Finding and Using the Right Invoice Template

If you type “free invoice template” into the Google search engine you get about 40 million returned results. Clearly then there is a lot of interest in trying to find and use an effective invoice process (and ideally a cheap or free one) so in this article we will explore what is available and what options appear to deliver the greatest benefits.

Whether you are a one person business or a giant multi-national, getting an invoice to a customer is the beginning a long process in getting paid. Hence, it is important to get this invoice to a customer quickly (once a product has been supplied or service rendered) but it is equally critical that it is clear and encourages the earliest possible payment.

Fifty years ago, hand-written or simply typed invoices sent through the mail were the norm. Today, we have many other options (although these old-fashioned practices have far from disappeared completely). Perhaps the simplest of these is to use an pre-designed template and popular desk top applications like word for windows and an excel spreadsheet package both have several design alternatives to choose from. In both cases these provide a well-designed looking invoices and provide prompt space for particular customer names, address details, product or services provided and the cost involved. They even allow space for logos to be added if desired. 

Outside the standard templates of desktop applications, there are many relatively cheap and even free software packages which allow invoices to be generated. These work in similar ways to desktop templates but may also generate sequential numbers and allow better storage and retrieval (and avoid the mistake prone process of overtyping the last invoice that was typed).

In both of the above alternatives, the problem is that despite the fact that the invoice can be sent by email as an attachment is still only received as a piece of paper (which the customer can do little with when they receive it and may only print in order to later pay in any case).  As a result, perhaps the best alternative of all is to use a bill presentment service which renders the invoice as a full digital bill. This allows individuals to click on an electronic bill at a web site (ideally rendered in graphical form as they would expect to see it as it appears when posted) and either reveal more bill detail, store it, end it on to someone else to review and most importantly to pay it.

For example, at the PaySwyft web site (www.payswyft.com) sole traders, partnership and companies or all sizes can click on the “free invoice template link” on the home page and use the system to generate an invoice at no cost whatsoever. Like the options described above it provides an clear and clean process for entering invoice details but this is rendered as a full digital bill, meaning that it can be clicked on dynamically to see as much detail as has been entered and perhaps more importantly, it can be paid from within the browser, also electronically. The added bonus here is that the single invoice can then be used (when saved) as a template to generate future invoices much more quickly (because a logo has been added and the design of the overall invoice is relatively set).

What is the difference between “push” versus “pull” on-line billing?

The terms “push” and “pull” are now commonly mentioned when on-line billing is being described, but what do these terms actually mean in this context and what is the advantages of one over the other? 

A “push” based on-line billing process essentially means that a consumer is prompted or alerted directly with a full invoice, statement or other document describing what has been purchased and what needs to be paid. This is therefore what is commonly called a “rich” document. For the most part, push-based on-line billing systems are carried out as e-mail notifications with attachment files (such as a PDF for example).

A “pull” based on-line billing process will still alert a consumer that an invoice is ready to be paid but instead of including the rich document, invites the consumer to go to a nominated web site where they can find the full bill to be viewed and subsequently be paid in digital form.  Both e-mail and text messaging can be used to simply alert the customer, but merchants may elect to use off-line notifications (letters, paper-based invoices etc) as well.

Both push and pull models on online billing offer merchants the opportunity to reduce or eliminate paper invoices over time but each has advantages and disadvantages.

The advantages and disadvantages or Push-based on-line billing
Push based on-lined billing has the advantage of using a very common and familiar system that most businesses and consumers now use with relative ease -their email. Recipient addresses are unique and go straight into an inbox to be read either immediately or when the person opens their email system. In addition, emails are now readily received on mobile phones and other portable devices, allowing for very fast delivery, flexible viewing and (in some cases) access to online payment options.

Despite the above, there are a number of drawbacks with this push-based delivery model. They include:
* An email address may be incorrect or not reach the right recipient directly
* Many individuals and even organisations may have inbox restrictions the size of incoming emails. This will limit the opportunities for presenting invoices (especially when the attachment is large in size).
* Staff turnover in businesses and changes to email addresses by consumers means that it is often difficult to ensure the complete integrity of email addresses.
* Recipients can claim that they never received an email with an attached e-bill
* It is not always easy to differentiate copy invoices from original invoices with push on-line billing.
* An attachment (such as a PDF) is still only a piece of paper. A consumer may just print it and pay it offline and/or a merchant cannot easily reconcile the data (needing to key in the data again).

The advantages and disadvantages or Pull-based on-line billing
In Pull-based on-line billing, an email is more equivalent to a paper-based notification in the physical mail and simply serves to alert the customer that an invoice is available for viewing and processing at the nominated billing website (the biller’s own or a third-party aggregator’s one). As well as presenting the invoice a fully digital and therefore clickable format, web 2.0 internet technology also makes it possible to distinguish between the original and copy invoice. In addition, this fully digital format makes for very simple upload or transfer to an accounting system, thus eliminating any requirement to key in data manually and greatly aiding the reconciliation process. In addition, full digitisation allows the recipients to view their bill and render payments all on-line, at the same web site (which they may choose to do as soon as it is received).

Just as with Push based on-line billing, there are nonetheless a number of drawbacks with this pull-based delivery model. They include:
* Recipients may forget their logins and passwords to the billing web site to which they are being directed
* Recipients may not trust the web site to which they are being sent, or least feel nervous about the security offered (especially where payments are concerned)
* Consumers may be confused with what is likely to be a simplified bill or one which approximates to the one they receive in the mail-it is often similar but not the same.
* The billing web site may not be very user-friendly (leading to consumer abandonment)

So, in summary, we can say that both push and pull on-line billing have many advantages worth considering but also have a range of disadvantages that need to be considered one-by-one according to each merchant’s needs. In overall terms perhaps there are less onerous disadvantages on the “pull” side, and it is this approach consequently has the present advantage. However, as usual in the online world, choice and convenience are always key considerations, and it may well be that offering both a push and a pull-based solution offers the best outcome of all (and most quickly attains the paperless system than many merchants may crave). 

What is the real cost of paper-based versus electronic billing

This might seem to be quite a simple question at face value but when we think about it, the answer is not exactly a straightforward one. This is because we are not always aware of the real costs of performing this quite complex task in all of its steps. In addition, while direct or tangible costs are relatively easy to identify, indirect costs are less easily identifiable and some of these are often very well hidden. Let’s therefore look at what tends to fall into these three categories of costs when comparing traditional paper-based billing versus full on-line or digital billing.

Direct Costs
At face value most people would estimate that a few “direct” costs are involved in paper-based billing. These may include:
•Invoice bill/file preparation/printing
•Paper invoices/bills
•Printing (ink or cartridge replacement)
•Envelopes
•Postage/Franking
•Offering basic payment options (debit, credit, other at standard fees)
Costs will fall as bill volumes increase for most of the above but even if they do postage or franking at about £0.40 to £0.45 pence will always be the biggest fee here. And the others will typically add as much as 30 to 35 pence making for a total of £0.70 to £0.80 of direct costs. Of course, if a merchant emails invoices (with a PDF attachment), instead of physically mailing them this may fall in half perhaps.

Indirect Costs
Costs are often deemed to be “indirect” because they are either fixed and/or cannot be wholly charged to the billing costs (especially if it is only part of a person’s job). However, even proportional costs add up here. Indirect costs may include:
•Customer service manpower to handle calls/queries
•Accounting/Reconciliation manpower
•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
Once again there may be some economies of scale in the above but all of these items (except bill storage perhaps) mainly involve having staff on the payroll or at call. Even at 500 bills a month, at least quarter a person would typically be involved in issuing and reconciling invoices and another quarter in handling queries, re-issuing bills or handling “special requests” related to invoicing or payments. If the cost of this person (or two part-timers) were £12,000 a year (£8,000 plus 50% salary/overhead burden) or £6,000 each, this £1,000 a month would amount to £2 per bill.

Hidden Costs
Costs are often deemed to be “hidden” because no-one is scrutinising or controlling them (they go unmeasured or unaccounted for or are lost in general overhead or the broad costs of doing business). Hidden costs may include:
•Extra or hidden payment transaction fees (which may be fixed or higher than necessary)
•Invoice/billing run or payment processing errors
•The need for a higher than wanted or necessary float/overdraft at the bank
•Possible added customers or more business from having more payment options
•Quicker settlement/cycle time (by use of SMS or email alerts)
•Easier training of staff/opportunity to focus staff elsewhere with time saved
•Potential cash-flow acceleration
•Easier/cheaper compliance and audit work with digital billing
•Lower/No cost digital marketing opportunities
•Overall incremental "Green" benefits/credits

The benefits to an organisation of the long list above are obviously much harder to calculate but a variety of studies in recent years have suggested that these can conservatively add up to as much as 3-4% of revenues or as much as 15% of profit. If we assume our little company doing 500 bills a month has an average transaction or “ticket” value of £40, turnover per month is £20,000 or £240,000 per annum. If we assume that profit is 15% of this or £36,000, this all means that the cost per bill is somewhere between £0.90 to £1.20.

So in summary, if we add all of these costs together which have a total traditional or paper-based billing cost of £3.60 to £4 or 9.5% of the revenue collected each time (£40 average ticket value). Now that’s a quite a serious amount of money for this little company not to take pretty seriously! But what about your company?-what is 9.5% of your revenues? And when you have calculated it in cold hard cash, can you afford not to investigate the potential to save as much as half of this as recurrent savings every year by moving to digital billing?

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.