By Michael Lane of Data Impact
In 2010, only 57 percent of business-to-business (B2B) payments were made by check, which is down from 63 percent in 2009 and 74 percent in 2008 (according to the Association for Finance Professionals 2010 Electronic Payment Survey).
This steady decline indicates that businesses are not only looking for, but are finding a more streamlined approach for managing the financial supply chain. As companies become more attuned to the needs of the B2B transaction set, 2011 is expected to be a record breaking year for electronic invoice presentment and payment (EIPP) growth.
Solution providers now recognize that traditional business to consumer models for electronic invoicing and payment cannot accommodate the complex needs of a B2B environment. As a result, the leaders in the EIPP space are providing more robust supporting information at the invoice and payment levels. Documents necessary to support the invoice review and approval process are made available within the platform. Invoice uploads into the customer’s accounts payable platform allow for cost savings and process efficiencies which fosters adoption. More importantly, the lack of remittance details and complexity of reconciliation have been addressed by decoupling the ACH and accounts receivable file information. Auto reconciliation can be achieved with a separate remittance file that is mapped directly into the billing parties accounts receivable platform.
With the past barriers removed, companies of all sizes will more aggressively pursue EIPP platforms in 2011 in order to drive cost savings, accelerate cash and confidently control receivables.
What do you think?
Showing posts with label online billing. Show all posts
Showing posts with label online billing. Show all posts
Thursday, February 17, 2011
Will Facebook replace the United States Postal Service?
By Flint Lane of Billtrust
Facebook and the United States Postal Service (USPS) are two organizations that have virtually nothing in common. One is a profitable enterprise that Hollywood is making movies about. The other is a government-run organization losing billions of dollars per year. What, if anything, could they have in common?
I've been thinking a lot lately about what's going to happen with the USPS. It's clear that their business model is broken and without an act of Congress, literally, they'll just continue to lose billions each year. I don't blame the folks that run the USPS, they work hard, but they're stuck with a business model that just doesn't work.
When I do the Billtrust sales pitch for electronic billing, it usually goes something like this: "How much sense does it make for a biller to take an electronic billing feed, print it on paper, put it in an envelope, mail it to me so I can then attach a check and mail it back?" Sounds pretty stupid, right? Well, why are the majority of bills still delivered via the USPS? The answer is actually pretty simple; it's still the only mechanism that can reliably reach everybody.
Below I lay out what a new "electronic post office" has to have in order to replace the USPS and why I think Facebook could easily position themselves for this.
1. Universal Deliverability - Facebook claims 150 millions active US users today and growing rapidly. While certainly not universal, they're certainly getting there with the ability to reach the majority of Americans.
2. Effective Communication Platform - Facebook falls short here quite frankly. Posting a status update is interesting and a great way to stay in touch with friends, but Facebook, in my opinion, has fallen on their face as a communication tool. What Facebook really needs here is a GMail like email interface so that people/businesses could send stuff to your @facebook.com address. Now this certainly would introduce enormous spamming opportunities. Facebook could impose some kind of insignificant email tariff to prevent rampant abuse. I've blogged about this in the past (here). I know most people think they get a lot of paper junk mail, but there is actually an effective tariff in place to limit this, it's called postage. I wouldn't mind receiving some junk email if they went through a system that actually had some controls in place. Charging $0.001 per email wouldn't be unreasonable and would keep out the blatant spammers.
3. Privacy - I don't get myself too worked up about my online privacy because I think the measures that most companies take are far more effective than the offline world. However, there are certainly opportunities for abuse here. I would suggest taking a portion of the tariffs collected from above to pay a third party to monitor privacy on a regular basis.
4. Payments - The majority of mail that people get, that is of any importance, are bills. That's because they require the user to take an action - return a payment. Facebook doesn't have this today but this is not a big effort.
Other have tried to become the universal mailbox. My first company Paytrust did this for bills. Zumbox and EarthClassMail are trying to do this for all other forms of mail. But all three suffer from the chicken and the egg problem. Which is to say that until they have enough users, billers and other mailers don't want to bother enabling electronic delivery to them. And users won't sign up, until they can get a majority of their mail through the channel.
That's why I think Facebook, if they want, is well positioned to do this because they already have the user base. Economically I think it would be a slamdunk. Who else could do this? Maybe Google with GMail but I like Facebook's chances better.
Facebook and the United States Postal Service (USPS) are two organizations that have virtually nothing in common. One is a profitable enterprise that Hollywood is making movies about. The other is a government-run organization losing billions of dollars per year. What, if anything, could they have in common?
I've been thinking a lot lately about what's going to happen with the USPS. It's clear that their business model is broken and without an act of Congress, literally, they'll just continue to lose billions each year. I don't blame the folks that run the USPS, they work hard, but they're stuck with a business model that just doesn't work.
When I do the Billtrust sales pitch for electronic billing, it usually goes something like this: "How much sense does it make for a biller to take an electronic billing feed, print it on paper, put it in an envelope, mail it to me so I can then attach a check and mail it back?" Sounds pretty stupid, right? Well, why are the majority of bills still delivered via the USPS? The answer is actually pretty simple; it's still the only mechanism that can reliably reach everybody.
Below I lay out what a new "electronic post office" has to have in order to replace the USPS and why I think Facebook could easily position themselves for this.
1. Universal Deliverability - Facebook claims 150 millions active US users today and growing rapidly. While certainly not universal, they're certainly getting there with the ability to reach the majority of Americans.
2. Effective Communication Platform - Facebook falls short here quite frankly. Posting a status update is interesting and a great way to stay in touch with friends, but Facebook, in my opinion, has fallen on their face as a communication tool. What Facebook really needs here is a GMail like email interface so that people/businesses could send stuff to your @facebook.com address. Now this certainly would introduce enormous spamming opportunities. Facebook could impose some kind of insignificant email tariff to prevent rampant abuse. I've blogged about this in the past (here). I know most people think they get a lot of paper junk mail, but there is actually an effective tariff in place to limit this, it's called postage. I wouldn't mind receiving some junk email if they went through a system that actually had some controls in place. Charging $0.001 per email wouldn't be unreasonable and would keep out the blatant spammers.
3. Privacy - I don't get myself too worked up about my online privacy because I think the measures that most companies take are far more effective than the offline world. However, there are certainly opportunities for abuse here. I would suggest taking a portion of the tariffs collected from above to pay a third party to monitor privacy on a regular basis.
4. Payments - The majority of mail that people get, that is of any importance, are bills. That's because they require the user to take an action - return a payment. Facebook doesn't have this today but this is not a big effort.
Other have tried to become the universal mailbox. My first company Paytrust did this for bills. Zumbox and EarthClassMail are trying to do this for all other forms of mail. But all three suffer from the chicken and the egg problem. Which is to say that until they have enough users, billers and other mailers don't want to bother enabling electronic delivery to them. And users won't sign up, until they can get a majority of their mail through the channel.
That's why I think Facebook, if they want, is well positioned to do this because they already have the user base. Economically I think it would be a slamdunk. Who else could do this? Maybe Google with GMail but I like Facebook's chances better.
Saturday, February 5, 2011
Are we approaching the "tipping point" for ebill usage?
Posted by Mark Brousseau
When will eBills be more widely used than traditional paper bills? A recent study suggests it might only be five years down the road.
The study conducted by NACHA’s Council for Electronic Billing and Payment (CEBP) and PayItGreen suggests that eBilling – or the electronic delivery of a bill to a customer – is gaining momentum across business industries with more billers expected to come online in 2011 and 2012. The NACHA CEBP and PayItGreen study, completed by Blueflame Consulting in January 2011, quantified the size of the eBill market, indicating that a total of 5.1 billion eBills were delivered in 2010 alone. However, some consumers are moving to adopt eBills more slowly than anticipated.
“After easily converting the ‘early adopters’ to eBills, billers are realizing that the second and third tiers of consumers will take more time to convince,” said Ed Bachelder, director of research for Blueflame Consulting. “However, billers across a broadening range of markets and sizes see eBill adoption as an important program for their companies, and have shown commitment to continuing to try to convert their customers.”
Nine of 10 of the companies surveyed rate eBill adoption to be a significant opportunity for their organizations. Cost-savings serves as a major driver for companies, with projected savings falling between 40 and 50 cents per bill. Another motivating factor, billers also said eBill customers are more satisfied customers and are easier to retain. Collectively, participants in the study distribute 735 million bills in a typical month, which is approximately 25 percent of all bills nationwide.
“eBills have not reached their full potential, but they’re gaining momentum,” said Janet O. Estep, president and CEO of NACHA — The Electronic Payments Association. “With companies’ long-term commitment to converting their customers to electronic bill presentment, we see adoption gaining momentum.”
Of those surveyed, universities had the most successful eBilling programs by far. Most universities can mandate eBilling for their students or use a customer opt-out approach rather than an opt-in approach.
“Most billers ask their customers to opt-in to the eBilling program,” said Bachelder. “Companies could increase their eBill participation dramatically by changing their new customer enrollment to an opt-out approach. Our study suggests that only 10 percent of customers who have Internet access would choose to opt-out once they experienced eBilling. Study participants identified one obstacle to eBilling is that the sign-up process is often too time-consuming for customers. An opt-out program would simplify that step.”
Participants in the study agree that more customer education is needed about how eBilling works, the security involved, and how significant paper reduction is to improving the environment.
“Once customers truly understand eBilling, they respond positively for a number of reasons,” said Estep. “Convenience is key, and environmental messaging continues to be a supporting motivator for eBill adoption.”
What do you think?
When will eBills be more widely used than traditional paper bills? A recent study suggests it might only be five years down the road.
The study conducted by NACHA’s Council for Electronic Billing and Payment (CEBP) and PayItGreen suggests that eBilling – or the electronic delivery of a bill to a customer – is gaining momentum across business industries with more billers expected to come online in 2011 and 2012. The NACHA CEBP and PayItGreen study, completed by Blueflame Consulting in January 2011, quantified the size of the eBill market, indicating that a total of 5.1 billion eBills were delivered in 2010 alone. However, some consumers are moving to adopt eBills more slowly than anticipated.
“After easily converting the ‘early adopters’ to eBills, billers are realizing that the second and third tiers of consumers will take more time to convince,” said Ed Bachelder, director of research for Blueflame Consulting. “However, billers across a broadening range of markets and sizes see eBill adoption as an important program for their companies, and have shown commitment to continuing to try to convert their customers.”
Nine of 10 of the companies surveyed rate eBill adoption to be a significant opportunity for their organizations. Cost-savings serves as a major driver for companies, with projected savings falling between 40 and 50 cents per bill. Another motivating factor, billers also said eBill customers are more satisfied customers and are easier to retain. Collectively, participants in the study distribute 735 million bills in a typical month, which is approximately 25 percent of all bills nationwide.
“eBills have not reached their full potential, but they’re gaining momentum,” said Janet O. Estep, president and CEO of NACHA — The Electronic Payments Association. “With companies’ long-term commitment to converting their customers to electronic bill presentment, we see adoption gaining momentum.”
Of those surveyed, universities had the most successful eBilling programs by far. Most universities can mandate eBilling for their students or use a customer opt-out approach rather than an opt-in approach.
“Most billers ask their customers to opt-in to the eBilling program,” said Bachelder. “Companies could increase their eBill participation dramatically by changing their new customer enrollment to an opt-out approach. Our study suggests that only 10 percent of customers who have Internet access would choose to opt-out once they experienced eBilling. Study participants identified one obstacle to eBilling is that the sign-up process is often too time-consuming for customers. An opt-out program would simplify that step.”
Participants in the study agree that more customer education is needed about how eBilling works, the security involved, and how significant paper reduction is to improving the environment.
“Once customers truly understand eBilling, they respond positively for a number of reasons,” said Estep. “Convenience is key, and environmental messaging continues to be a supporting motivator for eBill adoption.”
What do you think?
Wednesday, September 3, 2008
More B2B Transactions Go Electronic
By Mark Brousseau
More signs that paper checks are losing their grip on business-to-business transactions. Some 56 percent of treasurers, CFOs and other senior finance executives say they use p-cards and see reducing administrative costs and time as top benefits, according to Treasury & Risk’s annual cash management survey. Meantime, 55 percent of respondents to the survey said they handled more than 80 percent of their business online.
What's happening at your organization?
Post your comments below.
More signs that paper checks are losing their grip on business-to-business transactions. Some 56 percent of treasurers, CFOs and other senior finance executives say they use p-cards and see reducing administrative costs and time as top benefits, according to Treasury & Risk’s annual cash management survey. Meantime, 55 percent of respondents to the survey said they handled more than 80 percent of their business online.
What's happening at your organization?
Post your comments below.
Thursday, July 31, 2008
Using the Internet for Utility Payments
Posted by Mark Brousseau
An interesting article written by Bob Craig at Energy Central on another benefit of using the Internet for billing:
Internet Channel Can Help Utilities Ease the Sting of Delinquent Payments
07.21.08
Robert Craig, Executive Vice President and General Manager, eCommerce Services, Online Resources Corporation
Across the United States, personal financial stability is decreasing as the “perfect storm” of record-high energy, food and healthcare costs collide with spillover from the deepening mortgage crisis to push millions of families into financial trouble.
In April 2008, my company conducted a survey of U.S. households which found that 25 percent have at least one bill 30 or more days overdue, and that 52 percent of households are finding it harder to meet their financial obligations than they did twelve months ago -- an increase from 43 percent who said the same in October 2007.
Americans are increasingly being forced to prioritize their bill payments by creating a “delinquency budget,” ranking which bills they would be most likely to pay if they had to choose.
It should come as no surprise that the mortgage bill tends to be the one that most households (98%) are most likely to pay.
Utilities Hit by Spiking Delinquencies
With consumers prioritizing their bills, utility companies are seeing an increased risk of delinquencies. Our survey showed that approximately nine percent of households are at least 30 days delinquent on their utility bill. That number is up significantly from October 2007. Just this week, the National Energy Assistance Directors' Association reported that utilities across the country are seeing record numbers of shutoffs.
The “perfect storm” of colliding financial pressures on consumers’ budgets hits a utility company particularly hard during the spring and summer months. As winter moratoriums end and warm-weather energy bills hit their peak, utilities face significantly increased costs. These encompass having to send severely delinquent accounts to collections and hire additional crews to physically shut off service -- which, these days, means ever higher fuel costs for those crews to do the job.
Add to that the additional cost burden of having to collect deposits for households now classified as high-risk when service is restored and having to, again, dispatch crews to physically turn on service.
And, sadly, these high-risk households may be cyclically delinquent at various times of the year, requiring repeats of this costly exception handling. Unlike other service companies, such mortgage lenders, wireless telecommunications or credit card issuers, utilities cannot just charge off debt and walk away from high-risk accounts. They must provide service universally to every household in their region.
It is no wonder that the words “delinquency” and “collections” typically generates stress and challenges for utilities.
Advent of “Virtual Collections”
Traditionally, managing delinquent accounts has meant an increase in staff with the accompanying challenges related to hiring, training and compliance, or an increase in dollars spent outsourcing debt collection to first-party collection agencies. Both of these are a significant burden for most utilities
Online payments for accounts that are current have been around since the late 1990s. Web technology specifically created for the collection of delinquent payments is a relatively new concept that only a few billers in recurring industries, such as utilities, have deployed, thus far.
When consumers are faced with the consequences of collections, our research strongly suggests that delinquent account holders are much more willing to resolve the situation via the privacy and convenience of the web, through what we refer to as “virtual collections.” In fact, 28 percent of consumers said they would be more likely to pay a past due bill if they had the ability to settle the debt via a web site, whereas only about half that number was likely to respond to a phone call or letter from a collection agent.
Web-based collections has proven to be a cost-efficient and effective tool in improving delinquency roll rates for early stage delinquent accounts, and increasing payments from later-stage delinquent accounts. It has also helped eliminate or soften many of the negative aspects related to managing these situations with consumers and has given account holders more convenience to resolve their delinquent status.
This is of particular importance, I believe, for utilities, because they must provide universal service and have, in effect, customers for life. Providing as positive an experience as possible, as consumers cycle all the way from delinquency and collections and back into good standing, just might give utilities an edge in competing effectively for those consumers’ on-time payments during good times and bad.
Adoption of web-based collections by delinquent account holders is increasing as users become more comfortable remitting payments online.
Account holders who make a promise-to-pay during a web session keep their promises—the average payment commitment experienced a 94% keep rate.
A key benefit to web-based collections is convenience—22% of logins occurred on Saturday or Sunday, or during off-hours when regulations or hours of operation prevent contact by billers, creditors and traditional collection agencies.
Overcoming Skepticism about New Collection Technology
From January to May 2005, we set up a pilot study with a large bank to test whether people would pay their delinquent bills at a web site offering them multiple ways to “self-cure” or resolve their debt online without assistance from a live agent. The bank was initially skeptical.
First, it questioned whether delinquent customers would even come to a web site. Second, management doubted that delinquent account holders, whom the bank had been unable to reach by phone, mail or an 800 number, could be convinced to pay their overdue payments simply because they could go to a web site to do so.
The study was a “champion-challenger” test where the bank randomly selected 10% of its delinquent accounts and changed how they were treated. The only variable in how these accounts were treated was the promotion and notification of the financial advisory nature of the “virtual collector” web site for those customers to make payments, learn about potential payment programs or perhaps settle out their accounts.
The bank realized a loss reduction of 310 basis points, which would translate to an annualized savings of $3.1 million for an organization with $50 million in delinquent balances.
Other studies by our company have shown that companies who implement specialized web sites for resolving delinquent accounts have seen positive results.
About 20% of the users who self-cure online do so during hours that companies’ collection operations, whether in-house or outsourced, are not traditionally open.
Almost half the users have not been successfully contacted by the company in the prior 6 months, if ever, and two-thirds of them are late-stage delinquent accounts.
Web users have higher rates and amounts of payment against higher average balances.
Consumers’ choice of the web increases over time: the web has about twice the activity today that it did a year ago.
Web site visitors paid a dollar amount three times more than the portfolio average and paid four times more often than the portfolio average.
Utilities, other Billers Out of Sync with Consumer Preferences
Only 8% of billers -- including utilities -- offer a web site that goes beyond accepting payments to allow consumers to cure their delinquency. This means that they are missing out on a significant opportunity to improve how they meet consumer preferences for making delinquent payments, while saving money at the same time.
As more consumers find themselves in unfamiliar territory, being delinquent on bills they have always paid on time, utilities should embrace the opportunity to adopt new collections practices that minimize credit losses and ease the pain for consumers.
Innovative technology cannot prevent people from facing tough economic choices between which bills to pay this month. But its effective use can limit the repercussions and costs for the companies that serve them.
An interesting article written by Bob Craig at Energy Central on another benefit of using the Internet for billing:
Internet Channel Can Help Utilities Ease the Sting of Delinquent Payments
07.21.08
Robert Craig, Executive Vice President and General Manager, eCommerce Services, Online Resources Corporation
Across the United States, personal financial stability is decreasing as the “perfect storm” of record-high energy, food and healthcare costs collide with spillover from the deepening mortgage crisis to push millions of families into financial trouble.
In April 2008, my company conducted a survey of U.S. households which found that 25 percent have at least one bill 30 or more days overdue, and that 52 percent of households are finding it harder to meet their financial obligations than they did twelve months ago -- an increase from 43 percent who said the same in October 2007.
Americans are increasingly being forced to prioritize their bill payments by creating a “delinquency budget,” ranking which bills they would be most likely to pay if they had to choose.
It should come as no surprise that the mortgage bill tends to be the one that most households (98%) are most likely to pay.
Utilities Hit by Spiking Delinquencies
With consumers prioritizing their bills, utility companies are seeing an increased risk of delinquencies. Our survey showed that approximately nine percent of households are at least 30 days delinquent on their utility bill. That number is up significantly from October 2007. Just this week, the National Energy Assistance Directors' Association reported that utilities across the country are seeing record numbers of shutoffs.
The “perfect storm” of colliding financial pressures on consumers’ budgets hits a utility company particularly hard during the spring and summer months. As winter moratoriums end and warm-weather energy bills hit their peak, utilities face significantly increased costs. These encompass having to send severely delinquent accounts to collections and hire additional crews to physically shut off service -- which, these days, means ever higher fuel costs for those crews to do the job.
Add to that the additional cost burden of having to collect deposits for households now classified as high-risk when service is restored and having to, again, dispatch crews to physically turn on service.
And, sadly, these high-risk households may be cyclically delinquent at various times of the year, requiring repeats of this costly exception handling. Unlike other service companies, such mortgage lenders, wireless telecommunications or credit card issuers, utilities cannot just charge off debt and walk away from high-risk accounts. They must provide service universally to every household in their region.
It is no wonder that the words “delinquency” and “collections” typically generates stress and challenges for utilities.
Advent of “Virtual Collections”
Traditionally, managing delinquent accounts has meant an increase in staff with the accompanying challenges related to hiring, training and compliance, or an increase in dollars spent outsourcing debt collection to first-party collection agencies. Both of these are a significant burden for most utilities
Online payments for accounts that are current have been around since the late 1990s. Web technology specifically created for the collection of delinquent payments is a relatively new concept that only a few billers in recurring industries, such as utilities, have deployed, thus far.
When consumers are faced with the consequences of collections, our research strongly suggests that delinquent account holders are much more willing to resolve the situation via the privacy and convenience of the web, through what we refer to as “virtual collections.” In fact, 28 percent of consumers said they would be more likely to pay a past due bill if they had the ability to settle the debt via a web site, whereas only about half that number was likely to respond to a phone call or letter from a collection agent.
Web-based collections has proven to be a cost-efficient and effective tool in improving delinquency roll rates for early stage delinquent accounts, and increasing payments from later-stage delinquent accounts. It has also helped eliminate or soften many of the negative aspects related to managing these situations with consumers and has given account holders more convenience to resolve their delinquent status.
This is of particular importance, I believe, for utilities, because they must provide universal service and have, in effect, customers for life. Providing as positive an experience as possible, as consumers cycle all the way from delinquency and collections and back into good standing, just might give utilities an edge in competing effectively for those consumers’ on-time payments during good times and bad.
Adoption of web-based collections by delinquent account holders is increasing as users become more comfortable remitting payments online.
Account holders who make a promise-to-pay during a web session keep their promises—the average payment commitment experienced a 94% keep rate.
A key benefit to web-based collections is convenience—22% of logins occurred on Saturday or Sunday, or during off-hours when regulations or hours of operation prevent contact by billers, creditors and traditional collection agencies.
Overcoming Skepticism about New Collection Technology
From January to May 2005, we set up a pilot study with a large bank to test whether people would pay their delinquent bills at a web site offering them multiple ways to “self-cure” or resolve their debt online without assistance from a live agent. The bank was initially skeptical.
First, it questioned whether delinquent customers would even come to a web site. Second, management doubted that delinquent account holders, whom the bank had been unable to reach by phone, mail or an 800 number, could be convinced to pay their overdue payments simply because they could go to a web site to do so.
The study was a “champion-challenger” test where the bank randomly selected 10% of its delinquent accounts and changed how they were treated. The only variable in how these accounts were treated was the promotion and notification of the financial advisory nature of the “virtual collector” web site for those customers to make payments, learn about potential payment programs or perhaps settle out their accounts.
The bank realized a loss reduction of 310 basis points, which would translate to an annualized savings of $3.1 million for an organization with $50 million in delinquent balances.
Other studies by our company have shown that companies who implement specialized web sites for resolving delinquent accounts have seen positive results.
About 20% of the users who self-cure online do so during hours that companies’ collection operations, whether in-house or outsourced, are not traditionally open.
Almost half the users have not been successfully contacted by the company in the prior 6 months, if ever, and two-thirds of them are late-stage delinquent accounts.
Web users have higher rates and amounts of payment against higher average balances.
Consumers’ choice of the web increases over time: the web has about twice the activity today that it did a year ago.
Web site visitors paid a dollar amount three times more than the portfolio average and paid four times more often than the portfolio average.
Utilities, other Billers Out of Sync with Consumer Preferences
Only 8% of billers -- including utilities -- offer a web site that goes beyond accepting payments to allow consumers to cure their delinquency. This means that they are missing out on a significant opportunity to improve how they meet consumer preferences for making delinquent payments, while saving money at the same time.
As more consumers find themselves in unfamiliar territory, being delinquent on bills they have always paid on time, utilities should embrace the opportunity to adopt new collections practices that minimize credit losses and ease the pain for consumers.
Innovative technology cannot prevent people from facing tough economic choices between which bills to pay this month. But its effective use can limit the repercussions and costs for the companies that serve them.
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