Utility Billing: Growing Trend That’s Not Just for the Big Guys

Last modified on June 26th, 2024

Utility billing is a very important trend impacting property management software in 2012. Multifamily operators find that it can be challenging to continue to raise rents in a weakened economy and this fuels the desire to look for other opportunities to increase revenue and cover the growing cost of utilities. This trend started first with the top 50 property management companies and it is becoming a top priority for property management companies of all sizes this year. This demand is then passed onto the property management software vendors because it is much easier to manage and administer utility billing from centralized software.

The great news is that psychologically renters view the cost of utility bills differently and are not inclined to view it as a rent increase. The property owner / manager can recover the building’s utility costs rather than simply absorbing them as a cost of doing business. This can really add up because in some regions water prices have increased by 30% or more. The benefits are great for property managers, owners and residents:

  • The property manager receives additional management fees because there is an increase in revenue on the properties.
  • The owner collects more revenue each month.
  • Studies have shown that residents who are billed back for utilities are more likely to use fewer resources and will naturally conserve more.

Property managers have the opportunity to move residents to this type of utility billing system at the point of signing a new lease or at lease renewal – this means you’re never more than a year away from getting all residents on the program.

Using a fixed ratio, RUBS (Ratio Utility Billing System), for the utility billing allocation is very important because there are many older apartment buildings across the country that just can’t be sub-metered. RUBS is essentially a pre-defined formula that articulates how the utility bills will be allocated across the property. An example water bill might look like this:

  • Total Water Bill = $1,000
  • 20% (irrigation, pool, etc): Paid by the owner
  • 80% allocated across the residents. Determine the portion owed by each unit (50% – based on unit occupancy and 50% based on unit square footage)

Now technology makes it much easier for property managers to collect this additional revenue. When a property manager receives one utility bill at the end of the month, he enters it into a third party utility billing software, or even better the property management software itself and the software automatically creates all of the charges based on the RUBS allocations.  More revenue without a significant increase in work – no surprise that it is a growing technology trend for property management software!


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