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).

Sending Bills and collecting payment from customers costs every organisation 5% of Revenue on average!-can this really be correct?

According to several 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) they say, that on average, the overall cost of sending out a bill or invoice and then collecting payment from the customer, is anywhere from £4 to £17 per invoice. Unfortunately, apart from the fact that this is a pretty big range, it tends to create an unnecessary defensiveness in organisations (and often in the finance department in particular) who understandably become very keen to point out that they spend nowhere near that kind of money on such a mundane and clerical activity (although they will often fail to include many of the indirect and hidden costs of the process). Another recently published general statistic, however, could be much more useful and may make a few divisional heads and even CEO’s sit up and think about the efficiency and effectiveness of their billing and payments practices for the first time. This is the statement that on average, an organisation spends 5% of its revenue on issuing its invoices and in collecting payments from customers.  In this article, we will explore this claim and see if it reflects reality for both small and large organisations. To do this we will look at the figures based on two real businesses.

First and foremost let’s deal with the “on average” part of the 5% of revenue claim. What is being done here is to look at many organisations of many sizes and types and simply working out the median or middle value in a range of numbers.  In this case the median cost of billing and collecting payment in proportion to total revenues is 5%. Of course, this means that they are some companies that may be higher or lower than this but statistically, we can say that around two-thirds of all companies would fall into this average of 4%.

The Small Company

The first company (let’s call them Alpha) employs 26 people, has a turnover of £5 million in total revenues per annum. This is earned by selling goods and services at an average of £500 on average each time. Hence their total bills in a year are 12,000 or 1,000 per month. There are two broad cost categories that we now need to look at –staff and transaction costs.

On the staff side, Alpha have one accountant (on a salary of £45,000 per annum, three clerical admin people (at a salary of £21,000 each) and two people answering the phones (at a salary of £17,500 each). Hence, the all up payroll for this group of people is £143,000. The three clerical admin people devote all of their time to billing and payments but the accountant and customer service people devote only 50% of their time to this activity. Hence, we can say the cost of the people’s time which is devoted to billing and payments is £103,000. However, the company has staff overhead costs of 40% (cost of offices, equipment, training etc) which brings this cost up to a total of £144,200.

On the transaction cost side, 40% of the 12,000 bills are paid by cheque, 10% by BACS, 30% by phone (half by debit card and half by credit card), and 20% by cash. For cheques the bank charge fees of £1,200 (£0.25 pence times 4,800 cheques). For BACS, a charge is made of 15 pence per transaction (so £0.15*12000*0.1 or £180). For cash handling the bank charges a flat annual fee of £500 for all cash deposits of this size. For cost of transactions by phone, on the debit side the company pays £0.35 pence per transaction or £630 and on the credit side 2.5% of each transaction value (£500*0.025*1800 transactions or £22,500). Finally, we have to worry about how long it takes to get paid (and the cost of borrowing money to operate and allow for possibly late payments). Given that this small company has average invoice days outstanding of forty, they have to cover this £500 for 40 days or just under 11% of the year. As Alpha is paying interest at 5%, this means the cost to fund the necessary float is £26,027.

There are also a few direct invoicing costs for Alpha to bear including printing invoices, paper, envelopes, stamps and even marketing material (to also design and print). This adds up to a total of £0.90 per invoice (the stamp alone being half of this). We therefore have a total annual cost of £10,800. This makes the grand total on the transactional side of things £61,837. If we total all of the above, we now have a grand total billing and collection cost of £206,037. As a % of the £5 million in revenues this is 4.12% (or what would be £17.17 per invoice). 

The Large Company

The second company (lets call them Beta), employs 525 people, has a turnover of £90 million in total revenues per annum. This is earned by selling goods and services at an average of £58 each time. Hence, their total bills in a year are 1,551,725 or 129,310 per month on average. Once again, there are two broad cost categories that we now need to look at –staff and transaction costs.

On the staff side, Beta have a team of eight accountants (on an average salary of £48,000 per annum each, thirty-two clerical admin people doing bookkeeping, settlement and reconciliation (at a salary of £23,500 each) and a call-centre with sixty people answering the phones (at a salary of £18,500 each on average). Hence, the all up payroll for this group of people is £2,214,000. The Beta company does not keep detailed records but estimates that billing and collecting payments occupies about 60% of the time of this whole team. Hence, the cost of the people’s time, which is devoted to billing and payments is £1,347,600. However, the company has staff overhead costs of 45% (cost of offices, equipment, training etc) which brings this cost up to a total of £ £1,954,020.

On the transaction cost side, 20% of the 1,323,530 bills are paid by cheque, 20% by BACS, 50% by phone (half by debit card and half by credit card), 5% by cash and 5% via Beta’s Internet bank site portal. For cheques the bank charges fees of £52,941 (£0.20 pence times 264,706 cheques). For BACS, a charge is made of 12 pence per transaction (so £0.12*264,706 or £31,765). For cash handling the bank charges a flat annual fee of £15,000 for all cash deposits of this size. For cost of transactions by phone, on the debit side the company pays £0.30 pence per transaction or £99,265 and on the credit side 1.8% of each transaction value (£58*0.018*330,883). transactions or £405,000). Finally, we have to worry about how long it takes to get paid (and the cost of borrowing money to operate and allow for possibly late payments. This company has average invoice days outstanding of 45, they have to cover this £68 for each transaction for 45 days or 12.3% of the year. As the Beta company is paying interest at 5%, this means the cost to fund the necessary float is £553,500.

There are also a few direct invoicing costs for Beta to bear including sending invoices (which Beta does via email not paper unless it is requested by a customer), monthly mailed statements and accompanying marketing material (to also print and design). This is a total of £0.40 per invoice. We therefore have a total annual cost of £620,690. This makes the grand total on the transactional side of things £1,860,054.

If we total all of the above (all staff plus all transaction costs), we now have a grand total billing and collection cost of £ £3,814,074. As a % of the £90 million in revenues this is 4.24%. (or £2.46 per invoice).

Summary

Although the data from these two very different sized companies cannot in any way constitute a statistically significant result, it is nonetheless quite remarkable that both costs of invoicing and collection are so close. At 4.12% and 4.24% respectively they are also only a little less than the 5% average claim made by the research companies. In fact, it is a reasonable assumption that a few more “hidden costs” still need to be added to both sides here (which may completely close the gap). For example, the small company Alpha added no costs for the senior managers (GM and CFO) who both spend some of their time in payment matters, nor for the extra bank charges for bounced cheques, debt collection and writing off-unpaid invoices (issues also not included for Beta also). And, in the large company, there were some system and invoice storage costs that were excluded. This may well have made both % numbers even closer to the 5% figure and possibly slightly higher.

In the final analysis, this is just the data from two individual companies. However, they seem to provide a useful general justification to the claim and serve as a basis for calculating the actual figures for almost any business. This may be especially useful ahead of talking with online digital bill presentment and payment companies that often claim that they can reduce these costs by up to 50%-if this is true, what a great way to lift revenues by up to 2.5%!

Can Merchants really turn off paper bills with digital billing?

Within the billing world, going paperless has been almost like a “Holy Grail” for many merchants, and especially those who are sending out thousands, hundreds of thousands or even millions of bills a month in some cases. And who can blame them? Merchants who send out more than just a few hundred invoices each month are typically spending a great deal of money on printing, putting invoices into envelopes, sending out reminders and/or statements, franking the envelope, having to engage in making sure bills are filed or stored properly and fielding calls from customers who don’t receive a the bill in the mail at all (so it has to be resent) to name but a few things.
 
By adopting a paperless invoice or digital bill only solution, a merchant can technically avoid all of the above and “switch off paper” immediately. However, despite the apparent significant advantages to the merchant, this may not be the best way to go (and it should also not be the driver of the change to digital billing).

Most customers have been getting bills in the mail, or at least ones they can print if they are sent by email, for many years and many want to stick with a process that they well understand. Hence, any merchant that removes the option of receiving a paper bill risks losing a customer’s business altogether. Far better therefore to retain the option to receive a physical bill and either deliver it by cost-effective e-mail or allow a customer to retrieve it and print it for themselves from a central website.

With a cloud-based system such as PaySwyft, not only can any merchant post a digital bill but allow customers to print the bill whenever they like. Even better a merchant can email the bill if they so wish, including follow-up or chase bills. And once customers are using such a fully digital portal they can also use a whole range of convenient technology to manage their bill in more flexible ways. This includes:

 

• Receiving a monthly e-mail notification when a new invoice is available to view.
• Decreasing the possibility of mail fraud and identity theft.
• Automatically calendarising or secheduling payments at a time or date to suit them
• Set email and/or SMS alerts as they like
• Store and retrieve all invoice and payment records whenever they like, forever
• Make payment 24 hours a day, 365 days a year
• Pay in a multitude of ways at the same portal and get a receipt there and then
• See all of their invoices and payments when they want
• Analyse invoice trends and patterns as they wish

This does not mean that they will necessarily “turn off” the paper bill, or stop printing it, but over time the resistance to doing so will clearly lessen. And in the meantime, not only is the customer getting a convenient service for free, that they can use at work or home on their computer (and save themselves time if they were previously paying by cash or cheque in particular), but a merchant is saving money on many fronts, including fielding less phone calls, accelerating cash-flow with earlier online payments and reconciling payments in a much more straightforward way than ever before. Given all of this, getting to a paperless world, if and when it happens, is only a minor bonus.

Will Mobile Phones Become the Dominant Channel for Bill Delivery?

 
There are now a multitude of channels available to customers to pay their bills. These channels include:

1. Print and mail (paper-based)

2. Fax

3. Email with embedded data

4. Data interchange (system-to-system)

5. Email with PDF and/or link to on-line

6. Online (customer portal)

7. Mobile (MMS; HTML; WAP; USSD)

8. Mobile via App

9. Mobile Tablet

10. Emergent technology (via cable TV etc)

 

Only print and mail on the above list existed as an option until around 30 years ago when fax arrived and 25 years ago when email came along (both of which still have quite a strong following today). Data interchange options were mainly evolved and used in the B2B rather than direct Business to customer or B2C space but again are still around today as a strong channel, supported in the main by large international software companies, who have sufficiently large installed volumes to want to protect their position in the billing market.

Web based technology has driven the greatest change in the billing space in the last 10 years or so and seen the emergence of both consumer and merchant portals (for presentment and payment) and the use of mobile technology as 3G and 4G have made the internet available to mobile phones.

 
Even though each of these channels presents a new and perhaps better and more convenient choice to a given customer (and are often presented as the channel to replace earlier channel choices) in reality, they are often just additional options. In other words, consumers have shown time and time again that they like the extra choice but do not necessarily want to be driven too quickly to only one channel (however “efficient and effective” it is presented to be).
 
The implication of customers wanting lots of channel choice to both view and pay their bills is that the same bill may need to be presented and rendered possible to pay in several channels, at least for now.
 
Today’s challenges
Some technology experts are starting to say that customers will be move rapidly away from e-billing to m-billing (m for mobile of course) in the next few years. Modern mobiles can certainly handle very complex tasks today - just look at the hundred of thousands of Apps available for all different platforms. These Apps can do complex tasks, even generating bills “on-the-fly”. A mobile can also handle a simple task such as bill presentment with ease today – in some cases on quite a detailed basis (even though reading it may present quite a challenge!). However, viewing a PDF bill attachment on a mobile (as opposed to a tablet) is often a long scrolling exercise, making it impractical in most cases. There is a solution to this but it needs the biller to solve the problem of displaying their bills in more flexible ways according to the kind of mobile platform to which it is being delivered. In this way, a customer can see a simple version of the way and then “drill into the detail” as they wish when they want to see itemisation. 

However, perhaps all of this is a false dilemma. In the final analysis, customers do not care if a bill is delivered to their computer, their tablet or their mobile (or even all three). In fact, many want to see it delivered in as many ways as possible to allow maximum flexibility, including by email or by PDF attachment and even in the physical mail or fax on some occasions. This multi-channel approach is therefore a customer centric approach. The challenge for billers then is how to provide as many of these channels as possible at the lowest coat possible. In the end there is only one solution to this –use a full digital bill presentment and payment portal such as PaySwyft for example. This not only means that a bill can be sent in all 9 of the current channels above but means that a biller would be well-placed to take advantage of the new emergent technologies that will come along as in the near future.

Ten Ways to Accelerate Cash flow

In today’s tough economic climate all businesses need to pay even more close attention to ensure that cash due from customers flows in as quickly and smoothly as possible. What follows is ten key ways that cash-flow can be accelerated:

1. Send invoice as soon as possible after a product is supplied or a service is rendered, because every day you are late is at least one more day your customer will wait to pay-terms only start once they receive your bill. If it takes a week to get the bills out, on average, that’s a week’s worth of cash-flow. Also, follow up on major invoices to ensure the client has received the invoice. Invoices can often be delayed by an internal authorisation process, or just going astray.

2. Clear and professional looking invoices get taken more seriously. Make sure that they therefore contain all the information such as the correct entity name, right address etc with clear ways to pay listed.

3. Set fair and appropriate credit terms and communicate these clearly with a ‘due date’ very visible on the invoice. You may even want to set the payment expectations of new customers with a specific welcome letter.

4. Deposit all payments made immediately (especially when these are cheques or cash). The more these can get into a bank account quickly the better.

5. Offer several payment methods not just one or two -customers should never have an excuse for late payment related to your lack of convenient payment options-all customers today (small and large) need to be given choices.

6. Offer early payment discounts so long as it doesn’t swallow up all the profit. If customers are struggling, the sooner you provide the facility to partially pay, the sooner the debt is paid. If a customer exceeds their terms, you can offer cash on delivery terms until the account is back on track.

7. In order to remind customers when to pay, you need a system to let you know when they are due. A series of email/SMS messages, depending upon the time overdue with relevant wording, is often very useful.

8. A great target or key performance indicator for accounts receivables is ‘accounts receivable days’. This is not to be confused with the terms you offer customers. The ‘accounts receivable days’ is the average number of days that all customers are taking to pay you. Of course you want this to be on terms or better.

9. Use you improved cash flow practices to reduce your overdraft or “float” thus saving interest costs or giving you extra cash to spend elsewhere.

10. Aim to do as much of the above as possible online at a flexible and versatile bill presentment and payment web site (such as payswyft.com). Not only will clearly presented electronic bills arrive much quicker but research suggests that customers pay 35% quicker when they receive an online bill and can pay it online on the same web site.

Sites like PaySwyft also automatically bundle many of the above steps in the technology or give an organisation a range of options to help accelerate cash-flow.

Ultimately, if you can entrench these steps into your payment strategy and operational practices you will find accounts receivables less of a hassle, resulting in greatly improved cash-flow for your business.

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).

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.

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).

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).

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.