In quite long thread on the social networking site “linked in” recently, one individual suggested that sending out invoices was a necessary and rather mundane part of doing business and, as long as it was done efficiently, how it was approached (on or off line) made very little difference to the bottom line-perhaps only a few pounds for a small business. In this posting, let’s test that assumption by looking at what time and cost is involved in sending out invoices physically (which for our purposes here includes emailing them as attachments which are then printed) and sending them out electronically with a full digital bill/invoice presentment solution like PaySwyft.
Traditional billing
Most businesses bill on a regular basis, such as the end every day, every week or every month. In all cases however the product or service rendered has to be known along with its cost and an invoice generated to the relevant customer. Even if an accounting system can produce this whole list readily (which is not always the case of course) each invoice needs to be printed (or rendered as a PDF if it is to be emailed) and then sent out with either a correctly addressed envelope (and stamp) or by email. These invoices are then received and opened by the respective customers at various stages-some immediately and some not being opened for several days perhaps and then put into the payables processing queue to be paid either on terms or at some point afterwards.
In traditional billing, customers tended to be treated similarly in terms of offering only one, two or three payment options (such as cheque, direct debit or occasionally a credit card) but whichever one they choose, the customer will need to work quite hard to remit the payment (taking both time, effort and money). Cheques for example need to be written, signed and posted (in an envelope with stamp). Credit card payments (if they are accepted) require the customer to call the client and quote the card details to an accounts receivable person who then needs to reconcile or match the payment to the invoice as quickly as possible.
The bottom line is that traditional billing is an old-fashioned and relatively inefficient process and has high costs for both the issuing organisation and the receiving customer. The research firm Billentis suggests that the average internal cost of billing is somewhere between £5 and £15 (depending upon size of firm and overall process efficiency). About two thirds of this cost is in relatively hidden business expenses such as the staff required to collect money, handle bill calls/deal with queries and carry out bill reconciliation/matching. Hence, anywhere from £3 to £10 of this cost is potentially completely avoidable.
Digital Billing
In sophisticated and well-designed on-line web sites like www.payswyft.com every organisation can now easily upload all of their invoices (daily, weekly or monthly) to the PaySwyft web site at the same time as they are posting out or emailing their invoices. Hence this adds no time or internal effort and only involves a small cost per bill (usually around £0.40 pence). This is technically an on cost to a business until a physical invoice is no longer sent. However, even if this is not the case, a digital invoice in the PaySwyft system brings a number of benefits.
Firstly, all customers now have the added option of being immediately able to see their bill or invoice (in summary or in detail) at the PaySwyft site just by entering the unique Merchant number and invoice number. If they wish they can then pay it instantly, or (if they want to have a number of tracking, alert and reporting benefits) they can register and pay it. In addition, customers can pay their bill by all the options that the PaySwyft site offers including all debit and credit cards, Dynamic debit and even cash. There are actually 10 different ways to pay offered, and this number will only grow over time, all helping the merchant to get their money by the means by which the customer can best pay.
As yet another benefit of digital billing in a system like the one at payswyft.com, the on-line site is available to customers 24 hours a day, 7 days a week and 365 days of the year. This means that payments can be remitted whenever a customer wishes to do so, not just when the organisation is open to accept cheques or field phone calls (perhaps only 9-5pm Monday to Friday).
Even if only 10% of customers pay via this on-line channel, this is 10% of invoices that are paid and easily reconciled (requiring no further work or call handling). However, in practice, customers increasingly like making payments on-line, particularly when the channel is safe and secure. Some organisations have therefore converted many more and, in some instances, all of their customers to this online invoicing and payment method.
In time and cost terms, research suggests that those customers paying a digital bill are quicker to pay (accelerating cash flow), are less likely to call the issuing organisation for any reason and are making a transaction which is readily matched and reconciled (saving expensive accounting or bookkeeping time). All in all this is likely to save an organisation anywhere from £3 to £6 per invoice. Even if you only send out 100 invoices a month this results in savings of £3,600 to £7,200. Its quite clear then that this is a significant difference and may amount to a very large sum for larger organisations.
Saturday 29 January 2011
Tuesday 11 January 2011
Billing-just a necessary evil to be tolerated?
Whether you are a small, medium or large business, billing your customers for the products or services you provide is probably one of the last processes that you think about or design (in fact you may not “design” it all!). In this sense, it is often almost an afterthought and an administration “pain” to be borne or necessary evil to be tolerated, as the title of this blog suggests. Once set up, many businesses therefore give the whole situation little more thought, sometimes year after year, and just accept that the endless printing of invoices, stuffing of envelopes, issuing of emails, chasing of outstanding amounts and reconciling of payments (to name only a few of the tasks) just has to be done, without too much grumbling. But the big question here is this –what are we missing in viewing the rather irritating but necessary billing process in this rather negative way?
Over forty years ago, the quality guru Joseph Juran suggested that all businesses should pay most attention to three macro processes-these were:
1. Demand generation (or the creation of demand from consumers for the products or services on offer, usually through sales and marketing efforts).
2. Demand fulfilment (or the supply of the products or services on offer, usually through operational, technical or logistical means).
3. Cash generation (or the receipt and management of sufficient cash to ensure that current business activities are fully funded and that the business can continue to operate effectively in the future).
Juran suggested that most businesses pay enormous improvement time and attention to the first two of these macro processes but very little to the last, at least until a crisis occurs. It seems that not much has changed then today, with very little management time or even external help being available to help streamline this very critical area. So what are the choices that are available to optimise the process of issuing a bill and collecting money as fast as possible from customers?
As we are all aware, the big change in recent years has been the speed and access to the Internet and its ever increasing use as a more convenient tool for businesses and their customers. In the realm of billing and payment the Internet has already made a significant impact on most of us. Many people will have experienced electronic bills being presented by email (with an attachment or a dynamic link to click to a merchant web site such as a mobile phone company) and experienced the speed and convenience of electronic payment through an online bank account or payment service such as PayPal or American Express, for example. Even if we don’t like or not quite trust these services, we can therefore appreciate that this trend towards online services is likely to grow. However, the online experience remains quite limited in terms of total transactions completed and it is still rare to see a fully integrated experience which feels similar to getting a bill in the physical mail and then sending off a cheque to settle it and feel a sense of ticking a task off your list-until now that is.
Web 2.0 technology allows much better use of the Internet than it did as recently as only two to three years ago. This means that physical bills can not only be rendered to look similar online but can also be truly digital. This means that the online bill is “clickable” to manipulate it as a merchant or consumer wishes, whether it is to view it in more detail, check it against past invoices, schedule it for payment, pay it or just store it. And because it is online, there is no need for physical copying or storage in theory (even though it continues to be one of those things that people still do “just to be safe”).
In sophisticated webs sites such as www.PaySwyft.com the on-line experience of a fully digital “one-stop-shop bill presentment and payment site is a huge advantage to both the bill issuer and receiver. Look at the just some of the benefits to each in using the PaySwyft service the table below:
Merchant Advantages/Benefits
• Simple and flexible (and cost effective) Bill presentment
• More payment options for customers
• Saves time, money and hassle on paper handling
• Competitive transaction rates for payments (and transparent rate card)
• Instant receipting
• Ability to take payments 24/7 and 365 days of the year
• Cash flow acceleration
• Detailed payment/reconciliation schedule
• Safe and secure payment systems
• Flexible on-line alert system
• Ability to accept cash payments
• Easy to upload from/download to accounts systems
• Better invoice payment reconciliations
• Free to use on-line marketing portal
• Greener solution when customers start to “turn off” paper bills
Consumer Advantages/Benefits
• Safe and secure to use
• No need to register with PaySwyft (can use instant pay)
• Consumer information kept confidential
• Email or SMS alerts when payments due
• Ability to calendarise payments
• Dynamic debit option for regular payments
• Easier reconciliation
• Purpose built – consumer friendly
• Free on-going on-line bill/payment record storage
• Flexible and easy to use analytical tools
• Green solution
• Free
Summary
Billing may be a necessary evil to many but Internet technology has evolved to the point whereby it can be made much less painful to both the bill issuer and bill receiver and start to give tangible benefits to both. This helps customers to remit their payments more efficiently, effectively and willingly and helps to make the merchants substantially better at generating the money they need to deliver even better future service-the ultimate virtuous cycle!
Over forty years ago, the quality guru Joseph Juran suggested that all businesses should pay most attention to three macro processes-these were:
1. Demand generation (or the creation of demand from consumers for the products or services on offer, usually through sales and marketing efforts).
2. Demand fulfilment (or the supply of the products or services on offer, usually through operational, technical or logistical means).
3. Cash generation (or the receipt and management of sufficient cash to ensure that current business activities are fully funded and that the business can continue to operate effectively in the future).
Juran suggested that most businesses pay enormous improvement time and attention to the first two of these macro processes but very little to the last, at least until a crisis occurs. It seems that not much has changed then today, with very little management time or even external help being available to help streamline this very critical area. So what are the choices that are available to optimise the process of issuing a bill and collecting money as fast as possible from customers?
As we are all aware, the big change in recent years has been the speed and access to the Internet and its ever increasing use as a more convenient tool for businesses and their customers. In the realm of billing and payment the Internet has already made a significant impact on most of us. Many people will have experienced electronic bills being presented by email (with an attachment or a dynamic link to click to a merchant web site such as a mobile phone company) and experienced the speed and convenience of electronic payment through an online bank account or payment service such as PayPal or American Express, for example. Even if we don’t like or not quite trust these services, we can therefore appreciate that this trend towards online services is likely to grow. However, the online experience remains quite limited in terms of total transactions completed and it is still rare to see a fully integrated experience which feels similar to getting a bill in the physical mail and then sending off a cheque to settle it and feel a sense of ticking a task off your list-until now that is.
Web 2.0 technology allows much better use of the Internet than it did as recently as only two to three years ago. This means that physical bills can not only be rendered to look similar online but can also be truly digital. This means that the online bill is “clickable” to manipulate it as a merchant or consumer wishes, whether it is to view it in more detail, check it against past invoices, schedule it for payment, pay it or just store it. And because it is online, there is no need for physical copying or storage in theory (even though it continues to be one of those things that people still do “just to be safe”).
In sophisticated webs sites such as www.PaySwyft.com the on-line experience of a fully digital “one-stop-shop bill presentment and payment site is a huge advantage to both the bill issuer and receiver. Look at the just some of the benefits to each in using the PaySwyft service the table below:
Merchant Advantages/Benefits
• Simple and flexible (and cost effective) Bill presentment
• More payment options for customers
• Saves time, money and hassle on paper handling
• Competitive transaction rates for payments (and transparent rate card)
• Instant receipting
• Ability to take payments 24/7 and 365 days of the year
• Cash flow acceleration
• Detailed payment/reconciliation schedule
• Safe and secure payment systems
• Flexible on-line alert system
• Ability to accept cash payments
• Easy to upload from/download to accounts systems
• Better invoice payment reconciliations
• Free to use on-line marketing portal
• Greener solution when customers start to “turn off” paper bills
Consumer Advantages/Benefits
• Safe and secure to use
• No need to register with PaySwyft (can use instant pay)
• Consumer information kept confidential
• Email or SMS alerts when payments due
• Ability to calendarise payments
• Dynamic debit option for regular payments
• Easier reconciliation
• Purpose built – consumer friendly
• Free on-going on-line bill/payment record storage
• Flexible and easy to use analytical tools
• Green solution
• Free
Summary
Billing may be a necessary evil to many but Internet technology has evolved to the point whereby it can be made much less painful to both the bill issuer and bill receiver and start to give tangible benefits to both. This helps customers to remit their payments more efficiently, effectively and willingly and helps to make the merchants substantially better at generating the money they need to deliver even better future service-the ultimate virtuous cycle!
Friday 7 January 2011
What are the benefits of e-billing to customers and merchants?
E-billing is something of a “catch all” phrase which can often lead to much confusion for both the potential customer and the merchant who may want to adopt it. So let’s propose what is hopefully a helpful definition:
“E-Billing is the presentment of a bill or invoice by electronic means (usually via the Internet) allowing a customer to immediately choose from a range of alternatives to make payment. This should be facilitated in a user-friendly way and with the minimum of time and effort for all concerned.”
An e-billing process should consequently represent a substantive improvement over paper-based or other “off-line” billing/invoicing methods, and be more effective and efficient to both the customer and to the merchant.
There are three kinds of e-billing:
The first of these is e-billing via a bank web site (tied to a customer account). This is typically very limited in as much as a bank will not electronically present the bill or invoice, and in many cases may only allow customers to pay the large billers (such as utilities). They may also allow only cleared bank funds to settle bills and not credit side options, and offer limited or no bill history/storage options.
The second kind of e-billing is via e-mail (typically as a PDF attachment). This process is dependent on not only having an email address for the bill recipient but requires that the bill is printed and settled in the same way as a posted paper-bill. While this method saves costs in terms of postage and paper, in reality it is little different to the old-fashioned paper-based process that it attempts to replace.
The third kind of e-billing is the digital kind, whereby a bill is presented on a portal web site (such as www.payswyft.com) as a fully clickable document (for both bill detail, and payment). E-bills presented digitally look very much like the ones that are posted or emailed as attachments but are truly “live” or clickable documents that can be analysed, forwarded, and stored (as well as paid) electronically.
If we now return to our definition above, we can consider both the customer (or bill-receiver) experience and the merchant experience to see what each of the three kinds of e-billing offers in terms of efficiency and effectiveness.
The customer or bill-receiver experience
In all three kinds of e-billing the service is typically free to consumers and they avoid having to physically open envelopes and sort each bill individually.
In bank site e-billing, the consumer cannot see his or her bill (which would depend on some very clever technology with every biller –small to large, to allow this to happen). Hence the bank site e-billing option is very much concerned with payment only (and even this may be constrained). Hence, we might score this method for the customer at 3 out of 5 in terms of efficiency and 2 out of 5 in terms of effectiveness.
In the e-mail attachment process, the individual gets to see his or her bill quickly but can rarely do much else with it. This means that he or she may have to print, copy, store and even pay the bill using other systems or even by off-line means such as writing and posting a cheque to settle it. Hence, we might score this method for the customer at 2 out of 5 in terms of efficiency and 1 out of 5 in terms of effectiveness.
In the fully digital e-billing process, the consumer can print a bill only if they wish to, forward it, store it and pay it flexibly on-line (and in the same system and/or on the same web site). In addition bill storage and analysis is much more flexible. This saves both time and money for the consumer. Hence, we might score this method for the customer at 4 out of 5 in terms of efficiency and 5 out of 5 in terms of effectiveness. Clearly this is much better than either of the other options.
The merchant experience
In all three kinds of e-billing, the service is certainly potentially more effective and efficient than paper-based solutions but this is unlikely to be enough for a merchant who wants to invest in this approach.
In the bank site e-billing process the merchant will not be able to give customers an electronic bill (and will therefore have to continue to present it by post or email attachment). In addition, they may pay the bank for their merchant account (with fixed and variable costs) and not necessarily get additionally payment options for customers unless they pay what may be quite high per transaction fees. Hence, we might score this method for the merchant at 3 out of 5 in terms of efficiency and 1 out of 5 in terms of effectiveness.
In the e-mail attachment process, the merchant can save paper and postage costs (but only when consumers are prepared to turn off paper-based bills) and get some efficiency of delivery in terms of speed (as long as they have accurate email addresses of course). However, the reconciliation process is still likely to be unchanged and there may be little change in speed of payment by customers. Hence, we might score this method for the merchant at 2 out of 5 in terms of efficiency and 1 out of 5 in terms of effectiveness.
In the fully digital e-billing process, the merchant gets to upload their bill in pretty much the same format as they would have posted it (and probably save a little money on the cost side here). However, the far greater benefits will typically come from considerably better reconciliation and faster settlement (because of greater consumer-friendliness and more payment options being made available). Hence, we might score this method for the merchant at 4 out of 5 in terms of efficiency and 5 out of 5 in terms of effectiveness.
Summary
E-billing is more efficient and effective than paper-based billing for both the consumer and the merchant. However, not all e-billing solutions are alike and digital billing represents a major won-win for everyone.
“E-Billing is the presentment of a bill or invoice by electronic means (usually via the Internet) allowing a customer to immediately choose from a range of alternatives to make payment. This should be facilitated in a user-friendly way and with the minimum of time and effort for all concerned.”
An e-billing process should consequently represent a substantive improvement over paper-based or other “off-line” billing/invoicing methods, and be more effective and efficient to both the customer and to the merchant.
There are three kinds of e-billing:
The first of these is e-billing via a bank web site (tied to a customer account). This is typically very limited in as much as a bank will not electronically present the bill or invoice, and in many cases may only allow customers to pay the large billers (such as utilities). They may also allow only cleared bank funds to settle bills and not credit side options, and offer limited or no bill history/storage options.
The second kind of e-billing is via e-mail (typically as a PDF attachment). This process is dependent on not only having an email address for the bill recipient but requires that the bill is printed and settled in the same way as a posted paper-bill. While this method saves costs in terms of postage and paper, in reality it is little different to the old-fashioned paper-based process that it attempts to replace.
The third kind of e-billing is the digital kind, whereby a bill is presented on a portal web site (such as www.payswyft.com) as a fully clickable document (for both bill detail, and payment). E-bills presented digitally look very much like the ones that are posted or emailed as attachments but are truly “live” or clickable documents that can be analysed, forwarded, and stored (as well as paid) electronically.
If we now return to our definition above, we can consider both the customer (or bill-receiver) experience and the merchant experience to see what each of the three kinds of e-billing offers in terms of efficiency and effectiveness.
The customer or bill-receiver experience
In all three kinds of e-billing the service is typically free to consumers and they avoid having to physically open envelopes and sort each bill individually.
In bank site e-billing, the consumer cannot see his or her bill (which would depend on some very clever technology with every biller –small to large, to allow this to happen). Hence the bank site e-billing option is very much concerned with payment only (and even this may be constrained). Hence, we might score this method for the customer at 3 out of 5 in terms of efficiency and 2 out of 5 in terms of effectiveness.
In the e-mail attachment process, the individual gets to see his or her bill quickly but can rarely do much else with it. This means that he or she may have to print, copy, store and even pay the bill using other systems or even by off-line means such as writing and posting a cheque to settle it. Hence, we might score this method for the customer at 2 out of 5 in terms of efficiency and 1 out of 5 in terms of effectiveness.
In the fully digital e-billing process, the consumer can print a bill only if they wish to, forward it, store it and pay it flexibly on-line (and in the same system and/or on the same web site). In addition bill storage and analysis is much more flexible. This saves both time and money for the consumer. Hence, we might score this method for the customer at 4 out of 5 in terms of efficiency and 5 out of 5 in terms of effectiveness. Clearly this is much better than either of the other options.
The merchant experience
In all three kinds of e-billing, the service is certainly potentially more effective and efficient than paper-based solutions but this is unlikely to be enough for a merchant who wants to invest in this approach.
In the bank site e-billing process the merchant will not be able to give customers an electronic bill (and will therefore have to continue to present it by post or email attachment). In addition, they may pay the bank for their merchant account (with fixed and variable costs) and not necessarily get additionally payment options for customers unless they pay what may be quite high per transaction fees. Hence, we might score this method for the merchant at 3 out of 5 in terms of efficiency and 1 out of 5 in terms of effectiveness.
In the e-mail attachment process, the merchant can save paper and postage costs (but only when consumers are prepared to turn off paper-based bills) and get some efficiency of delivery in terms of speed (as long as they have accurate email addresses of course). However, the reconciliation process is still likely to be unchanged and there may be little change in speed of payment by customers. Hence, we might score this method for the merchant at 2 out of 5 in terms of efficiency and 1 out of 5 in terms of effectiveness.
In the fully digital e-billing process, the merchant gets to upload their bill in pretty much the same format as they would have posted it (and probably save a little money on the cost side here). However, the far greater benefits will typically come from considerably better reconciliation and faster settlement (because of greater consumer-friendliness and more payment options being made available). Hence, we might score this method for the merchant at 4 out of 5 in terms of efficiency and 5 out of 5 in terms of effectiveness.
Summary
E-billing is more efficient and effective than paper-based billing for both the consumer and the merchant. However, not all e-billing solutions are alike and digital billing represents a major won-win for everyone.
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