At the end of 2010, the research company Paystream in the US conducted a survey on the barriers vs. benefits in embracing e-invoicing. This research was conducted in over 200 companies, mainly medium to large in scale and from a wide range of industries. Results confirmed that 20% of the survey population was already using a form of e-invoicing, with a further 48% actively evaluating adopting it in the near future.
The survey ultimately concludes that the benefits of embracing e-invoicing outweigh the barriers, for most organizations, but suggests that particular barriers will inhibit the time taken to adopt the technology or the time taken for it to become fully utilized. Let’s therefore look at these barriers and benefits in more detail:
Barriers
The survey found the greatest perceived barriers to adopting e-invoicing is current work processes or existing process design around issuing an invoice and getting paid (and the inability to change these processes quickly or effectively). Close behind is the lack of budget to develop or purchase new e-invoicing software, or pay any incremental, up-front costs, even if this led to significant medium to long-term savings. A lack of executive sponsorship is also cited as a commonplace barrier, with the CEO or CFO most commonly expected to be a major driver of adoption in most cases.
Other commonly cited barriers quoted from the survey were often having insufficient resources to bring in a new approach (mainly people) and the associated lack of time and resources to integrate e-invoicing with current systems or software (especially on the accounting side of things). In addition, lack of awareness about available forward options and possible supplier resistance were also cited as being significant factors.
Benefits
The survey found the greatest perceived benefits to adopting e-invoicing is its capacity to better control the whole billing process much more effectively (at every level and from invoice issue to ultimate payment). This includes the capacity to ensure that invoices were less frequently lost, missing or duplicated. The survey also found that e-invoicing was expected to reduce billing and payment processing costs significantly and also decreased cycle times. The capacity to also dramatically reduce errors and exceptions was also cited as a significant benefit.
Another major cited benefit is the capacity for e-invoicing to increase on-time payments (and even accelerate cash-flow) and to increase choice when it comes to invoice payment options and potentially when an invoice can be paid.
What does this mean to those organisations thinking about e-invoicing?
This research clearly suggests that any organisation interested in saving expenses and accelerating cash-flow would be wise to research the e-invoicing options available to them (of which there are several, including cloud-based and “pay-as-you-go” systems such as Payswyft which immediately solve other barriers such as lack of budget and resources and the need for integration time and effort). In addition, the CEO or CFO of an enterprise should ideally act as a project champion, helping his or her organization to evaluate specific options and how particular barriers need to be overcome. In taking these two steps alone, most organizations would smooth the path to embracing e-invoicing and be able to realize the substantial benefits much more quickly.
Tuesday, 24 May 2011
Saturday, 14 May 2011
Why customers love an instant payment option
It may seem almost counter intuitive but while we are trying to win customers and build long-term relationships with them, the vast majority of them (at least at the outset) often want a much more transactional interface with a company from which they are buying a product or a service. In other words, many customers just want to quickly purchase what they are interested in buying and use it. This means that when rendering payment for the product or service, a typical customer wants the process to be relatively straightforward and not consume too much time and energy.
Whether a company is sending out an invoice through the physical mail or by email, their customers are inevitably given more of a challenge than they may want. This is because they are expected to view the paper invoice or look at what is likely to be a static PDF version of the bill and then seek out payment options. Depending upon the organisation, the bill may list one, two or more ways to pay but in all cases the customer has to plan time to respond. For example they may have to write out a cheque, find and address an envelope (unless it is supplied) and find/buy a stamp before posting off the payment. They also might choose to pay at a bank, local store or post office branch which takes payments for a particular bill (and perhaps stand in line or be cross-sold stamps or other products/services when they are paying. Perhaps a little quicker might be the time to call the merchant concerned directly (if they allow this) and make a debit or credit card payment (assuming the call centre is open at a convenient time). In all of these cases, the paying process requires quite a bit of time and effort and this is why so many customers now prefer to pay online if they can.
If a merchant does facilitate online payments, unfortunately not all of the approaches provided are the same. In some cases, an organisation will bury the “ways to pay” module within their own web site. Others will offer a third-party online payment solution provider but the interaction process may be slow and cumbersome. In both of these cases they may require the customer to register before they can pay his or her bill, and this registration process may seek lots of information that the customer may be uncomfortable providing and take quite some time to enter even if they do. The key then is to think about what we said at the outset about offering a quick and easy to follow process and this means offering an instant payment option wherever possible.
Instant payment can take a few different forms but essentially means that customers want to use only a few keystrokes at a given payment web site and not spend more than 4-5 minutes, at most, completing the transaction (which is what most current e-commerce research suggests customer say when they are purchasing at an online site).
A customer therefore needs to be able to enter an invoice and reference number and immediately see their invoice online to review it (ideally in digital form as they would see it in the mail or as a PDF attachment). They then need to be able to select from a range of payment choices (and the more the better) and quickly fill in the data requested of them (credit or debit card number, card expiry date etc). Finally they should be able to review the intended payment transaction data and click “confirm” or “complete” and they are done (and print a receipt if they wish to). You’d think this simple set of requirements to pay instantly would be readily available now in a web 2.0 environment but it is more often the exception rather than the rule.
So what’s the good news in these circumstances? The cloud-based solution PaySwyft.com provides all of the above, and is available to all merchants of all sizes and types without any need for software purchase or integration or monthly/annual fees to pay. Why not give us a call to find out more or to see a demonstration.
Whether a company is sending out an invoice through the physical mail or by email, their customers are inevitably given more of a challenge than they may want. This is because they are expected to view the paper invoice or look at what is likely to be a static PDF version of the bill and then seek out payment options. Depending upon the organisation, the bill may list one, two or more ways to pay but in all cases the customer has to plan time to respond. For example they may have to write out a cheque, find and address an envelope (unless it is supplied) and find/buy a stamp before posting off the payment. They also might choose to pay at a bank, local store or post office branch which takes payments for a particular bill (and perhaps stand in line or be cross-sold stamps or other products/services when they are paying. Perhaps a little quicker might be the time to call the merchant concerned directly (if they allow this) and make a debit or credit card payment (assuming the call centre is open at a convenient time). In all of these cases, the paying process requires quite a bit of time and effort and this is why so many customers now prefer to pay online if they can.
If a merchant does facilitate online payments, unfortunately not all of the approaches provided are the same. In some cases, an organisation will bury the “ways to pay” module within their own web site. Others will offer a third-party online payment solution provider but the interaction process may be slow and cumbersome. In both of these cases they may require the customer to register before they can pay his or her bill, and this registration process may seek lots of information that the customer may be uncomfortable providing and take quite some time to enter even if they do. The key then is to think about what we said at the outset about offering a quick and easy to follow process and this means offering an instant payment option wherever possible.
Instant payment can take a few different forms but essentially means that customers want to use only a few keystrokes at a given payment web site and not spend more than 4-5 minutes, at most, completing the transaction (which is what most current e-commerce research suggests customer say when they are purchasing at an online site).
A customer therefore needs to be able to enter an invoice and reference number and immediately see their invoice online to review it (ideally in digital form as they would see it in the mail or as a PDF attachment). They then need to be able to select from a range of payment choices (and the more the better) and quickly fill in the data requested of them (credit or debit card number, card expiry date etc). Finally they should be able to review the intended payment transaction data and click “confirm” or “complete” and they are done (and print a receipt if they wish to). You’d think this simple set of requirements to pay instantly would be readily available now in a web 2.0 environment but it is more often the exception rather than the rule.
So what’s the good news in these circumstances? The cloud-based solution PaySwyft.com provides all of the above, and is available to all merchants of all sizes and types without any need for software purchase or integration or monthly/annual fees to pay. Why not give us a call to find out more or to see a demonstration.
Wednesday, 4 May 2011
Are Direct Debits as cheap as you think they are?
There’s a ‘party line’ about Direct Debit: that it’s a cheap way to guarantee your cashflow month to month. But if you’re a merchant using DD, you might have spotted the downside – in terms of customer satisfaction as well as direct costs.
Just to be clear, a Direct Debit is a regular variable payment that’s controlled by the merchant – as opposed to a Standing Order, where the customer instructs their own bank to debit a regular fixed amount. Customers can cancel Standing Orders with just a few clicks or a nod to a bank clerk...but once they’re on a Direct Debit, they’re effectively surrendering control of their own account.
It might be great for the merchant’s cashflow, but every debit that exceeds expectations is one nail in the coffin for the customer relationship.
And what about payment costs?
Of course, it’s true that Direct Debit is far cheaper than processing manual payments. Merchants benefit from direct invoice to payment reconciliation, and spend less on letters, phone calls and agencies to collect all those late payments. There’s also the major benefit of higher customer retention. So with an average cost of 20p per debit, it looks like the ideal solution for merchants.
But there’s a hidden cost
Not every Direct Debit leads to payment. Currently in the UK, reversals – unpaid debits – run at about 4%, giving merchants a serious headache.
Look at the impact on costs:
A merchant pays up to £30 to set up a new DD to replace the payment that’s failed. With 4 reversals in every 100 transactions, that’s an extra £120 added to payment costs, or an average of £1.20 per customer.
Add that to the 20p that you already pay for each debit, and the real cost of DD can be around £1.40. Much more than you might have expected.
There are other complications, too. A customer’s account could be closed or frozen due to fraud or other legal proceedings. If a customer changes banks, the merchant has to spend time and money setting up a new DD. And the merchant has to keep a record of every DD mandate for a period of 7 years. That’s a lot of archiving!
So what’s the alternative?
Dynamic Debit – a new electronic payment option, like the service offered at Payswyft.com. Dynamic Debit is set up by the customer, not the merchant – an immediate plus if you’re concerned with customer satisfaction. The payment is linked to a customer’s debit (or sometimes credit) card, and allows secure, variable and indefinite payments, just like a Direct Debit.
The difference is, the customer gets to stay in control.
They can set a payment limit, say a £50 maximum, and receive email or SMS alerts if the debit exceeds their threshold. Then they can approve the payment with just a few clicks, or query it with the merchant first.
For any business, it’s a strong message – you’re putting the needs of your customers first.
Cost-wise, Dynamic Debit works out at around 35 pence per transaction. And with virtually no risk of cancellation, reversal or chargeback, there’s no need to worry about the hidden extras that come with Direct Debit.
In other words, Dynamic Debit is a win-win for merchants and consumers: all the simplicity and security you get from Direct Debit, without the additional costs or built-in pressure on customer relations.
Just to be clear, a Direct Debit is a regular variable payment that’s controlled by the merchant – as opposed to a Standing Order, where the customer instructs their own bank to debit a regular fixed amount. Customers can cancel Standing Orders with just a few clicks or a nod to a bank clerk...but once they’re on a Direct Debit, they’re effectively surrendering control of their own account.
It might be great for the merchant’s cashflow, but every debit that exceeds expectations is one nail in the coffin for the customer relationship.
And what about payment costs?
Of course, it’s true that Direct Debit is far cheaper than processing manual payments. Merchants benefit from direct invoice to payment reconciliation, and spend less on letters, phone calls and agencies to collect all those late payments. There’s also the major benefit of higher customer retention. So with an average cost of 20p per debit, it looks like the ideal solution for merchants.
But there’s a hidden cost
Not every Direct Debit leads to payment. Currently in the UK, reversals – unpaid debits – run at about 4%, giving merchants a serious headache.
Look at the impact on costs:
A merchant pays up to £30 to set up a new DD to replace the payment that’s failed. With 4 reversals in every 100 transactions, that’s an extra £120 added to payment costs, or an average of £1.20 per customer.
Add that to the 20p that you already pay for each debit, and the real cost of DD can be around £1.40. Much more than you might have expected.
There are other complications, too. A customer’s account could be closed or frozen due to fraud or other legal proceedings. If a customer changes banks, the merchant has to spend time and money setting up a new DD. And the merchant has to keep a record of every DD mandate for a period of 7 years. That’s a lot of archiving!
So what’s the alternative?
Dynamic Debit – a new electronic payment option, like the service offered at Payswyft.com. Dynamic Debit is set up by the customer, not the merchant – an immediate plus if you’re concerned with customer satisfaction. The payment is linked to a customer’s debit (or sometimes credit) card, and allows secure, variable and indefinite payments, just like a Direct Debit.
The difference is, the customer gets to stay in control.
They can set a payment limit, say a £50 maximum, and receive email or SMS alerts if the debit exceeds their threshold. Then they can approve the payment with just a few clicks, or query it with the merchant first.
For any business, it’s a strong message – you’re putting the needs of your customers first.
Cost-wise, Dynamic Debit works out at around 35 pence per transaction. And with virtually no risk of cancellation, reversal or chargeback, there’s no need to worry about the hidden extras that come with Direct Debit.
In other words, Dynamic Debit is a win-win for merchants and consumers: all the simplicity and security you get from Direct Debit, without the additional costs or built-in pressure on customer relations.
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