Do large organizations spend an average of $25 per invoice to issue a bill and collect payment?

Almost a year ago, one of our blog articles reported that the leading research companies who look at international billing and payment issues on an ongoing basis, (including perhaps the leader in the field of billing research -Billentis) said that on average, the overall cost of sending out a bill or invoice and then collecting payment from the customer, is £17 per invoice or around $25 (based on data in Europe for the year 2010). We also pointed out that many merchants were disbelieving of this figure, suggesting that they spend nowhere near that kind of money on such a mundane and clerical activity.

Although individual merchant data is often difficult to come by, a private study of the billing and collections practices of three very different organizations was made available recently and the data sheds some light on the real costs that are experienced. These three relatively large organizations were an electricity utility, a city/council organization and a regional telecommunications enterprise. All of these are US based and currently bill their customers with a physical bill in the mail. All three offered payment via their web site but take-up is less than 5% of the combined customer base (a total of 540,000 customers across all the organizations that are billed each month).

What did the study show?
These organizations classified their costs of issuing bills and collecting payment into “direct” and “indirect”. Direct costs included:
• Invoice bill/file preparation time
• Bill printing
• Envelopes
• Postage/Franking
• Payment type fees (fees on credit/debit cards etc)
• Bank fees

The estimated average direct cost for these companies was $6.50 per bill

Indirect costs included:
• Customer service manpower to handle calls/queries or take phone payments
• Accounting/Reconciliation time
• Lost invoices (and the time taken to deal with this)
• Undelivered bills (and the time taken to deal with this)
• The cost of bill storage (space rental or fixed costs)
• Bill query handling time
• Additional or extra payment transaction fees that were unexpected
• Invoice/billing run or payment processing errors
• The need for a higher than wanted or necessary financing to cover outstanding receivables
• Slower than expected bill settlements
• Extra costs associated with compliance/regulatory issues

Of the above, the first two items (call-centre and account reconciliation costs) accounted for about 80% of the indirect costs, which on average were stated to be $18.00 per customer invoice.

So in summary, these three companies suggested that their real costs were a total of $24.50 per bill, based on real internal data from the year 2011. At least for these large merchants therefore, the Billentis estimate looks to be pretty accurate and it is even more reason for merchants of all types and sizes to look very carefully at finding ways to reduce these costs. One immediate solution, of course, is to adopt  online digital billing and payment practices by partnering with a third-party bill presentment and payment portal such as PaySwyft (where these costs can be cut in half very quickly).

Security Protection is the Online Billing World

The use of online billing continues to grow but with this growth comes security risks which need to be managed, especially as far as the consumer is concerned. There are a number of useful steps or measures that can be taken by an individual customer who uses online banking or an online bill presentment portal. A few of these measures include the following:
 
1. Use a strong password- Too many people use their birthday or address for passwords that can be readily discovered. It is therefore better to come up withy something unique. A strong password is at least 7 characters long and contains both upper and lowercase letters. It is also helpful to include a number in the string of possible. This reduces the ability of anyone else guessing a consumer’s chosen password and thereby effect any illegal transactions.
 
2. Keep login data hidden away- Account information, such as a login or password or anything else that will help a person trying to commit fraud, should be kept in a very safe place. This is not on a “post it”, note or scrap of paper on your desk, where others may see it, but in a locked draw or a diary that you carry with you at all times. Even in the latter case, you may want to record the data in a way that you understand it but will confuse a third party person.  

3. Review transaction history- Just as we should check our bank account pages for errors and oversights, so we should apply the same level of scrutiny to our online transactions. This should include not only the most recent transactions but also the history to make sure that a fraudulent transaction is not “buried” in the list. Most fraudsters like to steal quietly and invisibly (one line item that is similar in value) so you need to take extra care to spot that purchase you never made or bill you never got.

 
4. Protect your computer- However careful you may be in your online effort to take security seriously you need to keep your hardware secure through the use of up-to-date antivirus software and firewalls to bar intruders from accessing your network or computer. The greatest risk here is file attachments sent to you on email. Always therefore make sure that any files from people you do not know (that make it past your firewall and spam catcher) are deleted (and attachments from them are never opened).
 
5. Sign out- when operating any online accounts, it is highly advisable that when your online session is complete, you sign out immediately and close the browser window you are done, as double security. If you do need to leave your desk in an office unattended for a few minutes, also make sure that you have locked your computer or password protected it so that others cannot log in to an open session.
 
6. Avoid public computers- Although it is often convenient to be able to log in remotely to your account (and this can certainly be done from your own smart phone or tablet computer for example) you should ideally avoid signing into your online billing portal on a public computer like the ones at cyber cafés. This is simply because they may not have good security and may have software on computers which record your login and password information for later use by someone wanting to commit fraud.
 
7. Beware of Email scams- Many fraudsters try to steal the identity of a bank or other financial services institute and send emails requesting personal and confidential information to be provided. Here it is best to simply avoid putting any login or password data into emails.
 
8. Select a trustworthy Portal- before using any online billing and payment system, be sure to check the credibility of the organization you are dealing with. Check that they are certified and check that they have secure socket layer (SSL) payment certificate etc. You can also read user reviews, blog postings and even “Google” the company to see what you can find that may give you any cause for concern.

If you follow these simple guidelines, you will protect your confidentiality and your account and enjoy the many benefits of using an online billing system.