Easing the cost hike squeeze

As costs continue to rise the focus on billing solutions as a key method of achieving necessary savings has intensified, says Union Street Technologies CFO Kevin O’Brien.

Among the most notable cost increases is the energy crisis which is placing significant strain on businesses up and down the country, with fears that this could be the breaking point for many. “Stored gas supplies have been considerably reduced following an extremely cold winter in Europe in 2020,” said O’Brien. “This, combined with economic disruption from Russia and increased demand from Asia, in particular China, has resulted in unprecedented cost increases.”

At the same time, Microsoft and Amazon are introducing significant increases onto the cost of cloud services, noted O’Brien. “Microsoft has announced a 15 per cent rise from March 2022 with an additional penalty for paying monthly, with similar increases announced by Amazon,” he added. “The cost of labour is also rising. From April, employee and employer National Insurance contributions will increase by 1.25 per cent and 1.5 per cent respectively to tackle massive backlogs in the NHS and historic underfunding of the social care sector. Software developers and other technical roles are in high demand following the pandemic’s technology drive, further exacerbating a technology skills gap that already exists in the UK.”

The rise in the cost of living is certain to have a knock-on impact on pay pressure, believes O’Brien. “Due to the various cost pressures and supply chain issues in the national and global economies, UK inflation rates are set to hit a 30 year high, reaching seven per cent which is significantly above the Bank of England’s projections of two per cent,” he explained. “Employees will, quite understandably, be seeking larger annual increases than at any time in the last two decades to keep them in step with inflation and rising household bills.

“The obvious solution is for channel businesses to raise prices in turn, passing these costs onto their customers. However, this course of action may not be practical or desirable for all channel businesses. Communications services are becoming increasingly regulated and recent changes by Ofcom have made it easier than ever for customers to switch providers. With the influx of the aforementioned costs, channel businesses are forced to walk a tightrope between balancing rising costs with winning and retaining customers’ business in a price sensitive market.”

Channel businesses are forced to walk a tightrope between balancing rising costs with winning and retaining customers’ business in a price sensitive market

But the news isn’t all bad. O’Brien says the channel is presented with a wealth of opportunities thanks to massive infrastructure investments, rapidly evolving behaviours of business buyers and the technology drive prompted by the pandemic. “The key to monetising these and other emerging opportunities while ensuring a worthwhile profit is to adopt effective billing strategies that ensure every customer and every service is as profitable as possible,” he stated.

O’Brien also highlighted a number of billing and buying strategies resellers can deploy (if they’re not doing so already) to boost the profitability of their customer base. “Mobile data is an area that can often yield cost savings,” he added. “The market offers great deals for unlimited data and customers often request it, but less than two per cent of users actually need unlimited data bundles.

“Continue to sell customers unlimited data plans if that’s what they want, but by using your billing platform to provision them onto shared or minimal data bundles from your suppliers you could increase mobile margin considerably. Occasionally customers will use an unexpected amount of data, but this risk can be mitigated by loading and rating call detail records (CDRs) as soon as they’re available so you can identify unexpected activity early.”

Consolidating all billing into a single system is also a key way to spot and stop revenue leakage. “We find that many resellers use their billing platform to manage rateable charges but use accounting software to bill fixed recurring charges,” said O’Brien. “This method is often intended as a cost saving exercise but, ironically, it’s usually a false economy. As a customer base grows it becomes hard to reconcile supplier charges with what is being billed to customers without a billing platform to automate this process.

“Over time, increasing amounts of revenue can slip through the cracks. Consolidating billing for all services into the billing platform makes it far easier to ensure nothing is missed. It also means one bill for all services for the customer and makes it far easier to assess the overall profitability of each customer account.”

Implementing robust revenue assurance protocols before and after each bill run can make a big difference to the bottom line, noted O’Brien. “End customer rate tables should be regularly checked and updated,” he said. “Import and process CDR or service detail records (SDRs) as soon as they are available, reconcile all charges and investigate any rejects (charges that are not automatically connected to a customer account) to ensure they’re invoiced to the correct customer.

“Checks should also be performed to ensure that buy prices are in accordance with the tariff agreed with the carrier. Assuming the carrier always gets it right can be a costly mistake.”

According to O’Brien, there’s countless more ways in which the billing process can be tweaked to maximise margins, but implementing these changes can be easier said than done. Optimising profits can be an expensive exercise in terms of time and resource, requiring a high degree of expertise. To help its partners address these issues Union Street Technologies has launched its ProfitaBILLity Service which is designed to support partners by boosting profits and driving down costs in their supply chains.

“A fundamental of good business is generating margins, not just sales, and when considering all the factors that have contributed to the big squeeze this has never been more important for the channel than it is today,” stated O’Brien. “Finance teams need to understand this and be proactive when it comes to driving profits from existing revenue streams, while simultaneously providing meaningful analytics to ensure the business maintains good profit levels with healthy cash generation.”

This can be approached in two ways, noted O’Brien. “The first option is to build a team with all the required financial, technological and industry skill sets to manage this in-house,” he said. “The second and likely more cost-effective option is to leverage the billing software and the expertise of the company that supplies it to assist you – not just with boosting profits today, but also with accelerating sustainable growth in the future.”


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