What do Postal Price Rises Really Mean for Billing Costs?

It was recently announced that a first-class stamp in the UK will rise in price from 46p to 60p (a 30% increase) and a second-class stamp will go up from 36p to 50p (a 39% increase). This reflects a worldwide trend in postal prices increasing dramatically (as less and less letters are sent in the mail and therefore make the post office burden so much harder to cover) and causing those businesses which bill their customers in the mail to have to bear the extra costs. For a larger biller (perhaps doing 50,000 bills a month) this adds £84,000 p.a and for a small business (doing say 2,500 bills a month) it adds £4,200.

These are significant relative costs in a channel that already presents additional challenges for merchants over other options. This includes the need to have to print and fold invoices and have to stuff them into envelopes, wait the 2-3 days until they are delivered (excepting a small percentage that never reach the customer’s given address!) and even get lost somewhere along the delivery route (and therefore have to be resent). Postal delays, go-slows and strikes can also impact significantly on businesses, and none of these factors does anything to help critical cash-flow (assuming that the customer does not lose their paper invoice and manages to pay on time).

So, what can businesses do about yet more costs that have to be absorbed in these difficult economic times? The obvious answer is to ask customers to accept an online invoice and cut out paper and envelopes and all mail costs completely. In the above two examples this not only removes the respective £300,000 and £15,000 annual postal costs completely, but by the time you add in the extra internal costs of printing, folding, stuffing, and envelopes probably saves twice as much-or around £600,000 and £30,000.

Unfortunately, if the above step of switching to ebilling were easy, every business of any size or type would be doing it. In reality, the inhibitors have historically been many including the often immediately prohibitive need to spend up-front capital on ebilling software (and pay annually to maintain it). In addition, the introduction of a new online billing system typically disrupts normal operations for months (often costing significant time and money) in order to transition to the new approach (not forgetting that customers also have to be converted to use the new system too). This all assumes that you have the customer email addresses to which you can send the bills or invoices of course. In the past, these kind of inhibitors have added too much cost and/or hassle for most businesses and they have no choice but to stay with their traditional way of doing things-until now that is.

In recent years, third-party online ebilling portals like PaySwyft for example, have been developed which overcome many of the problems described above. First and foremost this kind of portal offers almost an immediate opportunity to send full digital invoices to customers (often within days of signing up to use this “cloud-based” service) and on a pay-as-you-go basis, meaning there is no need for any capital outlay or annual software maintenance costs. And because every merchant has a unique merchant number or ID, customers can go to the portal to pay a bill without a business having to know their email address. Customers can then pay instantly, or register at the site (which means that a business progressively “scrapes” the email address for customers (who will often want to use their email or SMS alerts to remind them when bills are due). This means that customers can be weaned slowly but surely away from paper over time, as they become increasingly comfortable that all their bills are stored, emailable and printable whenever they like, and they can therefore safely turn off the paper bill they get in the mail. Best of all, the business not only starts to save the cost of sending paper bills and the postage costs but gains the added advantage of having a fully integrated set of payment options (often greater in diversity than they offered previously) that are now available (such as every credit card for instance). This aids cash-flow, lessens calls to the business to pay by phone and massively helps bill and payment reconciliation.

Summary
The transition to online billing is always a challenge but by using a portal-based system hosted in the cloud, it is many times easier than it was and can almost immediately start to save substantial time and cost. And now that postal expensive are going up so significantly, all businesses have even more reason to therefore consider making the change now.