7 tips to save on telecom in a tough economy

Telecommunications is a critical artery for your business. It drives relationships internally between employees, and externally with vendors, clients and customers. Local, long distance, Internet access, conferencing and data services – all are integral components of a business’ internal and external communications networks. It’s no wonder telecom expenses add up quickly for every business – large or small.

In fact, telecommunications expenses generally account for the second largest indirect expense of businesses, and the third to fourth largest expense overall. According to research by the Aberdeen Group, average small to medium businesses spent about $26 million a year while an average Fortune 500 company spent about $116 million a year on telecommunications alone. Nearly 7% to 12% were spent in error. That translates into potential savings of $2 to $3 million annually.

But these statistics also represent a huge opportunity for savings – one that most businesses can capitalize on immediately. Bottom line, smart companies must identify and execute simple ways to reduce telecom costs, especially in a challenging economy.

Here are seven simple ways to start saving now:

1) Inventory and audit and current lines, products and services

A thorough audit of a business’ current telecom services and expenses often leads to immediate opportunities for savings. A business needs to have a complete inventory of the number of lines and circuits they have, how they are being used and what they are being charged. Understanding the details of various lines, the features and functions, and the usage of all lines and circuits, ensures that the company is being charged appropriately. An audit also reveals that services that may have been contracted years ago, may no longer be utilized fully or necessary at all. Dated contracts may require updating with more competitive pricing. More frequently than not, businesses pay for products and services which no longer serve their current needs. At minimum, the full inventory and audit provide an organized overview of the business’ current telecom services and costs associated with them.

2) Identify billing errors and opportunities

Though time consuming, a thorough reconciliation of telecom bills is an effective way to reduce costs. Outright billing errors are extremely common, and frequently overlooked. Contracted rates may not be properly billed, taxes and fees can be miscalculated, and cancelled services may continue to be billed. Even a single month’s evaluation of current bills can lead to tremendous cumulative savings, especially when nominal monthly errors are multiplied over years. And, one vital last point on the subject – follow up diligently to ensure follow-through on issuance of any credits due. Diligence and persistence is key.

3) Optimize existing lines and circuits

Many companies will save money simply by consolidating multiple narrow bandwidth lines into fewer higher bandwidth lines. Higher cost circuits can also migrate to less utilized, lower-cost circuits to minimize waste and optimize usage. A simple solution requiring minimal time and effort.

4) Renegotiate contracts to get better deals

Telecom carriers are often willing to renegotiate terms if your business needs change. Of course, they will ask for something in return, like as a longer term or volume commitment, but this may also work in your favor. Signing a new agreement in the middle of your term for a lower price is well worth the extended term, especially if it improves your services. Also, note – at the end of any contract, never auto-renew. Rates and services evolve and change dramatically year to year, so it is critical to get competitive quotes from multiple carriers and compare.

Finally, when negotiating a new carrier agreement, be sure to ask for a technology refresh clause and a business downturn clause. Carriers will include these in contracts without much hesitation, and it provides businesses with more options should the climate change. Carriers are motivated to migrate customers to their less expensive networks because they have better margins.

5) Employ new technologies to reduce costs

Emerging technologies offer businesses a variety of ways to reduce their telecommunications costs significantly. Businesses will actually spend less for some of the latest technologies (WAN, VoIP), and receive better quality service. Upgrading often translates into immediate savings.

6) Exercise Business Downturn Clauses

During tough economic times, some businesses elect to exercise the Business Downturn Clause, if it is included in the carrier contract. With backup documentation, a business can adjust their services and commitments to suit the current state of the business. Carriers generally understand and are willing to work with companies to compromise. After all, some spending is better than no spending – or a customer going out of business.

7) Identify ways to earn discounts and rebates

One of the best ways a business can save on telecom expenses is to find partners or providers who can offer the most competitive rates on services, plus additional discounts and/or rebates. There are a number of telecom Master Agents that represent a variety of carriers offering services such as local and long distance phone service, high speed Internet access, data services or even integrated voice and data services. A Master Agent first understands the telecommunications needs of a business and then recommends options. Because agents represent a variety of carriers, they create custom solutions that benefit the customer from a needs and cost perspective. There are a select few programs that also offer a monthly rebate to customers. This way, the customer not only gets the most competitive carrier rates and custom solution – they also receive a rebate every month on their telecom spending. Seek those partners out.  Telco Rebates is one such partner.