Developing a Payment Strategy-Step 5- Building a seamless payments process.

In exploring what is involved in developing an overall payments strategy, in this fifth and final article in the series we will look at building a seamless payments process.

There is no “one-size-fit-all” payment strategy for every organisation, as there will be many individual factors to be taken into account in every case, and this is likely to affect the choices made. However, one aspect about a payments process appears to have almost universal appeal when it comes to customers-they want a “seamless” experience as much as possible. “Seamless” means without joins or to be continuous or even “flowing” from one stage in the process to the next. For a payments process this entails that every step needs to flow in this smooth way to ensure that the customer experience is a straightforward and relatively painless one (given that few people probably like actually paying bills).

Research again and again confirms that flexibility and choice should be a major driver in making the customer experience a positive one, when it comes to rendering payment and the web can now deliver much of this with a little careful pre-planning. In practice, this suggests that the entire payment strategy can be centred around an Internet web site (whether this is in-house or an third-party one). On this site, all the payments process steps of issuing the invoice, offering various payment channels, taking different kinds of payments, reconciling payments to invoices, banking the payments and accounting for the whole payment transaction are possible-a one-stop shop. Of course, some customers either will not or cannot transact on the web and the organisation may therefore have to continue to physically send, email or SMS invoices and even accept telephone based or postal payments. The key issue here however is that this population of customers can be kept to a minimum and encouraged to transition over time. For example, those people making telephone payments can be shown how easy it is to do make the same recurrent payment online (especially when the convenience of doing so 24/7 and 365 days a year is appreciated and not just when call centre lines are open for instance).

In summary then, all organisations of all sizes and types should develop and continue to hone a payments strategy that offers more flexibility and choice to customers. In the chosen approach, being fast and efficient in making the bill available is critical, as is making the whole experience as user-friendly as possible. By doing this, an organisation will usually get the change pioneers and early adopters to experiment with the new approach, and it is their experience that that will have a “viral” influence on those customers who do not like to be the first to try new things. Organisations therefore have to be patient and take a long-term view, but in doing so, can drive both bill presentment and payment acceptance costs down substantially.

Developing a Payment Strategy-Step 4- Making as much payment choice available as possible.

In exploring what is involved in developing an overall payments strategy, in this article we will look at the fourth phase of five in total, which is making as much payment choice available to customers as possible.

Every organisation wants to get paid (and as quickly as possible) but there are clearly many ways in which this may be done by customers. This creates an interesting dilemma. On the one hand, by keeping payment choices to a minimum, complexity is reduced for the organisation but flexibility of options is decreased for the customer. On the other hand, a wide array of payment options creates high customer choice but with a high degree of handling complexity for the business. In the past, the size of the average transaction, the billing cycle frequency and the volume were the main determinants of strategy here (and may have favoured fewer payment choices such as cheque and direct debit only for instance as a way of keeping things simple and processing costs low) but with the more widespread use of the Internet for payments in recent years, the balance towards greater customer payment option choice has become much easier and therefore compelling. 

Offering a wider choice of payments incorporates not only varying payment channels but also a variety of payment types. Different channels include the traditional ones of mailed-in cheques and direct bank transfer (direct debit or standing order) but these days can often also include operating a central call centre (in-house or outsourced), automated telephone services or payment via the web (at a company built or third-party site). Different types of payment include cheque, cash and bank transfer, but can be easily extended to a wide variety of credit and debit cards, pre-paid cards and e-wallet transfers.

Internet technology now allows considerable flexibility for an organisation of any size to offer most of the above channels with a web site at the hub of the offering. In addition, an e-payment gateway can now be relatively easily added to enable credit side and debit side, options, as well as e-wallet payments to be taken online. Perhaps even more attractive to an organisation is adding a reputable third-party electronic billing and payment aggregation destination site (such as PaySwyft) as an offering in the overall mix. At such a site, an organisation can present all of its bills in digital form and then allow these bills to be paid with almost every available payment type, including cash in many cases. Because the aggregator takes the payments, collects them together electronically and then settles to its merchants online also, this helps to drive down the internal expense of payment call handling and the acceptance and reconciliation costs of handling cheques (and any other paper-based transactions).

Whatever approach selected by an organisation, today’s customers prefer a variety of payment options to be available meet their different and often changing needs when it comes to paying invoices. The reward for making this available is quicker settlement and thereby accelerated cash-flow. A wise business therefore finds the most cost-effective ways to offer as much choice as they can.

In our next article in this series, we will look at the next phase in developing the Payment Strategy- Building a seamless payments process.

Developing a Payment Strategy-Step 3- Giving customers as user-friendly a billing and payment experience as possible.

In exploring what is involved in developing an overall payments strategy, in this article we will look at the third phase of five in total, which is giving customers as user-friendly a billing and payment experience as possible.

Most dictionaries suggest that user-friendliness involves making a customer process as easy to learn and operate as possible. In practical terms, this often boils down to making sure that language is straightforward and unambiguous. In a web site environment, this will mean making sure that screens are clean and uncluttered, and navigation is both speedy and efficient etc. However, when it comes to a relatively uninteresting task such as receiving and paying bills, it is suggested that the key to user-friendliness is clarity, convenience, choice and control. Let’s therefore look at each of these in a little more detail

Clarity
Many organisations confuse their customers by either failing to let them know clearly how payment can be made for products or services supplied, or bury the information in places where it cannot easily be found (or is difficult to understand when a customer does stumble across it). Customers need simple and clear language about where how they can receive a bill and where, when and how they can pay that bill. In a web site, “ways to pay” is often therefore a simple addition (as a page or a tab) especially when they can click a link and make a payment there and then.

Convenience
In general, convenience is something that increases comfort or saves work. When it comes to billing or payment therefore, the offered approach should allow greater comfort (being able to complete the whole task on line, at home, on a mobile etc) or less work (do it quicker, without having to rely on the physical mail, avoid paper-based copying/storage etc). This might also involve a more convenient web site experience (less clicks, more clickable options or deeper/better analysis when needed).

Choice
All customers like to have choices available (whether or not they use them). In bill presentment and payment, this typically means allowing customers to view their bill in flexible ways. In a web site, this might include the ability to view a mini bill or clickable bill detail. On the payment side, choice involves providing different payment mechanisms. We will look at this issue in more detail in step 4 of this series but in summary this should ideally include as many debit and credit side options as possible so that customers can settle a bill in a way that suits them (which they are more likely to do much more quickly when several choices are made available to them).

Control
According to recent research, customers will pay between 10 and 17 bills a month and may not feel that they are very much in control when these arrive at different times in the mail, are chased frequently and may specify few ways for payment to be made. Using online technology to both issue bills and allowed them to be paid flexibly is one way to overcome many of these frustrations and this has other advantages. In an online bill and payment environment, customers can store their bills electronically (and retrieve them when wanted) can calendarise payment to suit them, get immediate receipt of payment (giving the confidence and security that settlement has occurred) and can analyse bill data whenever and however they like. This all helps the customer feel that they are more in control.

In our next article in this series, we will look at the next phase in developing the Payment Strategy- making as much payment choice available as possible to customers.

Developing a Payment Strategy-Step 2- Focusing on how to issue bills and invoices in a fast and efficiency way

In exploring what is involved in developing an overall payments strategy, in this article we will look at the second phase of five in total, which is how a business can issue bills and invoices in a the fastest and most efficiency way.

There are few businesses that fail to readily appreciate that when a customer orders a product or service, they expect to have it delivered as efficiently as possible (and this usually means fast). In fact, some organisations even seek to gain competitive advantage by doing this effectively. However, this would be costly unless the invoicing process is equally efficient, so that payment can be collected as quickly as possible. Streamlining the billing process is therefore a critical activity.

There are essentially three options available to streamline the billing process:

First, a business can seek to make an existing manual bill process “flow” more efficiently. For example, this might involve looking at the simplicity of the invoice design or layout, reducing or even eliminating wasteful work tasks, or even further automating the delivery process (such as faster envelope stuffing). Although this may help considerably, the danger is that these process improvements need to be “locked in” to avoid slippage and the changes may only go a short way in terms of overall improvement from a customer perspective.

A second option is to automate the manual billing process as much as possible. For example, this might involve adopting an email-based invoice delivery process (saving on paper, envelopes and franking (if the customer can be convinced to accept an email as the substitute of course). This can save considerably in direct costs and gets the bill to the customer earlier than the physical mail. However, the business is still delivering paper and may not experience much in the way of faster payment. In fact many organisations find that they end up maintaining both their physical mailing and emailing process (and storing more paper than they did before).

A third option is for a business is to let a third-party specialist billing organisation help to streamline the process. One possibility here is to completely outsource the process of both billing and payment collection. However, a more popular option is to either buy full bill automation software from the third-party (and pay for its maintenance and use) or to use a digital billing service. The latter choice is likely to deliver the most change from a customer perspective. Here, a customer’s bill is made available to view at the third party’s dedicated web site, where they can then pay it by a variety of means (on both the credit and debit side).

Each of the above options needs careful consideration, as all three involve time and cost. However, in terms of savings in direct and indirect cost, option three is likely to be the most efficient and cost effective.

In our next article in this series, we will look at the next phase in developing the Payment Strategy- Giving customers as user-friendly billing and payment experience as possible.

Developing a Payment Strategy-Step 1-Appreciating why it critical to have a payments strategy?

This blog article seeks to explore what is involved in developing a payments strategy and it will therefore look in more detail at the first phase of five in total, which is determining why it is critical to have a payments strategy at all.

First of all let’s just define what the payments strategy needs to encompass and then determine why this is so important.

All businesses know that continuing revenue or positive cash-flow is their “life-blood” but few of these have a strategy or even a loose plan to ensure that this keeps flowing appropriately (by which we mean steadily and at a greater rate than costs are incurred). Revenue (as opposed to money from borrowings or equity) only comes in when a business bills for its products and services to its customers and when it receives payment in its bank account. As a result, the process that is used for up-front billing all the way through to the steps to finally collect payment need to operate efficiently and effectively-and this is not something that you want to simply let evolve (or leave to chance).

Whatever its size, a business should spend just as much time on its Payments strategy as it does on its Marketing strategy or Operations strategy. This is simply because all three of these strategies have to work together in order to be successful. Marketing and Sales create demand and get customers to buy in the first place (and will usually spend up-front money in doing so). Operations will fulfil the demand by delivering goods and services (once again spending money to do so). Finally then Accounting and Finance are charged with collecting money from customers, but need to do so in the best possible way (with as much choice as possible) and fast enough to ensure that money is well managed at all times (however seasonal or “lumpy” sales might be).

The first step in developing a Payments strategy, that balances all if the above well, is to understand the full billing to payment cycle. This cycle typically includes: preparing the invoice, issuing the invoice, offering payment channels, taking different kinds of payments, reconciling payments to invoices, banking payments and accounting for the whole payment transaction. In addition to these 7 core steps it might also include, tracking invoice and payment progress, dealing with queries and complaints and producing analysis and reports on payment transactions. Every one of these steps is a significant process by itself and therefore needs to operate smoothly on a stand-alone basis and as part of the overall process. A good Payment Strategy will therefore seek to specify how this can best be done at each step and in an overall manner.

In our next article in this series of five we will look at the next phase in developing the Payment Strategy- how to issue bills and invoices in a fast and efficiency way.