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Monday 18 November 2013

Electronic billing and payment-a win-win for everyone?

Electronic billing and payment is one of those rare organizational change measures that can create a number of so-called win-wins. The merchant wins on efficiency and effectiveness (and with the right solution on the cost side too) and the customer wins on speed and convenience (and can save a little money as well). Let’s briefly look at why.

For the merchant on the direct or visible cost side, there’s less paper, less envelopes, less ink and less postage when customers elect to discontinue getting a paper invoice. Even though these are often significant in and of themselves there are also even bigger potential cost reductions on the indirect or more hidden side of things...less customer support (handling queries or phone-in payments) and much less time spent on reconciliation and settlement. In addition, online bill presentment and payment has been shown to lead to much quicker settlement by the customer-which substantially aids cash-flow for a merchant. All these savings add up significantly on the merchant side.

For the customer they win by eliminating or simplifying the tasks of organizing bills, querying them, and storing them (in a good online system forever) and being able to make payments in many ways (all being possible both safely and securely and at a single web site, and ideally only with a few clicks). Digitally-based billing and payment means more free time for the bill payer, and less to worry about when dealing with paper (including having to put the bill or invoice somewhere safe, finding it when needed and even losing it occasionally).

And above and beyond the merchant and the customer in the relationship, the environment wins too.  Electronic billing is a simple but significant step that every organization can take with a little focus, effort and determination, and encourage their customers to make a small “green” contribution of their own.  Less paper eventually means less use of trees and less transportation (and gas), reducing a merchant’s carbon footprint. Not all customers will be happy to turn off paper immediately but some will and they will slowly encourage the others to do the same.

So, in summary merchants will save money on:

                  Printing paper bills

                  Fulfillment and postage

                  Undeliverable mail

                  Chasing as many late payments

                  Handling manual payments

                  Archiving paper bills

                  Reconciliation/bill matching/banking payments

And customers will save time on:

                  Checking and paying bills

                  Hunting for previous bills

                  Checking funds and means to pay

                  Writing and mailing checks

                  Waiting for a merchant to be open for business

                  Paying by IVR or phone

                  Worrying over lost checks and late delivery

And all this is “green” too.

Monday 11 November 2013

Implementing an Online Billing Solution

As banks and the rest of the financial services industry continues to evolve online systems and more and more individuals are comfortable using the web, as well as in using their smart phones and tablets to make a payment, all businesses have a tremendous opportunity to speed up their receivables process while lowering costs and improving efficiencies. This is best achieved by making as much of the electronic or digital technology that is readily available to us as possible (although we will need to determine exactly what this means of course).

There is no one-size-fit-all online billing system for every organization, as there will be many individual factors to be taken into account in every case. However, there are some common issues that need to be considered and it is these that we will look at in his brief article. In other words, having assembled a payments strategy and calculated the true cost of billing and collections, the next key question is therefore “what is the best way to go about implementing a more digitized approach to billing and payment for our customers?”

What are the Options?
There are several choices available to a merchant to start to issue bills electronically and to accept payments via the web. These include:
Migrating to an email and attachment based approach
  • Adding a third-party payment system
  • Building an online billing and payment solution (writing the software),
  • Buying a third-party piece of software for online billing and payment,
  • Outsourcing some or all of the billing and payment process to go more online
  • Using a cloud-based pay-as-you-go online service (such as BillSwyft for example).
All of the above are viable options and the best is likely to be the last of these in cost-saving terms. However, each organization needs to make its own choice in terms of what it is ready to do.
 
Important Transition Considerations?
Whatever online option is finally selected in terms of how to render change to current billing and payment practices, there are several other issues or considerations for a merchant of any size or type to think about. These include:

Size and Type of the Enterprise
Although almost all organizations issue invoices or bills to some degree, some products or services are supplied only after payment is taken at the point of sale. Most retail businesses are a good example of this. However, where customers are allowed to pay for goods and services after they have been supplied or rendered, an invoice needs to be issued promptly and efficiently and ideally options for payment should be many and easy to use. Having said this some invoice volumes are so small that the work involved to send them and collect payment is easily absorbed in one person’s job role. In these circumstances large internally built or third-party software solutions are unlikely to be economic.

Branding/Marketing Issues
Any business will need to decide how much marketing control they want to have over the look and feel of both the bill and the payment page or pages. In some companies, this may not matter very much and a generic payment site may be fit for purpose. However, if a brand is important or even if a company wants to maintain a very similar look and feel (including use of logos etc.) then an internally built, purchased software solution or full digital service such as BillSwyft is likely to give a merchant the most customization potential. 

Website Monitoring and Availability
A critical component to any company’s desire to adopt a more digital billing and payment approach is ensuring that site availability to customers is high. A couple of typical metrics to include are therefore response time and website availability or uptime. Clearly an internally built system or purchased piece of software will need to be well-built and well-supported to be available as needed. 

Customer Service
Many considerations need to be fleshed out when deciding on what type of customer service is needed for a given merchant’s customers. For example, is the system going to be user-friendly to all people who may be interested in using it? do you need 24/7, 365 days a year availability? Do you require international payments? or can your system quickly find a payment transaction when needed (and can it communicate easily with the customer –via online means, when necessary)? 

PCI-Compliance and other Risk issues
As with accepting credit or debit card payments in person (or via a phone call), any merchant accepting cards as a payment type must ensure that they are in compliance with the Payment Card Industry (PCI) Security Standards Council’s rules. The PCI Security Standards Council offers comprehensive standards and supporting materials to enhance payment card data security. The PCI Data Security Standard includes requirements for security management, policies, procedures, network architecture, software design and other critical protective measures, such as card tokenization and encryption.  All of these factors need time and money to manage properly if building an internal solution but are often already party of any third-party site.

Costs/Fees
One other important issue to think about when accepting payments via the web is costs or fees. Many businesses which operate on low margins could see those margins deteriorate even more as credit or debit card fees (direct and indirect) would add an additional (and perhaps unnecessary) layer of cost. Although fees are payable to process payments with an internally developed or software-based solution, third-party providers can also charge a courtesy or convenience fee. All fees therefore need to be carefully scrutinized ahead of time so that there are no surprises when a monthly transactional statement is sent.