The Hidden Costs of Telecom Billing Errors and How to Avoid Them

Telecom expenses are a significant part of operating costs for businesses. Yet, many companies unknowingly lose substantial amounts due to billing errors. Despite advances in technology and billing software, telecom invoices still frequently contain inaccuracies. In fact, studies reveal that up to 85% of telecom invoices have errors, potentially costing companies 12-20% of their telecom spend each month​.

This blog explores the types of common telecom billing errors, the financial impact, and strategies businesses can use to reduce these unnecessary costs.

Common Types of Telecom Billing Errors

Telecom billing errors can stem from a variety of sources, including outdated plans, incorrect service fees, tax miscalculations, and unresolved credits. Here are some of the most common errors that often go unnoticed:

1. Billing for Disconnected Services: Sometimes, even after canceling a service, companies continue to be billed for it. For example, old phone lines or extra data packages may appear on invoices long after they are no longer needed.
2. Misapplied or Incorrect Rates: Telecom rates can vary significantly, and changes or adjustments can sometimes be implemented incorrectly. This is especially common in companies that operate across multiple locations and jurisdictions with varying rate structures.
3. Unfulfilled Credits or Discounts: Many telecom providers offer credits or discounts that don’t always make it onto the final invoice. When left unchecked, these can add up to significant overcharges.
4. Outdated Plans: Businesses often pay for telecom plans that don’t align with their current needs. For example, they may be paying for more data than necessary or missing out on bundled plans that could save money.
5. Tax Errors: Telecom billing can involve complex tax calculations that vary by region, and errors here are not uncommon. Companies may be overcharged due to inaccurate tax applications, especially when they operate in multiple states or countries.

Financial Impact of Telecom Billing Errors

The financial repercussions of telecom billing errors are substantial. Global estimates that these errors can add 12-20% to a company’s telecom expenses.

For large businesses, this can amount to tens or even hundreds of thousands of dollars each year. These hidden costs can chip away at budgets that could otherwise support business growth, technology investments, or hiring initiatives.

How to Detect and Prevent Telecom Billing Errors

Understanding the common sources of errors is the first step, but proactive management is essential to reduce these costs. Here are several best practices that can help companies combat telecom billing errors effectively:

1. Conduct Regular Audits: Regularly reviewing telecom invoices is crucial to catching discrepancies. Whether done in-house or through a third-party service, audits can help identify overcharges, track usage patterns, and ensure that billing aligns with contracts.
2. Use Telecom Expense Management (TEM) Solutions: TEM services specialize in managing and optimizing telecom expenses. By automating invoice review and aligning services with real usage, TEM solutions can reduce error rates, ensure appropriate billing, and often yield significant savings.
3. Negotiate and Review Contracts: Many companies are locked into outdated telecom plans that no longer serve their needs. Reviewing and renegotiating contracts at renewal periods can ensure better alignment with actual usage and market rates. In some cases, a customized solution may offer substantial savings over a one-size-fits-all plan.
4. Verify Credits and Discounts: It’s important to confirm that all promised credits, discounts, or adjustments are reflected on the invoice. Tracking these over time can prevent recurring overcharges.
5. Monitor Changes in Taxes and Fees: Regularly reviewing tax applications on invoices can prevent errors due to varying rates across jurisdictions. For companies operating across multiple locations, a tax expert or a tax-specific audit as part of the telecom expense review may be beneficial.

​Conclusion

Telecom billing errors may be common, but they’re not inevitable. By taking a proactive approach to telecom expense management, businesses can capture savings, eliminate unnecessary costs, and better allocate their budget to areas that promote growth and innovation. For companies, keeping a close eye on telecom expenses is a powerful strategy that can make a significant difference to the bottom line.