Electronic Billing, Payment, & Presentment

By Cheryl Dangel Cullen

As consumers, we’re inundated with all things Internet-related. Everyone has a Web site and we’re all expected to have an e-mail address. So does that mean that we’re all paying our bills online, too? Today, companies are wrestling with this notion. In theory, electronic billing, payment, and presentment (EBPP) is the ultimate model of efficiency. But is it catching on? Are consumers ready to go to a paperless world? Who has adopted EBPP and what have we learned from past experience? These are the questions we posed our panel of experts.

Who is Using EBPP?
Nearly everyone has jumped on the EBPP bandwagon, according to our experts. Businesses and their suppliers using EBPP range from insurance and financial service companies—such as retailer banks, credit card issuers, investment banks, and insurance companies to energy and utilities, healthcare, government, telecommunications, transportation, education, and retailers.

More specifically, “organizations wishing to reduce the cost of delivering the hard copy bill or statement and wanting to increase online payment adoption at the same time” are candidates for EBPP according to Don McCormick, managing director, ACI e-Courier business unit, ACI Worldwide (www.aciworldwide.com), Omaha, Neb., makers of e-Courier, an electronic document delivery solution that is deployed worldwide and across industries as a more cost-effective means to deliver bills, statements, and other correspondence to customers.

“Anyone who sends bills through the mail would be wise to look into adding this channel,” said Scott Gerschwer, spokesman for Pitney Bowes DMT (www.pb.com), Pitney Bowes Document Messaging Technologies, Danbury, Conn. (See Figure 1.)

“For early adopter industries, including telecommunications and utilities, e-billing has become a critical business requirement. Likewise, financial services are rapidly adding e-presentment capabilities. Many are also looking at these services as additional sources of revenue,” said Tom Kuder, vice president, product management, Group 1 Software (www.g1.com/doc1) , Lanham, Md., which provides solutions for data quality, customer communications management, direct marketing applications, and electronic presentment and billing.

The Advantages
Why is EBPP all the rage? Is it to cut costs, grow the top line, and reduce customer churn or something more? “The answer is ‘yes’ to all three,” said Scott Dunlap, vice president of marketing, Avolent (www.avolent.com), San Francisco, Calif., which makes BizCast, enterprise software for financial relationship management that is designed to help Fortune 2000 suppliers streamline costs and improve service to business customers. “Most customers that buy our software today are interested in gaining a competitive service advantage. They want BizCast to help improve service, which ultimately leads to more satisfied customers that stay longer and buy more.” 

Dunlap says that this “advantage” often translates to lowered invoicing costs and elimination of “lost” invoices, lowered cost of dispute resolution, days sales outstanding (DSO), payment processing, as well as lowered costs and frequency of collections and customer service calls.

“These goals also vary by industry, but within our customer base today, it’s to cut operational costs and/or reduce customer churn,” echoed Tim Walsh, director, corporate communications, edocs, Inc. (www.edocs.com), Natick, Mass., which provides customer self-service and e-Billing software solutions. “While most every potential user understands the implicit revenue benefit in improving customer convenience and satisfaction, no one wants to attach their EBPP project to incremental revenue goals in the current market environment. At the moment, companies are more focused on keeping the customers they have and serving them more efficiently.” 

William D. Barry, senior vice president, sales and marketing, Docucorp International (www.docucorp.com) , Dallas, Texas, agrees. His company markets a solution portfolio of information software, application service provider (ASP) hosting, and professional services that enables companies to create, publish, manage, and archive complex, high-volume, individualized information. “Most of our utility clients want to offer their customers EBPP as an additional billing option. In some cases, EBPP can be utilized to grow the top line, as online bill presentment enables new product offerings and marketing messages to be easily incorporated.”

“There are four key factors and in fact, all of them ultimately relate to improving the bottom line by doing more with less,” said Gregory T. Church, vice president, marketing, communications and product management, ACOM Solutions, Inc. (www.acom.com), Long Beach, Calif. “We see four fundamentals—direct cost reductions through elimination of printing, manual handling, and mailing; improved cash management, which allows the cash to work harder while in-house; improved customer relations, which means greater efficiency, less confusion, and a greater long-term projected valuation of each customer (improved volume); and enhanced back office efficiency, with lower personnel costs and more effective deployment of personnel, financial, and physical resources.” 

“The primary benefit is to cut the costs of manual data entry while improving the overall efficiency of accounts payable processing,” said Charlie Kaplan, product manager, SERdistiller, SER Solutions, Inc. (www.ser.com), Dulles, Va., manufacturer of intelligent document recognition and data capture, workflow, and archiving software such as SERdistillerª and SERsynergy.ª “In the past, these companies have invested heavily in back-office automation (i.e. ERP) that have delivered a fraction of the ROI originally promised, while still leaving tremendous costs associated with entering transactional data into the system(s). To date, there are no technology solutions available in the market that have delivered on the process of complete AP automation, since the bulk of AP processing originates with paper-based documents.”

It all comes down to cutting costs, suggests McCormick. “Paper and postage are very visible costs in an economic environment that is demanding efficiency and cost reduction,” he said.

“Billing organizations realize huge cost savings by delivering e-bills instead of paper. Especially for business to business EIPP, paper reduction is a key benefit to the payer,” said Kuder. “Invoices must be stored for years with some invoices being 100-plus pages long. Both billers and payers benefit from more efficient dispute handling. According to Gartner (March 2002), cumulative implications are clear—by moving from paper invoices to electronic invoices, the typical enterprise can save $10.8 million per year. By moving customer services from the telephone to the Web, the average enterprise can save $1.6 million per year. By moving customer dispute resolution from the telephone to an online application process, the typical enterprise can save $1.8 million per year. Total potential savings for the average enterprise: at least $13.1 million per year, or approximately 55 cents per invoice.”

However, cost savings may no longer be the top reason for turning to EBPP, according to Gerschwer. “An effort to ensure customer loyalty is slowly replacing cost savings—paper and postage—as the main driver. Consumers surveyed by Pitney Bowes want four things as they ‘cope’ with billing/ebilling—control, organization, privacy, and expedience. Paper bills continue to offer all of these, even if they add to the clutter of a household. With EBPP you have the advantage of taking care of a common household chore while at work, quickly and efficiently.”

Few of our experts mentioned the consumer in this discussion of the reasons for moving to EBPP. Larry Hogan, director, product marketing, CheckFree i-Solutions (www.checkfreeisolutions.com), Norcross, Ga., which offers complete, end-to-end electronic billing and electronic statement solutions, was one of the exceptions. “Consumers love it because it, saves them money, saves them time, and keeps them more organized.”

“Most Metavante clients want EBPP to meet customer demand for bill presentment and pay options and more convenience,” agreed Cary Serif, EVP and general manager of Metavante Electronic Presentment & Payment, Metavante Corporation (www.metavante.com), Milwaukee, Wis. Enhancing customer loyalty, reducing customer churn, and reducing customer care costs are also motivations for clients.

EBPP and Customer Relationship Management
It’s like an alphabet soup, but in a discussion of EBPP, one can’t ignore how it impacts customer relationship management (CRM).

“EBPP can leverage the customer data contained in existing CRM systems to personalize bills with customer-specific content and targeted marketing. The more personalized the communication with the customer, the more likely the customer will stay with their biller,” said McCormick.

“Many providers have invested heavily in CRM in an attempt to learn more about their customers’ interests, desires, and habits,” Barry agreed. “With that new knowledge, providers can leverage their CRM output to deliver efficient and cost-effective EBPP that’s clear, consistent, and personalized to reflect their customers’ preferences.”

“The bill and recurring account statements are the most frequent touch points between most companies and their customers. When was the last time you walked up to the counter at your local utility company or your car insurance company?” asked Hogan. “It never happens. But the bills and statements arrive month after month. Seventy million American households are online—many of these want an online relationship with the companies they do business with. They want access to their account information and information on other products and services the company offers 24 hours a day, 365 days a year.

“The bill and recurring account statements are how most companies communicate with their customers. A CRM solution that doesn’t include e-billing and e-statements is missing the mark.”

Kuder agreed. “E-billing can deliver strong marketing and customer retention benefits when implemented as part of an integrated customer communications or customer relationship management (CRM) strategy. Web self-service is the most obvious value for customers, providing customers 24x7 access to their account information online. Online 24x7 access to bills helps reduce in-bound call center calls. Servicing and inquiry via telephone is 15 times more expensive than via a Web self-service site—$30 versus less than $2,” said Kuder, citing research from Forrester. “As a result, customers using e-billing service rather than calling a CSR just once in 12 months, the service to the customer has paid for itself.”

“There are many CRM benefits—taking time to get through an enrollment process leads to greater loyalty, is the most benefit often cited by banks,” said Gerschwer. “But the ability to connect—via the Internet and intranets, the call center service agent, and the actual bill is a great benefit—customers and biller both prefer online customer service rather than service on a telephone. FAQs on the home page reduce the number of questions. Online self-service may be the best benefit of EBPP—some call center volumes have been reduced by as much as 30 percent.”

What’s Next for EBPP?
“To date, EBPP has been mostly about payment,” said McCormick. “Although online payment continues to grow, it is not rapid enough. The real cost savings now reside with the delivery of the bill. Direct delivery of the bill to the desktop—combined with online payment from within the bill—will save big money, help drive online payments to the next level, and lock customers into the service.”

“The business to business EBPP market is in an early stage, with most suppliers targeting selected customers for EBPP,” said Dunlap. “Over time, we see a couple of trends. Large adoption—one of our customers told us that 85 percent of their corporate accounts wanted to see and process their invoices online—strong validation for EBPP. Secondly, emerging business models—there will be applications for bother suppliers and buyers, all ‘connected’ by open XML standards—the market will emerge not unlike the online procurement market emerged.” 

“By 2006, more than 50 million households will view bills online and 52 million will pay at least one bill online, according to Jupiter Research,” predicted Hogan. “In the future companies will begin to apply the same technology to different areas of their businesses, for all types of products and statements. Tighter integration with back office systems and operations to support EBP and CRM is something else we see down the line.

A Paperless Society?
Barry is less optimistic about the adoption rate. “While we have seen a lot of utility companies offer EBPP, the adoption rates among their customers have been very low. We anticipate the slow growth of EBPP adoption rates to continue in the future. We’ve seen increased activity in the insurance industry, among personal auto insurers who want to offer EBPP to their customers. However, the customer adoption rate has been slow, reflecting what we’ve seen in the utility industry.”

“I suspect that the adoption rate will be slower than many analysts predict,” cautioned Kaplan. “Furthermore, paper-based invoicing in many industries and between many companies will continue to be prevail, offering a huge opportunity for application in the IDR space like SERdistiller.”

“People trust paper because they can hold it in their hands and see it, while electronic documents are ‘out there.’ Moreover, many smaller companies view electronic processes as complicated and/or unaffordable, but this point of view will no doubt be ameliorated as the ease-of-use and universal accessibility of Web forms penetrates their consciousness. A Web form invoice or electronic invoice is only one direction of the EBPP process, of course, but once these are accepted and respected, the other leg—electronic invoice processing and payment is sure to follow.

“It is important to remember that paper documents can cost as much as $8.50 to produce (IOMA figure), all costs considered, while automated e-documents cost mere pennies. Electronic payments provide similarly impressive cost reductions. So it makes a lot of sense for companies of any size,” said Church.

“There are still some challenges—banks and billers and consolidators all want to provide EBPP for different reasons—and they all want to drive customers to their Web sites for the additional marketing benefits, upselling and cross selling,” said Gerschwer. “The studies that Pitney Bowes has done this year suggest that consumer demand is growing but until providers understand the workflow within the home and make big improvements, consumers won’t give up their paper bills even if they ultimately pay online. That’s the status quo and it’s going to be a challenge to add value to that process in a way that compels consumers to change an engrained habit. Of course younger people want to do everything online, so they will be easier converts. And it may be counter-intuitive, but retirees are embracing EBPP in surprising numbers.”

The Receptive Markets
“Online bill payment will be the fastest growing online financial application in 2003,” said Hogan, citing data from Gartner Research. “Once they become comfortable with the technology, companies, especially in the financial services and insurance industries, will begin to apply the e-billing and e-statement technology to all types of their products and services.”

If that’s true, then the key will be winning people over to the convenience e-billing provides. “Besides enterprise clients, e-billing and customer self-service appeal to teens and young adults, a demographic that is accustomed to interacting via the Web and an area that many companies are targeting with their products and services. As a result, for many companies, online billing and customer self-service is becoming a basic requirement for appealing to new customers. And, like any competitive market, companies are trying to differentiate themselves by adding more sophisticated online service capabilities because they know that will win them customers,” said Walsh.

“Healthcare insurance market has a growing interest in EBPP systems being driven by the need to meet security and privacy HIPAA [Health Insurance Portability and Accountability Act of 1996]. Government is another growing industry for EBPP, mostly for business to business procurement and accounts payable applications,” said Kuder.

What’s the bottom line for those who adopt EBPP? “In general, we’ve seen customers who utilize our billing solutions benefit from increased efficiencies, new revenue generation and strengthened customer relationships,” said Barry.

Jul2003, Digital Publishing Solutions