provisioning and billing processes.

If you plan to implement a telecom expense management solution during the term of the contract you may want to ask the carrier to specify if they offer invoices in Electronic Data Interchange (EDI) format.

In my next post on the topic of telecom expense management and negotiating a great telecom contract, I will write about some great negotiating tips.