Telecom Billing and Payment Terms: Fighting the Hidden Costs
Lawyers at our firm, Levine, Blaszak, Block & Boothby, LLP (LB3), are often asked whether contract clauses concerning limitations of liability, force majeure or indemnification are ever actually invoked. No one ever asks this about billing and payment provisions. It is a truism of modern telecom that all customers have problems with their bills, and the contract terms on billing and payment are the first place the customer looks to solve these problems. When these terms do not fairly balance customer risks and remedies, the result is frustration and lost dollars.
Companies with significant communications budgets frequently have to hire a Telecom Expense Management (TEM) company or dedicate an employee (or two) to sort through carrier invoices and spot and fix charges that are inconsistent with the rates negotiated, that are for services disconnected months ago, that are old, or that don’t correspond to anything the customer bought. Occasionally, carriers threaten to suspend the service of customers with good payment records because of a failure to timely pay a bill, when the bill was not paid because it was wildly overstated or sent to the wrong address.
Next to performance problems, and sometimes ahead of them, billing problems are generally the biggest headache for buyers of communications services. Sometimes billing disputes are resolved only after difficult negotiations, or even litigation/arbitration. Sometimes carriers acknowledge the problems up front and are cooperative in processing credits. Even then, flawed billing systems force customers to spend an inordinate amount of time sniffing out errors, thereby wasting internal resources and costing money.
The bottom line is that telecom savings aren’t just about rates. Billing and payment terms matter. Improving them may not always result in a customer being able to avoid all of the problems listed above, but it will eliminate the “gotchas” built into the carriers’ standard forms, and give the customer the tools it needs to protect its rights and resolve problems more quickly and advantageously.
Here are some of the key billing and payment terms that customers should be thinking about.