$3.6 million in Telecom Late Payment Fees!

It was recently reported that the Federal Government’s Shared Services Canada department was billed $3.6 million in Telecom Late Payment Fees between September 2012 and March 2014!   In March 2013 alone it was $646,565.   The federal government did get this billing reduced by $1.1 million and in fairness to Shared Services it was consolidating billing from 75,000 phone bills per month and 43 departments so processing this many bills in a month and paying on time was obviously a huge challenge.  However it does show the significant financial consequences of being as little as a day late in paying your telecom bills if there are disruptions to your standard practices.

In Telecom Regulatory Policy CRTC 2009-424, the Commission found it appropriate to forbear from regulating late payment and NSF charges.  In that proceeding Bell Canada et al. and Telus submitted that market forces can be relied on to achieve the purpose of the late payment and NSF charges policies. They stated that the unregulated rates for these charges associated with non-tariffed services have remained within industry norms and do not materially affect the affordability of primary exchange services.

Have you looked at your invoice terms recently? My latest residential phone bill states: “A late payment charge of 3% per month (42.58% per annum) will apply from the bill date if we have not received your payment before your next bill date.”

If a 42.58% interest rate is still within industry norms when you are lucky to earn .25% in a savings account, then I am sure that is surprising to many, even the credit card companies!

So what about your business?  Do you know what late payment charges you incur annually as a result of a slow telecom bill review, approval and payment process, or perhaps due to something as simple as employee vacations?  Or do you pay your invoice on time every month at the cost of a review of all telecom charges?  It is obviously important to pay on time AND do a thorough billing review.  Late Payment Charges can be extremely onerous, but so can missing a billing error  that you could pay for in perpetuity.

What are some strategies to avoid Late Payment fees?

1. Negotiate your late payment fee terms as part of your contract renewal.  By having 45 day terms instead of 30 days you may get the time you need to complete a thorough billing review and pay the bill on time every month.
2. You can also look to negotiate a more favourable interest rate.
3. Look at your payment process.  It may work fine if an invoice is straightforward, but if questions are raised about charges before financial approval is granted, can they be answered in time?  If they cannot, then maybe there is a knowledge or process gap that needs to be addressed.
4. If you have an issue and wish to dispute invoice charges, give written notice to the telecom provider.  They should not charge you late payment fees per their terms of service if you file a written dispute.

However, don’t just pay bills quickly to avoid late payment fees.  Ensure the billing is accurate and any changes in billing are understood.  A telecom audit and review will help you analyze late payment fees and other billing terms and conditions.