The Telecom Line Passes Every Control Except the One That Matters
By Bill Henrichs
Founder & President, Bearstone LLC | Former Head of Telecommunications, Simon Property Group
Budget season is warming up, and somewhere in the next few weeks a version of the same note lands in every CIO’s inbox: finance is building next year’s plan, the telecom line is up for review, and the question attached to it is some form of “why doesn’t this number ever come down?” It’s a fair question. It’s also aimed at the wrong target — because the telecom line has been passing every control finance runs, all year, and that is exactly the problem.
Take one charge to see why. Say your last carrier renewal cut the rate on a class of circuits — negotiated, signed, effective the first of the month. And say, at some number of sites, the billing system never caught up: the old rate keeps right on billing. Nothing dramatic. A modest difference, times a handful of locations, times every month since. The kind of charge that never announces itself.
Now watch what happens to it at month-end close. The accrual is built from the run rate, and this charge is in the run rate — it accrues itself, on schedule, to the penny. Actuals land right on top of the accrual, so there is nothing to reconcile. The line ties out perfectly, because the variance is sitting on both sides of the tie.
Then comes variance analysis, the control everyone trusts. Actuals against budget: on plan. Actuals against last year: flat, maybe slightly favorable. But look at where the budget came from. It was built from last year’s actuals — and last year’s actuals contained the same charge. The charge funded its own budget line. A variance review is designed to catch a number that moves. It has no way to catch a number that has been wrong, consistently, since before the budget existed.
The invoice itself clears approval the same way. Accounts payable confirms the invoice arrived, the math sums, the total sits inside tolerance, the right cost centers absorb it. Every one of those checks asks whether the invoice is consistent — with itself, with the ledger, with expectations built from previous invoices. Not one of them asks whether the carrier was entitled to bill it. Entitlement lives in the contract, and the contract is never in the room at close.
Multiply by twelve, and the year-end picture writes itself: a telecom line that closed clean every month, survived every review, and still carries charges nobody authorized. “Clean” and “correct” are different claims. Close controls certify the first. Only validation against the contracted terms — every charge, line by item, against the contract and the live inventory — certifies the second.
And this holds even in estates with a TEM platform in place. A TEM will tell you the invoice was received, loaded, allocated, and paid on time — processing, done well. Whether a charge was authorized in the first place is a different question, answered by a different discipline, and no processing system was built to ask it.
The cash is real when someone finally does ask. On our reference engagement — a multi-brand retail portfolio, validated line by item every cycle — $1,852,314 has been credited back by the carriers over 31 months, at an 87% collection rate. That second number is the one worth reading twice. Flagging variance is analysis. An 87% collection rate means the disputes held up against the contract, carrier after carrier, and turned into credits that actually posted. That is the difference between an observation and an outcome.
BearGuard, our managed governance process, exists to be the control missing from the sequence above: every invoice validated against the contracted terms and the live inventory, variances documented and disputed inside their windows, credits pursued until they post — a reference the close process doesn’t have, running alongside the ones it does.
So when the budget note arrives this fall, the strongest answer isn’t a defense of the number. It’s a distinction: a clean close proves the telecom line is consistent. Validation proves it’s right. Going into planning season, it’s worth knowing which of the two you actually have.
