Dirty vendor trick No. 4: The billing "mistake" Sometimes it's not what you bought that cost your company money; it's what you didn't buy but got charged for anyway. In the telecom industry alone, 7 to 12 percent of all charges are a mistake, according to Aberdeen Research. There's an entire industry devoted to finding errors in telecom bills and collecting a percentage of the money recovered.
Phil Stone (not his real name), director of IT operations at networking systems vendor, says his firm was getting billed $30,000 to $50,000 a month for a data circuit with a leading telecom provider. There was just one problem: His company didn't have any data circuits with that provider.
"We get bills all the time from vendors for circuits that aren't ours," he says. "We had one that accrued to over $300,000 over nine months before we finally got it cleared up. It turned out to be a circuit used by some company in Texas. Two months later the charge started showing up again. Different circuit, same Texas company. The telecom company says it will be fixed in the next billing cycle. Sure, I believe that. Their billing is so bad we stopped using them even for voice."
Sometimes, says Stone, the "mistakes" are more deliberate. One time he negotiated a deal for some T1 lines with another telecom who quoted a price of $3,000 a month. In the process of signing the contract his attorney noticed his company was being asked to pay $60,000 per annum, or roughly $24,000 more than they'd agreed to. When Stone asked why, he says the telecom reps told him that its data circuits were so good they were sure his company would order more.
"I said, 'I appreciate your optimism guys, but I don't do business with companies that operate this way,'" he says. "I tore up the contract and went with someone else."
The biggest problem with billing mistakes, genuine or deliberate, is that fewer than one in 10 customers notice the error, says Steve Roderick, CEO of GoToBilling, a payment management service for small businesses.
"The common statistic heard in the payment industry is if you misbill 100 people, eight of them will call and complain," he says. In other words, companies that deliberately add false charges get away with it more than 90 percent of the time. Though Roderick says most companies in the payment industry are on the up and up, a few bad actors have given it an enduring black eye.