Published on November 3rd, 2022 | by Sumit Bhowal0
How TEM Expense Audit Helps Businesses Save Money
Businesses today rely significantly on technological tools for conducting their operations. And they have to incur hefty amounts for telecom expenses such as telephones, smartphones, tablets, and laptops with cellular data plans. Organizations that do not clearly understand what assets they are paying for and where those assets are located frequently overpay by significant margins.
A telecom expense management audit is a great way to start when it comes to optimizing your telecom environment and cutting unnecessary overheads. Do you have a clear picture of your telecom inventory and audits? Or do you struggle to categorize services and maintain healthy contract statuses? If so, this article will give you a sound understanding of how regular TEM expense audits can be beneficial.
What is a TEM Expense Audit?
Telecom Expense Management (TEM) is the systematic effort to manage, consolidate, and optimize telecom resources to reduce risk and minimize costs. Auditing is a critical component in this process and, when done correctly, can result in considerable savings. A telecom expense management audit scrutinizes your previous bills in detail to recognize opportunities for cost savings and expense optimization.
Telecom auditors look for specific information about spending, surcharges, contract conditions, contract renewals, late payments, interest payments, and more to find areas where your company may be overpaying.
What is the Need for Telecom Expense Management?
As communication services shift to the cloud and more enterprise spending is centered on monthly fees, TEM has become a more significant challenge for many businesses. Every day new technology enters the market, and with it, the number of people in your organization who utilize the technology grows as well. All of this leads to complexity, which leads to errors.
According to research, 85% of telecom invoices contain errors, costing businesses up to 12-20% in overspending each month. While one-time audits may result in one-time savings, they do not address the underlying broken processes that necessitated the Audit in the first place.
Time and again, it has been demonstrated that an effective telecom audit offers enormous potential savings. Hence companies must invest in telecom expense management audits on a regular basis.
What Does a TEM Expense Audit Cover?
TEM is an extensive service that covers a lot of ground, but a thorough telecom audit focusing on expense management does wonders for telecom providers. Let’s look at what’s included in this Audit and how it can help your bottom line.
A standard starting point for telecom expense audit is to conduct a service audit. It covers your telecommunications services and checks invoices and billing. It weighs the telecom costs of services against the benefits they provide. It should be able to estimate ROI on your service spending, and it’s the key to getting the contract you want from your TEM services after the audits are completed.
Telecom Invoices Audit
Invoice audits underpin the audit process. Your invoice data is compared to your inventory and contract data at this stage. The main goal is to find discrepancies and in-house accounting errors in telecom bills, overall telecom spend, invoice processing, and other services offered by the business. Later on, automated processes are created with the help of the audit.
Service or invoice audits may include historical audits. What matters is that they are carried out. These audits specifically examine the history of billing and invoicing to identify persistent overbilling issues. Overbilling can take the form of inconsistent payments or as simple as paying for things you don’t need. Historical audits aim to look back in time to find recurring problems and costs.
The TEM Audit Process for Telecom Services
The TEM expense audit process typically comprises four stages.
Most TEM providers will begin by collaborating with the client’s carriers to convert their invoices to an industry-specific electronic standard, such as EDI ANSI 811. As described below, analysts within the TEM provider can use software to audit each charge item on every invoice.
2. Inspection of Telecom Expenses
Inspection activities are classified as either high or low level.
A TEM provider performs high-level validation on invoices upon receipt to approve them for payment. It includes the following:
- Confirm that the accounts belong to the customer.
- Integrating billing and inventory records.
- Verifying that cost allocations are complete and correct.
- Ensuring that charges or variances are within pre-set tolerance levels.
- Examining contract compliance to ensure that all discounts and rates specified in the terms have been met. Contracts are stored in the TEM software, and the terms and conditions are compared to rule-based logic to determine compliance.
An auditor’s more detailed work may include:
- Examining features that can be avoided, such as call waiting, call forwarding, speed/repeat dialing, caller ID, verify busy, three-way calling, wire maintenance, call tracing, and call return.
- Reporting and blocking high-cost calls.
- Looking into usage spikes.
- Investigating charges for unauthorized internet use, a voicemail from third-party companies’ monthly directory assistance plans, and calling plans with no usage, among other things.
- Verifying that all lines have the correct PIC/LPIC codes (Primary/Local Interexchange Carrier).
- Noting any spikes in charges or questionable issues.
3. Dispute Management
A TEM provider is well-positioned to resolve discrepancies discovered during invoice inspection due to a thorough understanding of carrier procedures and dispute channels. Billing errors, cost-cutting opportunities, credits, and refunds are all examples of this.
When an error is discovered, the auditor reviews it immediately and, if necessary, creates a disputed entry, which sends a notification to the carrier. The error is thus tracked, and the analyst can keep a handle on it to get it resolved.
When the results have been released, next comes the review phase. The client can view comprehensive Audit saving summaries in the TEM tool anytime. Furthermore, the designated account manager regularly follows up with the client to review TEM cost savings.
Benefits of TEM Expense Audit
Telecom Expense Management (TEM) audits aim to save you money on technology contracts. But in addition to saving you money, they can help you make more money by investing in highly efficient technology. The numerous benefits that TEM expense audit brings with it are as follows.
- Creating long-term visibility into your telecom-related services and contracts
- Detailed analytics and reporting to individual service levels
- Ensuring contracts are up to date and services are billed at the correct rate
- Recognizing billing errors, inconsistencies, and orphaned services
- Identification of significant telecom savings
- Elimination of fraudulent and unauthorized charges
- Streamlining IT & finance operations by concentrating on core competencies
- Efficient order fulfillment, auditing, asset management, and payment processes
- Compliance with policy and regulatory standards
- Better expense tracking
- Improved telecom inventory management
- Wrapping Up
In short, expense audits are the first step toward achieving productive TEM. You must understand what you are spending, how you are spending it, and why. When those questions are answered, you can use analytical resources to find ways to reduce spending and increase returns, but you won’t be able to achieve those goals unless you first collect audit data.
Technology expense management (TEM) audit is a practice you can do yourself using web-based software such as Clearview, or you can partner with a company such as Digital Direction to do some or all of these TEM services for you.