2O/2 distribution Improving Cash Flow With Online Payment Services By KeCommerce socius The Power of Partnership
The Case for Offering Integrated Online Bill Payment Services to Customers EXECUTIVE SUMMARY It s no secret that one of businesses top challenges is collecting payments faster and having a steady cash flow. Based on a semi-annual survey conducted by the American Express OPEN Small Business Monitor, 60 percent of small business owners have cash flow concerns, with 20 percent of business owners reporting that the ability to pay bills on time is the most significant cash flow issue. The time between issuing and receiving payments from invoices can be an extremely long process, which can ultimately hurt businesses and keep them from paying their own vendors and suppliers on time. According to Experian s Business Benchmark Report, it was found that businesses with between one and four employees were an average of 8.2 days late paying their bills nearly a 15 percent increase from a year ago. Firms with five to nine employees were 7.6 days late, an increase of about 16 percent. The average for businesses of all sizes was 7.1 days. Efficient and faster billing processes can help ease many of these problems business owners face, and offering customers ways to pay their bills online, can simultaneously speed up the reconciliation process and improve a business s cash flow. In a world that is consumed with going online, more and more individuals and organizations are becoming comfortable with electronic payments, in particular with biller direct systems, which allow customers to pay off bills directly on a biller website. In a report conducted by Fiserv in 2010, it was reported that 40 percent of all households with Internet access use some form of online bill payment, that s about 36.4 million people. These numbers are continuing to grow year over year as payment preferences continue to shift toward electronic methods. It will become increasingly important to offer customers more electronic payment options to not only keep them happy, but to also allow faster payment of bills. Figure 1: Increase in Households Adopting Internet, Online Banking and Online Bill Payment Services
A comparison of payment methods over the years shows that the biller direct method is continually increasing. More and more customers are becoming comfortable with and willing to save time by accepting and paying for bills electronically via an online bill pay site. Figure 2: Increase in Biller Direct Payment Among Consumers Background This white paper will look at the advantages that exist for companies that want to offer an online bill pay system that is integrated with their financial accounting software, and how it can help improve the payment collection process and solve many of the cash flow concerns that face them.
Advantages of Offering Online Bill Payment Options to Customers The benefits of offering an online bill payment solution are plentiful and include: Faster Invoicing, Faster Payment - Reduces the waiting time of sending regular paper invoices and allows customers to payoff invoices right away through a single web-based portal. This in turn will speed up the reconciliation process, saving organizations from carrying overdue invoices from month-tomonth. Available Account Information 24/7 - Having the ability of customers to view their payment history and print invoices at their leisure directly from the website at any time improves overall customer service and reduces customer service calls. Lower Cost for Company and Customer - Companies can save considerable time and money by not having to print or mail invoices. Additionally, without paper usage, it helps conserve the environment. Confirmed Payment Messages - Once payments are received online, customers can receive automatic email payment confirmations saving check processing time. Recurring Payment Setup - Allow customers to easily setup recurring automated payments, which can save valuable time from manually having to pay. This also streamlines the credit card payments process, preventing costly banking errors and optimizing the Accounts Receivable process. Create Additional Brand Awareness and Invoice Customization - Having customers visit a website to pay off invoices allows the ability to cross-sell and upsell for future purchases. Customers can view promotions or new products while visiting the site. Companies can also personalize invoices with their own logo and color scheme to reinforce their branding. Affordable Cost of Moving Invoices Online - If an organization is already running a financial enterprise resource planning (ERP) system, they can easily connect to those invoices and move to a secure online portal with solutions like k-ecommerce Online Bill Pay Bundle designed to work with Microsoft Dynamics GP. Flexible Solution for All Types of Accounts - Whether it is a payment from an individual, small business or larger corporation, online payments can be accepted at all levels. Benefits of Integrating Enterprise Resource Planning Solutions with Online Bill Payment Systems If an organization is already running an enterprise resource planning system (ERP) that handles and automates much of a company s finances, inventory and accounting, extending this type of investment by incorporating an online payment solution is a cost-effective way of adding more functionality and improving overall customer service. Integrating online bill payment with a financial ERP system can also reduce a company s operational cost and empower customers to schedule recurring payments or log in monthly to check their payment history or change their payment methods. By connecting an online payment solution with an ERP system, any payments the customer makes online will automatically be applied to invoices and integrate real time with an ERP system. This gives much needed insight into accounts payable and the overall financial reporting.
Getting Customers to Switch to Online Bill Payment While many customers voluntarily opt-in to pay their bills online, there are many who choose not to. One way companies have successfully managed customers to switch is by implementing successful online bill payment awareness programs. To gain higher user adoption, many companies have had to incorporate messaging through a multi-faceted marketing approach to help reiterate the value of switching to paperless billing. A few ways this can be accomplished is through incorporating concise messaging throughout different customer contact points. One example would be reminding customers of the benefits of online billing on everything from email communications to the billing statements themselves. Reminding customers of the ease of using electronic bill payments is the most effective way to get customers that were on the fence to switch. The value of being able to setup recurring payments and being able to check account history at any time is a huge advantage in itself that would move a lot of people off traditional paper invoicing and onto a biller direct method. Incorporating labels and reminders, like the one below, on envelopes, invoices, and website banners are some common ways that companies have been able to remind customers of the benefits of switching over to paperless billing. Going green is a huge movement that many businesses and individuals are aligning themselves with. Javelin Strategy and Research reported that if every American household viewed and paid bills online, solid waste could be reduced in U.S. landfills by more than 800,000 tons a year and save an estimated 18.5 million trees a year. Furthermore, the Federal Reserve estimates that over 170 million pounds of greenhouse gases are used on printing checks and bills each year. With society becoming more conscious of the environment, stating how online bill payment can help the environment is another benefit that can help them make the switch. Conclusion As customers become more accustomed to paying their bills online and ditch writing the old fashioned paper check, companies will need to offer services that align with their customers preferences. Companies will also be able to gain greater financial insight by having all financial statements in one place. Companies that respond to these changes will better position themselves to reduce cost, collect payments faster and improve customer satisfaction.
About Distribution 20/20 Distribution 20/20 Brings Together a Suite of Solutions, Architected for Distribution Distribution 20/20 helps distributors improve responsiveness to rapidly changing customer demand by providing access to accurate, real-time data from across the supply chain, and build a highly agile business as the basis for competitive advantage, topline growth and cost reduction. About k-ecommerce k-ecommerce is dedicated to developing integrated ecommerce and epayment solutions for Microsoft Dynamics AX, GP, NAV and CRM as well as SAP Business One. We develop fully integrated B2B, B2C, Sales Portal and mobile-optimized ecommerce websites. Our solutions are quick and easy to deploy on premise or in our private, PCI Certified cloud. k-ecommerce also provides secure PA-DSS certified credit card/ach processing and an online bill pay portal.