Boutique Apartments™ recovers $1.4M of utility costs with Zego Utility
About Boutique Apartments
Boutique Apartments™, managed by Portus, LLC, has represented a whole new idea in Denver apartment living since 2005. With approximately 3,000 units in and around Denver, CO, the Boutique team of leasing, maintenance, and property management professionals has spent many years focused on making each resident’s apartment experience memorable.
- Location: Colorado
- Portfolio: Multifamily
- Zego Products: Zego Pay, Zego Utility
- Accounting Software Integration: Rent Manager
Results highlights:
The challenge
Utilities used to be the biggest source of headaches for Boutique Apartments™. Every aspect of utility management, from recouping those expenses from residents to paying their properties’ utility invoices, was riddled with inefficiencies. They were using a third-party vendor to bill residents for utility expenses, however, the vendor could not provide integration with their property management software. Without integration, accessing details about if and when residents had paid for utilities was challenging.
On the accounts payable side, Boutique Apartments™ also needed assistance auditing and paying utility invoices, which were being managed entirely in-house. “We just weren’t able to manage our properties’ utility invoices in a timely or appropriate manner. Between late payment fees and not having the bandwidth to regularly check to see if our new residents had transferred utilities into their name, it was costing us money.” shares Jennifer Howard, CFO at Boutique Apartments™.
The approach & outcomes
Boutique Apartments™ decided to leave their utility billing provider and sign up for Zego Utility, an end-to-end utility management platform that includes automated utility accounts payable and utility expense recovery. They were already using Zego’s digital payment solution, which integrates with their property management software, to collect rent from residents.
“We loved the digital payments solution Zego offered and knew their customer service was outstanding,” said Jennifer. “When our Client Success Advocate told us that Zego had started providing Utility Resident Billing and Utility Expense Management solutions we signed up almost right away. All of Zego’s services integrate into our management software and it has made a world of difference for our entire staff.”
Zego recommends four components to a best-in-class utility program, which led to clear results for Boutique Apartments™.
1. Optimize usage, consumption, and conservation
2. Maximize utility expense recovery while minimizing risk
3. Streamline utility accounts payable
4. Benchmark utility efficiency
1. Optimize usage, consumption, and conservation
Boutique Apartments™ decided to roll out the new Zego solutions one at a time, starting with Utility Resident Billing. Aside from encouraging conservation through billing residents for their utility usage, their new Utility Resident Billing program would also enable a better resident experience and a streamlined payment process. Their prior vendor could only send residents a bill containing utility charges that would have to be paid separately from their rent. The Zego solution improved the experience for Boutique Apartments’ residents, who now get a single, clear, and itemized invoice with all of their applicable charges – rent, utilities, and any ancillary fees – that can be paid online in one transaction.
While billing back for utilities inherently motivates residents to conserve by demonstrating how much their usage is impacting their bottom line, an added benefit of the Zego solution is customized messaging on resident invoices. This high-value space allows for targeted messaging from renewal reminders to conservation tips and encouragement.
2. Maximize utility expense recovery while minimizing risk
In order to maximize utility recovery, Zego clients typically use RUBS (ratio utility billing system), submeters or a combination depending on their properties. For Boutique Apartments™, the Zego team carefully calculates billable expenses for water, sewer, electric, gas, and trash by property. Utility experts determine what amount of the total expense is recoverable and can be billed to residents, based on the most current regulations. Compliance experts closely monitor any changes to the local, state, and federal regulations. These updates are reviewed with the Boutique Apartments™ team and recommendations are made should any changes be required to their utility recovery strategy. 88% of Boutique Apartments’ billable utility expenses are currently recovered by residents.
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3. Streamline utility accounts payable
After the bulk of their properties were underway with Utility Resident Billing, Boutique Apartments™ began implementing Utility Expense Management. Because of Zego’s integration with Rent Manager, Boutique Apartments™ would have all of their utility data and invoice payments shown in real-time. It would also ensure they were not paying more than they should on utility expenses.
Zego’s Utility Expense Management solution audits each invoice for inaccuracies or overcharges and also conducts Vacant Cost Recovery, which detects when a resident has failed to transfer utilities into their name. “We have 200 properties so all of the tasks related to managing our utility expenses are too much – frankly, it’s next to impossible – for a small team to handle in-house. We tried a lot of different things in an attempt to keep up with it, but when you have the sheer volume of utility expenses like we do, using Zego™ made more sense.”
Jennifer Howard confirms that partnering with Zego quickly resulted in cost savings. “Almost immediately, Zego found some errors on our utility bills that they rectified with the utility company for us. Then they noticed that one of our water bills had doubled in one month and alerted us that our property probably had a leak. And to top it off, their Vacant Unit Cost Recovery service identified quite a few residents who had not transferred utilities over to their name. Utility Expense Management is personally my favorite Zego solution because I’m not babysitting utilities for 200 properties. They do a fantastic job at managing that for us and we no longer worry about a ball getting dropped.”
The Zego solution is currently auditing and paying over 9,000 utility vendor invoices per year for Boutique Apartments™. As part of the thorough auditing, more than $36,000 in vacant cost recovery revenue was contributed to Boutique Apartments’ bottom line last year.
4. Benchmark utility efficiency
Prior to working with Zego, it was also difficult to view and analyze any data about their properties’ utility consumption, which made it nearly impossible to identify and prevent inefficiencies. The Boutique Apartments™ team had to rely on their vendor’s Excel spreadsheets to view any data about their utility invoices and then combine spreadsheets to understand any trends with property utility consumption. “The lack of integration or reporting features was awful,” shares Jennifer. “We were constantly chasing our tail because the newest utility data we could see was from 60-90 days in arrears. If there was a problem with something, for instance, a leak that was causing our water bill to skyrocket, we weren’t finding out until it had been going on for 60 days. By that time, it had cost us a fortune and it would be another 60 days before we’d know if rectifying the problem had been successful.”
Using the Zego Suite – Payments, Resident Billing, and Utility Expense Management – has not only resulted in significant time savings but also streamlined processes and visibility to their data for Boutique Apartments™. The Zego Portfolio Insights dashboard provides business intelligence and customizable reporting that assist the Boutique Apartments™ team in benchmarking their utility expenditures and usage and improving their operations. “Dealing with utilities, in particular, has been a drastic improvement because we now have full insight into that data” said Jennifer, “Recovering those costs from residents is more streamlined and has even led to more on-time payments because residents pay rent and utilities at the same time.”
Conclusion
Boutique Apartments™ is pleased with the measurable impact of having all of their properties on Zego Pay + Zego™ Utility, including $1.4M in utility costs recovered, 9,000 invoices audited and paid, and $36,000 in Vacant Cost Recovery contributed to their bottom line. “Using Zego payments, utility management and billing have made a world of difference for us. I wish we would have started using Zego sooner."
Best practice recommendations for multifamily utility programs
The Boutique Apartments™ team has benefitted from the financial returns from using Zego for utility management and online payments. In addition, their staff is saving time and enjoying the seamless integration with their property management software. Finally, resident experience has improved thanks to clear, transparent, and easy-to-pay convergent statements.
Zego offers 4 key recommendations for a best-in-class utility program:
1. Optimize usage, consumption, and conservation: encourage conservation and streamline communication
2. Maximize utility expense recovery while minimizing risk: utilize RUBS or submeters combined with legal expertise
3. Streamline utility accounts payable: audit for errors and avoid late fees
4. Benchmark utility efficiency: identify and prioritize efficiency upgrades
The chart below demonstrates the impact of a comprehensive utility management program for a multifamily property with 2,000 units. The savings opportunity increases with the size of your portfolio. Contact us today to learn how Zego Utility could impact your portfolio.
*Data as of 2020
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