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Dramatically faster electronic payment

Published on 04 Jan 2009
Days Sales Outstanding Reduced Drastically

Thanks to overwhelming evidence, billers can now be confident of improved cash flow as a result of bills being paid faster with electronic payments.

Optimizing electronic billing processes can dramatically reduce DSO by cutting the time it takes to get bills to customers and elicit payment. (A companies’ Days Sales Outstanding (DSO) figure expresses the average time it takes for customers to pay their bills.)

In today’s tough economic environment, reducing the payment cycle by even a single day can influence a company’s ability to grow and compete. Reducing it by two thirds would be nothing short of miraculous.

Email bill presentment and payment does just that. Documented results show that email bill presentment and payment is able to reduce the DSO cycle by as much as 70%.

“The easier it is, the faster I’ll pay”

This is the consumer mantra when it comes to paying bills. It’s an attitude that won’t surprise any savvy biller who understands that customer convenience is paramount. It’s nonetheless gratifying for ‘eBilling solution’ companies to have it confirmed with hard evidence.

The results from two recent Striata North American utility eBilling projects prove beyond doubt how attractive the proposition of eBilling is:

  • Over 50% of customers paid the bill before the paper bill could even have arrived by mail.
  • 19% paid on the same day they received the bill.

The cash flow implications

The cash flow implications are considerable and improvement in customer retention is also evident due to the superior convenience that electronic payment offers.

These findings add further weight to the case for eBilling, already very strong due to the considerable savings a biller enjoys in reduced costs. (It is 70% – 90% cheaper to deliver bills electronically than by paper.)

These figures should leave no doubt in any company’s mind of the positive impact a well-implemented eBilling solution can have on its cash flow. As the evidence mounts, there is no doubt that eBilling is future of bill payment.

How fast do bills get paid?

This chart shows the distribution of payments by email billing customers of a major US utility.

 When the bill was paid Percentage of eBilling customers
 1 day or less 18%
 2-7 days 41%
 8-15 days 17%
 16-30 days 20%
 31+ days 3%

The average DSO for customers still receiving paper bills is 45 days, while all but 3% of the eBilling customers were paid within 30 days and more than half of the consumers paid within a few days of receiving their respective bills.

In “Billing and Incoming Payment Processes in the 21st Century – a white paper “, Killen & Associates confirm that the broader choice consumers now have over how they receive and pay their bills is profoundly influencing their payment habits. They go on to remark that the pressure felt by businesses today has increased dramatically, with stricter regulations and higher demands on payment cycles and cash management. They surmise that conditions are ripe for companies to start implementing processes that can be better tracked and monitored, resulting in faster cash collection.

Another area deserved of close attention is the widening choice of suppliers’ consumers face and the subsequent number of options they now have for receiving and paying bills. During this period of rapid change, it’s essential to keep the customer experience as convenient as possible.

The best kind of eBilling solution is a single touch experience that minimizes effort and maximizes convenience. Ideally, all a customer would need to do, when viewing an electronic bill, is click once to open it. Similarly, paying the bill need only require one click. The process should be made so quick and easy that there’s no need to print out the bill, file it and remind yourself to pay it later, a practice which defeats the entire purpose of eBilling as a more convenient solution to the paper billing process.

How email billing reduces DSO

Email billing shortens the payment cycle by reducing the time it takes for a bill to be delivered and paid.

All eBilling solutions work slightly differently. With Striata eBilling, bills are delivered as secure electronic documents directly to customer inboxes. eBills are embedded with Striata BillPay, an innovative ‘one click’, no registration electronic bill payment, directly from within the encrypted, emailed bill itself.

More choice in payment options is perceived as an added convenience by customers, with direct benefits to billers. The packages of services that payment integrators provide to billers include added financial protections that make it advantageous for billers to offer a wider range of payment options.

The ability to make a payment from within the bill provides an enhanced customer experience that maximizes ePayment adoption.

The seamless integration between bill presentment and payment drives faster payment that reduces the biller’s DSO.