Since this is still a new technology there has not been much on-line discussions on this subject. Being on both sides of the table, more on the user side, I’d like to start a new discussion and hope to get a couple of comments from experienced on-line billers that might want to help others. You may just want to share your experiences as a user.
Producing on-line invoices is probably one of the most cost-efficient methods of billing since it's not as labour intensive as hard-copy generated invoicing. There are varieties of software programs that can easily generate lots of invoices with a few clicks. However, the question here is how effective this technology is in terms of collecting the receivables. To examine this, I think it’s safe to divide the invoicing into two categories; residential billing and commercial invoicing.
Residential billing
Many residents, who purchase products may be internet savvy. However, records show that large percentages of people are still not comfortable with on-line transactions. Navigating around websites can be frustrating, which is the reason that users should be given the opportunity to have both; online as well as mailed copies. The problem with on-line statements is that people can forget about the payment once they leave your website. However, the old fashion hard copies can remain on the dinner table until paid, which is still a great method. During these tough times (2010), you need to consider how people would be able to pay you without a cable connection or other necessary means. With all the identity theft that is going on, it is also unlikely for people to use a library computer to pay your invoice. So it’s a good idea to give people options when it comes to collecting your money. Your receivables are the life blood of your business and greatest emphasis must be placed on this department.
Another consideration is the number of people that are unable to download your forms and gadgets in order to make a payment. With the latest advancements in technology, it might be easy to think that everyone has the computing power to download and view anything. On the contrary, research results indicate that dial-up connection (slow in downloads) is still a big player not to mention users with disabilities and censored-connections in particular regions. Meaning, that these users are unable to download your fancy forms within a reasonable amount of time. These less privileged groups have a 20% stake in the on-line market share. Therefore, if you gross $1,000,000 there is a good possibility that you might lose over $200,000 of it due to difficulty level of your online invoicing.
Most recent user complaint is the late fees associated with online billing. Some companies are using the unethical method of spam-intended-emails to cause users to miss the billing notice and be forced to pay a late fee. Some of these irate customers are taking the matters to government agencies such as Attorney General offices, Insurance commissioners and FCC for a mere $5 late fee. But you have to realize that $5 a month late fee for each invoice can add up quickly. The unfortunate fact that most businesses don’t realize is that many of these regulatory agencies consider any and all user contacts as complaints, positive or negative. So you might want to tell your happy customers not to send happy emails to these regulators because they are counted as complaints. If you generate enough complaints, then you know what’s next. So you want to be as sincere as possible and be cautious about using false email tricks to force users into late payments. It is not worth the headache.
Here are some surveyed preferences, which you might want to use in your online invoicing case-study or perhaps personas (a typical customer model that can be used in studying your clients’ behaviour and preferences);
As a typical customer paying bills on-line; it should be noted that most people no longer use hand-written checks, except through bank auto-pay. Meaning, that 90% of all invoices are paid on-line, however, hard-copy invoices are still needed in order to remember to pay.
It is quite irritating when vague forms and questions repeatedly try to force users into paperless billing. A customer should only be asked once if s/he wants to switch to paperless billing.
Personally, if the money is rolling in, I pay all my invoices the moment they come in. Except purchase orders, which are filed by date. Therefore, there is no reason that I should have to pay any fees for being late. The only incidents when I was sent any late fees was due to the fact that the email containing my charges went into my spam folder or I never received the paper statement.
There is no possible way for me to remember and log in to my account to see if any payments are due. It is the biller's responsibility to insure that I receive a notice well in advance to avoid any late fees.
Let’s face it, if you can tag a $5 late fee to 20,000 customers each month, that’s an extra $100,000. Some companies are doing anything possible to get this fee, which is bad business.
Commercial billing
Businesses may be easier to invoice on-line since larger percentages are savvy enough to do web payments. In addition, many businesses have a database of accounts payable, which they refer to every month, hopefully. This way you might have a better chance of getting paid if the on-line notice is lost for some reason. Again, the consideration should be the percentage of retailers for instance, that refuse to do any on-line transactions. If 20% or more of your clients prefer hard copy statements, then you have to figure out whether on-line billing is cost effective.
The other problem you may encounter (based on personal experience) is that many small size operations might sound enthusiastic about on-line billing. Unfortunately, many of these enthusiasts are excited because they can put off the payments and blame it on lost emails or other excuses. You therefore, have to do some accounting to see if the amounts generated by on-line invoicing offsets the cost of software, labour, late payments and other costs.
In either method, I don't think it is a good idea to put all your eggs in one basket. It might be a good idea to set up a process that starts with online invoicing and goes into more conventional collection methods for delinquent accounts. I think a good pattern is to start with 6 steps;
Online invoicing. a) The invoicing should look professional. It should have the option to send a copy through email and I don’t mean spam box. b) I would not push the auto-pay. I attended a workshop by someone who introduced himself as a security administrator, contracting different government agencies, but to me he looked like an FBI agent. After about 15 minutes you could see all the computer scientists attending the workshop, getting uncomfortable in their seats because the harsh truth was coming out that government agencies control your online activities a lot more closely than you think. I think most of the people in the room were worried about entering unethical keywords into their search engines. But To make a long story short, I would not mess with user information. The speaker also demonstrated exactly how auto-pay is the number one reason for hacking into accounts as we read online. So, I’d be careful about storing credit card information. c) The software should allow you to insert your logo and other branding information. d) It should also have an easy discount, adjustment and update features. Once you have all these features you might still consider two formats; one for users with high speed and other for dial up, older operating systems and browsers.
Hard copy. The next step is to follow up with a paper statement. The notice should go out immediately giving your clients as much time to pay as possible. Discounts are great incentives to encourage users to pay your invoice immediately and not have to keep worrying about being late. There is a saying that “worry is interest paid on trouble before it comes due”. Thinking about due dates is a worry that they carry with them day after day. In the meanwhile they may not have to pay any monitory interest, but they surely pay interest with their blood worrying about it. Lastly, if they request you to waive the late fee for a legitimate reason, you might want to be as reasonable as possible as they will never forget how their request was handled.
Second hard copy. If no response, the second notice is just as vital because it established the fact that you are serious. Many businesses sell products on the phone. Since the client has to wait for the bill, some often hope that the statement will never come or tomorrow will never come or whatever they’re thinking. The second notice cancels this frame of mind and tells the customer that you mean business. However, you need to understand that your chances of collection are a lot less if you haven't been able to get your payment by this time. Therefore, it may be a good idea to include payment options at this point. I think if we were to take a survey, the invoices that get paid last are the ones that are sent a couple of time without any follow up. It pays to be persistent and it's important for your customers to know that you will not quit until the payment is made in full.
Phone follow up. This is detrimental because you transform from a website into a human and that creates an automatic pressure. The phone call must be as polite as possible in case there have been any misunderstandings or lost invoices. The tone of voice needs to be much more serious on the second phone follow up though.
Personal visit. Your next step is to try to collect the amount in person if local. Out of town customers need to be called every few days until payments are collected.
Collection process. This of course is the last resort, however, must be part of your online invoicing plan. The reason these obvious processes are listed is because there are many companies, small and large, that simply give up on collections. They feel that they can just turn the accounts to collection agencies and concentrate on creating newer and better accounts. That is a great method, however, if there are too many receivables, then you need to hire employees to collect them and this way you have collected the full amount as well as creating jobs. The simplest description I can give you about collecting your own invoicing is that it is easy and fun. You meet a lot of nice people that just forgot to pay or let’s face it, hoped that you would forget to collect. But they will gladly pay now since you took the time to visit or call them and they’ll probably buy more.
