Employee benefit management is often an HR function, while benefits billing is managed by Finance. However, at the intersection of those two functions is an overlooked, significant source of potential savings. Enrollment errors, outdated data, and manual calculations lead to significant billing errors and overpayments that often go unchecked. By adopting an advanced, technology-driven, and collaborative approach to benefits billing, organizations can eliminate unnecessary spending.
The hidden costs of benefits billing
Companies manage a wide range of benefits plans—medical, dental, vision, and voluntary benefits—each tied to multiple invoices from multiple carriers. A substantial and surprising number of those invoices are wrong throughout the year, sometimes by tens of thousands of dollars. If these errors aren’t caught quickly, let alone at all, the window for adjustments will close.
Carriers each deliver invoices in different ways (web portals, email), have different release and due dates, and have different processes for disputing bills. Invoices also arrive in different formats (PDF, Excel, csv). Collecting these invoices, auditing them, and adjusting them to fit a P&L is often a time-consuming, messy dance between HR and Finance each month.
The lack of standardization across carriers means that HR teams can only bring order to chaos by manually entering data into custom spreadsheets throughout a billing month, which is time-consuming and error-prone.
HR and Finance teams are already stretched thin and tend to work in a siloed manner – HR handles enrollment while Finance pays the bills. However, by collaborating within an automated benefits billing platform, companies can better understand their benefit costs, catch errors quickly, and ensure that they are not overspending due to outdated billing processes.
Automating discrepancy audits to prevent overpayment
A missed billing error today can turn into thousands of dollars in unnecessary spending over time. A more modern approach to benefits billing ensures that companies only pay for the benefits employees are actually using—nothing more, nothing less. Automation can help Finance and HR teams move away from custom spreadsheets and quickly identify and correct billing discrepancies before they incur unnecessary expenses.
A strong technology-driven audit tool will compare the two data sources at hand—carrier invoices and HRIS data—and automatically identify any potential or actual discrepancies. Common causes of billing discrepancies include:
- Costs for employees that are no longer with the company
- Failure to bill for new employees or dependents (which can lead to large surprise bills later)
- Enrollment in COBRA beyond 18 months
- Incorrect billing rates
- Incorrect company HRIS data
- Broken connections between carriers and HRIS platforms
Audit tools can give companies streamlined reports that identify all discrepancies by employee, carrier, or amount, along with their likely causes. This can transform weeks of work hunting for errors throughout the month into several hours solely devoted to resolving them.
Consolidating invoices for simplicity and accuracy
Due to carrier invoice date and format variability, getting a clear picture of a “bill month” is not always easy. Collecting invoices, especially for large organizations with dozens of carriers, can be a distraction, and invoices often traverse multiple calendar months.
Another way for HR and Finance teams to be able to obtain a clear management viewpoint is through invoice consolidation. Technology solution partners can collect companies’ carrier invoices each month, and automatically consolidate them into a single, easy-to-read bill. A consolidated invoice gives companies an easy overview of all benefits invoices for the month, by carrier, without having to re-type data anywhere.
Most consolidated invoice platforms can not only process invoices, but even handle payment to carriers. Typically, a company will electronically pay their platform partner the total amount of their benefit spend in that month, and the platform partner will then pay the individual carriers in a timely manner and provide digital payment receipts.
Outsourcing this function to a tech-enabled partner means that companies only need to review and approve their invoice summaries each month – no more collecting invoices, and no more meeting 20+ different payment deadlines.
The time saved by eliminating traditional invoice collection can be redirected toward higher-value initiatives, such as benefits strategy optimization and workforce planning.
Enhancing financial visibility with real-time reporting
Due to the aforementioned aggregation challenges, HR and Finance teams often lack visibility into each other’s work when it comes to benefits. Most HR teams can pull detailed enrollment reports from their HRIS platforms, but those reports often don’t reflect what carriers actually bill. Finance teams can pull invoice reports, but (i) the invoices may not be accurate, and (ii) the ability to drill down into something like “spend by department by benefit type” is limited within financial software. For most companies, there is no opportunity for a bird’s-eye view of spend, or any downstream analysis, until invoices hit the company books. This prevents HR and Finance from working together to make informed benefits decisions.
Tech-enabled billing solutions can also remove this problem completely. Benefit consolidation and auditing tools can break down expenses by employee, benefit type, carrier, department, and location. With this level of detail, HR teams can view and better understand benefit enrollments, while finance teams can track incurred costs across locations and departments, so that both teams can understand precisely where their money is going.
Utilizing tools that were designed to sit at the nexus of carrier invoices and HRIS data enables companies to obtain a clearer picture of monthly benefit expenses at any level of detail. This helps organizations improve budgeting and forecasting to ensure they allocate resources effectively.
A collaborative path forward
Employee benefits are the largest non-salary personnel expense, and their rising cost is not a short-term issue. Employers must proactively find sustainable ways to manage costs while ensuring employees receive competitive benefits. Neither HR nor Finance teams can tackle this alone.
By leveraging technology to remove manual work, both departments can work smarter and focus on making strategic, forward-thinking decisions for the business. Automated, technology-driven solutions offer a clear path to eliminate costly billing discrepancies, streamline administrative processes, and provide deeper financial insights, ultimately safeguarding against overspending and driving long-term savings.
