If you want to bill tenants for their utility usage, also known as utility sub-billing, you’ll need to measure how much each tenant uses and determine the costs. It’s all about tracking usage and making sure everyone pays for what they use.
You’ll need to measure how much each tenant uses electricity, water, and gas. Then, you invoice them based on their actual usage. This way, everyone pays their fair share, and it keeps things transparent and fair for everyone in the building.
In this article, we’ll go over some tips and other tenant billing solutions to help you set up fair and accurate utility sub-billing for your tenants.
The information provided in this article is for general informational purposes only and should not be considered legal advice. Water billing practices, including the implementation of submetering systems, must always comply with the terms outlined in the lease agreement between landlords and tenants. Property owners and managers are advised to consult with legal professionals to ensure their billing methods align with local laws, regulations, and contractual obligations.
What Makes Tenant Billing Unfair?
Most property managers still bill tenants for their water and energy consumption using RUBS (Ratio Utility Billing System) in buildings without individual utility tenant meters for each unit. With RUBS, bills are split based on factors like the size of the apartment, not what a tenant actually uses.
However, many tenants feel this system is unfair because it's quite vague if they're actually getting billed for their actual water and energy usage.
Although it's understandable to think that a tenant's apartment space and the number of people within it could result in higher water and energy costs, this conclusion isn't all that accurate.
Why RUBS Rubs Tenants the Wrong Way
For example, a family of three that uses use water and energy responsibly will consume less than a single tenant who is careless with their utilities. With RUBS, the property manager would have to bill the family of three higher than the single tenant, which is unfair. As such, RUBS doesn’t sit well with a lot of tenants.
Another problem is that RUBS doesn’t give tenants any reason to save on utilities. Since they’re not paying for their own usage, some of your tenants might use more than they need. That pushes bills higher for everyone.
In the end, RUBS can cause a lot of frustration. Tenants feel like they’re paying for someone else’s usage, which can lead to dissatisfaction.
Some cities have recognized the problems with RUBS and decided to ban it. For instance, Santa Monica, CA, no longer allows RUBS as a billing method.
Why Is Fair Billing Important?
Fair tenant billing is important for several reasons:
Better Tenant Satisfaction and Relationship
Just like how businesses aim to encourage customers by offering clear pricing and excellent service, property managers can build trust with tenants by implementing fair utility billing.
It feels a lot fairer and clearer for tenants when they are billed based on their actual utility usage. They have more control over their costs, which helps them manage their expenses.
A fair tenant billing process improves the living experience and strengthens the relationship between property owners and tenants.
Accurate Tenant Billing Helps Your Profits
When you bill tenants accurately, you recover all your utility costs without missing anything. It also gives you useful data to see how resources are used and spot ways to save money. In the long run, this helps keep your property profitable and running smoothly.
More Environmentally-Friendly
When tenants are billed for what they actually use, they have a reason to cut back on their utility consumption. This saves money and helps with sustainability efforts by lowering the property's environmental impact. In fact, fair tenant billing can reduce a building’s utility usage by 5–10% or even more.
Stay Compliant With Local Laws and Regulations
Fair tenant billing keeps you in line with regulations and reduces the risk of legal issues. It also shows that you manage your property responsibly, which helps build trust and credibility with your tenants.
Best Practices for Tenant Billing
If you want to start adopting tenant billing solutions that would make charging your tenants more fair, here are some of the best practices you can try out:
Accurate Metering
Meter reading is much more accurate than RUBS, which depends on circumstantial factors. That's why the first step in the fair tenant billing process is installing a quality metering system.
These meters accurately measure individual tenants' actual usage, and you can bill them accordingly. This system allows tenants to see and pay for what they actually used.
A property manager can easily generate error-free invoices backed with their consumption data and deliver them to your tenants on billing day. This whole process keeps things fair and clear for everyone.
Transparent Billing Statements
Your invoices or billing statements should include a clear breakdown of their utility usage. You can have a simple table presenting how much electricity costs per kilowatt-hour (kWh) or how much water costs per gallon. Then you can add an accurate reading of their meter and total the costs.
Tenant billing software can help you make these statements, or you can just use a simple Google Sheets or Excel spreadsheet if you prefer those. What's important is that your billing statements include all the information they need to fully understand why they need to pay a certain amount.
Keep Things Accurate and Compliant With Regular Audits
Doing regular audits helps make sure tenant billing stays accurate. It’s also important to follow local rules and standards to show your tenants that you’re managing the property responsibly.
Take Advantage of Technology
Using specialized submetering systems can simplify how you handle tenant billing. They make the process more accurate and easier with innovative dashboards that tell you everything you need to know.
These smart devices can even provide a complete historical record that can help you understand a particular tenant's consumption habits. With these data, you can easily encourage better resource use in your apartment.
Submetering for Tenant Billing
If you’re looking to improve tenant billing, adding a submetering system can help. It makes it easier to manage utilities, lowers monthly bills for tenants, and simplifies invoicing.
What Is Submetering?
A submetering system measures how much water, electricity, or gas each unit in your building uses. This way, you can bill tenants for precisely what they use instead of splitting costs evenly or using estimates.
Now, for water, here’s the tricky part: most apartment buildings don’t have separate water mains for each unit, so traditional water meters won’t work.
Instead, you can install micrometers on fixtures like sinks and showers. With IoT technology, these micrometers track usage for each unit and make monthly billing much easier and more accurate.
Applications of Submetering
Here are some common uses of submetering:
Toilets: A micrometer measures water usage to each flush, making it precise. It’s great for spotting leaks or inefficiencies and lets you bill tenants accurately for exactly what they use. This keeps things fair and helps avoid surprises on bills.
Kitchen sinks: Putting micrometers on kitchen sinks lets you track water used for cooking and cleaning. It also helps tenants see how much water they’re using, allowing them to manage their consumption better.
Faucets: Tracking faucet usage in bathrooms, kitchens, or utility areas gives you detailed information about water use. This data helps spot leaks or notice if someone uses more water than expected.
Showers: Installing micrometers to showers is a smart move for accurate tenant billing. It also helps you catch illegal high-flow showerheads that might be wasting water.
Any water fixture: Using submetering on all water fixtures, including those in each unit and shared areas, helps property owners track water usage across the entire property. This makes it easier to divide water costs fairly among all tenants.
Submetering Case Study From DrizzleX
DrizzleX installed a submetering system at this property, and it made a big difference.
The image below shows that the property's water usage dropped, costs went down, and tenant billing became more accurate. Everyone benefited from the changes.
Here’s a breakdown:
Big Drop in Daily Water Use
Before DrizzleX, the property used an average of 2,363 gallons of water per unit each day, sometimes going over 4,000 gallons. After installing the system, daily water use dropped to just 1,268 gallons per unit. That’s a huge improvement!
Cost Savings and Gallons Saved
With DrizzleX, the property saved $10,860 in a year and cut water use by 55%. That’s 592,960 gallons of water saved in just one year—both a financial and environmental win!
From a Tenant Billing Perspective
When it comes to tenant billing, here’s what happened:
Lower Usage, Lower Bills
Thanks to the DrizzleX system, water use per unit dropped a lot. Tenants are now using less water, which means their water bills are lower too. It’s a win-win for everyone!
Fair Billing With Submetering
Submetering lets you bill tenants for their actual water use instead of relying on flat rates or estimates based on the building’s total usage. This keeps things fair and accurate for everyone.
How DrizzleX Can Help You With Tenant Billing
DrizzleX allows you to detect hidden leaks, such as running toilets and leaky faucets, to stop waste each year. It also alerts you to tenants' excessive water overuse. Typically, buildings that use DrizzleX reduce their water bills by 25-45% or more.
And you can expect a pretty quick return on investment (ROI). Buildings with DrizzleX save enough water to cover the entire cost of DrizzleX within about 9 months on average.
Get a free quote from DrizzleX today and see how our submeters can help you fairly bill your tenants!
Usage Reports
One of DrizzleX's solutions is the "Water Consumption Insights Report" report. Since many people aren't really aware of their excessive water usage, an accurate report can be very helpful in preventing unnecessary expenses.
Using the reports, you can communicate with your tenants about their water consumption habits and back them up with precise data.
Leak Detection
Leaks can be sneaky because they aren't always visible. With property inspection, you can see the obvious ones. But silent leaks will only show up on your utility bills. DrizzleX gives you water control because you can monitor the water flow in your building.
The system will notify you about where and how much water is being lost.
E-mail Notifications
Once DrizzleX spots the leak, it will notify you via email. The message you receive will include all the details about the exact apartment and fixture that is the culprit, how many gallons were used, how much it will cost you if the problem isn't fixed, and even possible causes for the water waste and how to fix it.
Billing
DrizzleX also allows you to bill your tenants. Tenants conserve water when they are the ones paying for it. You can easily create water bills based on accurate water consumption and bill them fairly.
How to Get a Gallon Report and Calculate Tenant Water Bills with DrizzleX
Billing your tenants is made easy with DrizzleX. For an accurate bill, the system takes in two components:
Your sewer/water local rate
Gallons report per building
Here’s a simple step-by-step instruction on how you can use DrizzleX’s system to bill your tenants:
Log in to Your DrizzleX Dashboard
Once logged in, find the “Gallon Report” section on the homepage.
Choose the property or building you need the report for.
Specify the date range to define the billing period.
Click “Generate CSV” to download the water usage report for the selected property.
Locate the downloaded file on your computer and open it.
Find the “HCF per period” column in the file.
Multiply the HCF value for each unit by your water and sewer rate.
Prepare the bill details for tenants
You can also include the following in the bill for a clearer bill breakdown with your tenants:
Start and end read values: Show the meter readings at the start and end of the billing period.
Total gallons per period: Display the total water usage.
Total HCF: Include the total HCF (Hundred Cubic Feet) value.
Rate per HCF: Provide the water and sewer rate used in the calculation.
Total amount in USD: List the total charges for water and sewer usage.
FAQs About Tenant Billing
What is a tenant billing platform?
A tenant billing platform is a system that accurately measures and charges tenants for their individual utility usage. It helps promote fairness and transparency in multi-tenant properties.
How can tenant billing reduce costs for tenants?
By accurately tracking individual usage, tenant billing guarantees that tenants only pay for what they consume.
What are the benefits of implementing tenant billing in a residential complex?
Implementing tenant billing can lead to significant savings in utility costs, improved conservation efforts among tenants, and enhanced satisfaction due to fair billing practices.
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