Billers who haven't adopted electronic methods of bill payment have an opportunity to save on costs. Electronic payments offer convenience to both Biller and payer, but they also introduce the ability to schedule recurring bills and receive recurring payments. But Billers who have already implemented a basic system for electronic bill presentment and payments may stand to benefit from an upgrade, especially if their systems don't currently have the capacity to receive recurring payments. Recurring payments can improve cash flow and enhance customer service. Customers appreciate the convenience of recurring payments because it keeps them up to date on all of their bills without the hassle of having to write and mail a check or manually enter payments each time an invoice is received. As a business entity who invoices customers, otherwise known as a Biller, you'll enjoy a steady flow of payments and a reduction in the number of delinquent accounts and DSO.
Paper invoicing and paper methods of payment, like cash and check, are still used frequently, but there are a number of downsides to relying on paper for the bulk of your transactions. The use of checks is becoming less popular. According to research by the Association of Financial Professionals in 2013, only 50% of organizations surveyed reported making B2B payments via check. Reports from NACHA in 2013 indicate that the industries receiving the most paper payments are home and consumer services, non-profits, healthcare, and financial services. Billers in these sectors have a lot to gain by making the switch, no matter the size of their volume of monthly and yearly payments.
What are the benefits of electronic payments for Billers?
Accepting online payments has become a standard method of collecting for Billers. Allowing customers to pay bills online is much safer than accepting checks because it negates the risk of financial information falling into the wrong hands. Billers benefit from online payments because payments arrive in their accounts immediately and they don't have to worry about a check payment bouncing. The convenience of online billing is what attracts Billers most, however, because it saves them valuable time and greatly reduces the risk of human error.
With electronic billing, there are no stamps, envelopes, or trips to the bank. Simply put, Billers can save on every billing statement by eliminating paper, and estimates of these savings range from 18 cents to $10. While this might seem like a small amount, it can add up to large numbers depending on the number of transactions a Biller processes on a monthly basis. Electronic billing also dramatically reduces the volume of customer service calls a Biller receives. Billers who already employ a fundamental electronic billing platform could also benefit from the implementation of a new one, especially if their current platform doesn't incorporate the features that provide the most effective solutions in electronic payment, like mobile and recurring payments.
Installing a state of the art platform offers cost-saving benefits. Billers who are concerned about the overhead of operating a new electronic payment solution can rest easy knowing that the utility of such a system will be well worth the costs, especially if there is widespread adoption among payers. Furthermore, most concerns about cost can be outsourced by partnering with an expert payment processing solutions provider. Established third-party providers who are SSAE 16 compliant will not only install new systems quickly and effectively, they will work directly with the Biller to expedite the system's functionality and provide guidance on its use.
Electronic billing can speed up receivables by up to three days and improve cash flow. Billers who go electronic will see a reduction in the amount of paperwork they have to deal with, and they will no longer have to wait for checks to process slowly through a financial institution. Billers that accept ACH payments will generally see their payments settled by the next business day, but same day ACH for credits was recently implemented in September 2016 and debits are expected to be included by September 2017. NACHA projected that ACH Originators would generate 1.4 billion same day ACH payments annually in the next ten years.
Efficient Invoicing and Documentation
Nobody likes sifting through a filing cabinet for much-needed information. Switching to electronic payments will not only reduce the number of paper checks a Biller receives, it will reduce the number of paper invoices the Biller must send and the number of paper documents that have to be accumulated and stored. Electronic billing platforms are designed to generate clear documentation of every transaction. This information can be stored digitally and backed up accordingly, providing easy access for the Biller and a more efficient system of organization.
Electronic Bill Presentment
Presenting bills to customers electronically as a PDF or in HTML format and storing transaction information electronically provides clear, lasting documentation of invoices, payments, and receipts. Bills can be presented through multiple channels, like web services, email, and mobile messaging. Furthermore, electronic bill presentment effectively eliminates the printing and posting costs associated with traditional collection activities, which can be substantial with paper methods. And customer satisfaction is increased when bills are presented intuitively through electronic methods.
Recurring payments work to benefit the Biller by streamlining the entire process of invoicing and accepting payments. Even when you adopt electronic billing methods, the manual entry of payment information can lead to costly errors. A simple mistake like inputting the wrong number into the wrong field or misplacing a paper check can cost you valuable time and limit your cash flow. Establishing recurring payments with your customer effectively eradicates this problem. A payer's information is imputed and payments are scheduled. The entire process operates automatically, without the Biller having to manage inputted data.
Every time a Biller sends, receives, and processes a new paper invoice, they are incurring costs, but these costs are not always readily apparent. Employees have to be paid to handle the bills. Printers, paper, and ink must be purchased to generate records, and valuable time is wasted on visits to the bank or post office. Recurring payments reduce the number of hours your staff will spend processing daily, weekly, and monthly documents. Payers can be invoiced using fewer materials and billing statements are processed electronically. Once the payer has signed up for recurring payments, the billing service operates like a subscription service, and they no longer have to intervene. Money is deducted directly from the payer's account and all future payments are made routinely unless the payer purposely opts out of the cycle.
Recurring payments also increase security. In the absence of recurring payments, payers have to upload payment information, input it manually, or write a check. Every additional touch point in the payment process increases security risks and the time it takes to verify payments. Recurring payments allow transactions to be processed with minimal touch points, which reduces the risk of fraud and keeps sensitive information secure.
Convenience for Biller and Payer
Recurring electronic payments reduce or remove the risk of late and delinquent payments and contribute directly to the Biller's cash flow, but the real reason both Billers and payers love electronic recurring payments is the convenience they provide. They save time, provide accurate and organized documentation, and eliminate the hassles associated with paper billing.
If you are a Biller who is currently considering the switch to electronic payments and are interested in the benefits, it's important to understand how customers are currently paying you. Take some time to evaluate your current billing methods and determine their costs.Not only do customers want you to let them pay their bills online, if you compare the costs of traditional billing to the savings you could enjoy, the choice becomes clear. You're ready to take the next step and switch to electronic and recurring payments.
If you have already implemented an electronic payment solution but you are still unable to accept recurring payments, mobile payments, or even card payments, it might be time to upgrade your payment solution.