Paperless billing-a cost effective and sustainable solution?

“Eco friendly” and “budget friendly” don’t always go hand in hand. But paperless billing is one of those rare measures that checks both boxes – all while keeping customers happy.  This is simply because getting a bill to a consumer in a traditional way takes lots of time, effort and money that can be avoided. However, by using modern internet technology, the bill issue time can be reduced, the effort to get the bill out can be lessened and costs can be squeezed or in some cases eliminated.

Let’s look a look at some of the specific wins:

Any business of any size or type wins on cost.  On the direct or visible cost side, there’s less paper, less envelopes, less ink, less postage. Even though these are often significant in and of themselves there are also big potential cost reductions on the indirect or more hidden side of things...less customer support (handling queries or phone-in payments) and much less time spent on reconciliation. In addition, online bill presentment and payment has been shown to lead to much quicker settlement by the customer-which substantially aids cash-flow for a merchant. All these savings add up.

The customer wins – This includes eliminating or simplifying the tasks of organising bills, querying them and being able to make payments (all being possible safely and securely at a single web site typically with a few clicks). Paper free means more free time for the bill payer, and less to worry about when dealing with paper (including having to put the bill or invoice somewhere safe, finding it when needed and even losing it occasionally).

The environment wins.  Paperless billing is a simple but significant step that every business can take with a little focus, effort and determination.  Less paper means less use of trees and less transportation (and petrol), reducing a merchant’s carbon footprint. Not all customers will be happy to turn off paper immediately but some will and they will slowly encourage the others to do the same.

So Paperless billing  is a worthy goal for all merchants
Whether you’re a large merchant billing tens or hundreds of thousands of customers, or a small business raising a handful of invoices, on-line billing at an aggregation site (such as PaySwyft) is a pain free way to trial the paperless option.

Merchants can raise some or all of their bills online...or test dual billing with late payers and measure the impact on cashflow...or if they prefer, give customers a straight choice: paper or paper free.

Paperless Billing: at a glance:

Merchants are saving money on...

·        Printing paper bills

·        Fulfilment, postage and franking

·        Undeliverable mail

·        Chasing late payments

·        Handling manual payments

·        Archiving paper bills

·        Reconciliation/bill matching

Customers are saving time on...

·        Checking and paying bills

·        Hunting for previous bills

·        Checking funds and means to pay

·        Writing and posting cheques

·        Waiting for a merchant to be open for business

·        Talking to customer services

·        Worrying over lost cheques and late delivery

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).

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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