Auditing for Dollars

I can't believe the mistake that many CLECs make in failing to properly audit the carrier bills that they receive. Dollar for dollar, reductions or corrections in this area can have more impact than any other opportunity found in today's CLEC. And failure to perform an adequate audit can make the difference between a profitable or unprofitable quarter.

Carrier expenses are often one of a CLEC's largest cost items. If the CLEC has termination lines to each LEC, there is a charge. If your customer accesses the long distance network, there is a charge. Also, if a CLEC is re-selling ILEC services there is a charge.

Auditing the telco expense is like balancing your checkbook or reviewing a monthly charge statement. It's a necessary evil to assure that you have not made any mistakes and you are paying only for what you use. I have seen CLECs who have paid for circuits that they haven't ordered or for ones canceled months before. A simple item to correct, but due to the stove-pipe manner in which many CLEC's operate, the correlation between network supporting circuits and their actual billings is seldom accomplished.

Part of the problem is that most CLEC's do not have automated tools or the capability to handle automated feeds to assist them in auditing bills. In these cases, the bills arrive in the mail on paper documents that seem as if they are written in Greek. One reason is that the staff that has the responsibility to deal with these bills, often do not understand the different codes or terms used. In addition they often do not understand how to perform the audit. This is a key element.

The staff must first understand what type of bill they are dealing with.

Is it a bill relating to the CLEC's internal network?
Is it the bill that corresponds to their customer's local services?
It is the bill that corresponds to their customer's long distance services?

The type of audit is similar, but the CLEC's source for the audit does change.

For the internal network, a listing of circuits and/or services must be maintained by the network engineering group. This is usually accomplished in the provisioning system. The easy part of the circuit audit is the fact that the major issues are when the circuit was installed and when it was cancelled. All of the companies that interface with a CLEC will provide a start and end date. This must be retained for auditing purposes, and is an area of constant contention.

The auditor then compares the circuit list to the billing list and drops all circuits that match appropriately and have the proper billing. The remaining circuits require further research to determine where the discrepancy lies. If the error is in the CLEC's favor, the expense needs to be accrued, and the sender of the bill may perform their own audit and provide a bill that covers the accrued amounts. On the other hand, if the bill is incorrect, a credit should be requested. Backup documentation should accompany the credit request to eliminate further discussion.

If a bill is minute based, then the auditing group must have the ability to retrieve minutes off their network to a level of detail that eliminates incompatibility issues. The level of detail is often a summarization to an end-office level, but should also be broken down by service type, by day and by hour. This level of detail will allow proper interface levels with any carrier.

If services are being re-sold, then verification of the actual orders to the billing is paramount to assure proper billings. This can be accomplished by reviewing new and disconnect orders from your own system. But don't forget to do a spot check on recurring fees as changes often can occur. There is seldom a need to perform a 100% audit on recurring charges. Quality management provides sampling methods to assure a confidence level that meets your needs.

The key to successful auditing is consistency and tenacity. The ability to control this major expense area is not a difficult task. It requires a firm hand and a set process that can be followed each and every month. Go on a treasure hunt. You too may find revenue jewels.

Jim Marsh is a senior consultant for The Management Network Group, a telecom consulting organization.  Jim has worked in telecom for 15 years and is an expert in revenue assurance, risk management and fraud. Jim speaks and writes on improving operational systems and functions to improve bottom lines.