Many businesses wonder why they should choose to accept credit and debit cards. After all, it costs money to get a merchant account and to maintain it. In addition, the merchant always bears the fees that are charged not the consumer, so it’s not necessarily the most attractive option, at least on the surface, unless you happen to be a high volume retail business for example. But that’s not the full story, and in this brief article we’ll explore the major reasons why accepting plastic in a good idea for almost all businesses.
There are four primary reasons to accept credit and debit cards in a business:
1. Increase sales or revenue
2. Bring in new customers
3. Lessen trips to the bank (or having to deal with bounced checks)
4. Lower administrative costs
Let’s look at each of these in turn:
Increase sales or revenue
Many studies over recent years have shown that the average size of credit card orders or payments is anywhere from 20% to 50% larger than cash and check orders or payments. In other words, just by adding this choice to existing customers they increase the amount of money that people are prepared to pay for goods and services. Many merchants, small and large attest to this and reap the benefits accordingly.
Bring in New Customers
Many customers want to pay by credit or debit card but need to be given the opportunity to do so. Studies show that credit and debit card payments (in combination) have already overtaken cash and cheque payments. Customers often get benefits for paying with credit or debit cards such as frequent flier miles or other “affinity” type points. Paying with a credit card also gives customers more flexibility to manage their personal cash flow.
Lessen trips to the bank
By making credit cards an additional method of payment, you decrease the time it takes to process orders by waiting for cheques or other slower payment methods. In addition, you also reduce or even eliminate bounced cheques, and the costs of having to deal with this problem administratively.
Lower administration fees/costs
Because credit and debit cards can be accepted on the Internet or at a terminal (by swiping the card) the transaction is an electronic one and can readily create an on-line record that is easy to record and/or transfer to an accounting or other administrative system without further keying. Administration time (and particularly reconciliation effort) is therefore reduced or simplified or both.
By taking credit and debit card payments, merchants will also typically improve their relationships with customers. In addition, the more difficult it is for customers to make purchases, the more likely your business is to lose customers. Meanwhile, your business will be able to increase retention by offering customers with recurring charges or fees the opportunity to pay automatically.
Friday, 3 June 2011
Tuesday, 24 May 2011
The Barriers vs. Benefits in Embracing E-Invoicing
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.
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.
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.
Monday, 25 April 2011
Invoice templates come in all shapes and sizes...so where do you start?
When it comes to formatting and presenting your invoices, you won’t be stuck for inspiration! If you Google “free invoice template” you’ll be given around 40 million results...the only challenge is cutting through the clutter to find a template that works for you.
But it’s not a decision to be taken lightly. Whether you’re a one person business or a huge multi-national, raising an invoice is the start of a long process that ends when payment reaches your account. Somewhere along the line, your customer could get distracted or decide to prioritise other bills – so it’s vital to find a template with clear itemisation and prominent instructions for payment.
So what are your best choices?
Perhaps the obvious route is to choose a template from a desktop application like Word or Excel. Both provide attractive and well-designed invoices, with space for personalisation - so you can add customer details, product and service descriptions, and even your company logo.
If you’re happy to wander a little off the beaten track (and maybe spend some money), there are software packages out there that will generate invoices for you. Most work in much the same way as the desktop templates, but some will also generate sequential numbers. This will help you to store and retrieve old invoices, and avoid the classic mistake of overtyping the last invoice raised.
Both of these options will ‘do the job’, but both have their limitations, because they only offer you two choices – print and post, or send by email.
If you take the print option, there’s a cost to you (not to mention the environment). And if you opt for an email attachment, your important invoice will sit in someone’s inbox alongside thousands of less vital messages.
In the digital age, we can do better
Today, the best alternative is to use a bill presentment service, which renders your invoice as a full digital bill. Your customer can view their bill online - still in its familiar offline format – and click through for more details, storage options, delegation...and to make payment!
One example of electronic bill presentment is PaySwyft.com, where sole traders, partnerships and other companies can create simple, professional invoices that encourage customers to act swiftly. Using the site’s free invoice template, you can personalise your bills just as you would with a desktop or software template.
The difference is, you can present them online and make it easier than ever for your customers to pay.
But it’s not a decision to be taken lightly. Whether you’re a one person business or a huge multi-national, raising an invoice is the start of a long process that ends when payment reaches your account. Somewhere along the line, your customer could get distracted or decide to prioritise other bills – so it’s vital to find a template with clear itemisation and prominent instructions for payment.
So what are your best choices?
Perhaps the obvious route is to choose a template from a desktop application like Word or Excel. Both provide attractive and well-designed invoices, with space for personalisation - so you can add customer details, product and service descriptions, and even your company logo.
If you’re happy to wander a little off the beaten track (and maybe spend some money), there are software packages out there that will generate invoices for you. Most work in much the same way as the desktop templates, but some will also generate sequential numbers. This will help you to store and retrieve old invoices, and avoid the classic mistake of overtyping the last invoice raised.
Both of these options will ‘do the job’, but both have their limitations, because they only offer you two choices – print and post, or send by email.
If you take the print option, there’s a cost to you (not to mention the environment). And if you opt for an email attachment, your important invoice will sit in someone’s inbox alongside thousands of less vital messages.
In the digital age, we can do better
Today, the best alternative is to use a bill presentment service, which renders your invoice as a full digital bill. Your customer can view their bill online - still in its familiar offline format – and click through for more details, storage options, delegation...and to make payment!
One example of electronic bill presentment is PaySwyft.com, where sole traders, partnerships and other companies can create simple, professional invoices that encourage customers to act swiftly. Using the site’s free invoice template, you can personalise your bills just as you would with a desktop or software template.
The difference is, you can present them online and make it easier than ever for your customers to pay.
Sunday, 17 April 2011
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.
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.
Friday, 8 April 2011
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 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.
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 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.
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