Making the bill pay

Steve Wright, CheckFree i-solutions International, Berks, UK

For energy providers, billing is no longer a routine back office task, but a major marketing, customer services and revenue generating application in its own right. E-billing can help utilities to combine these functions.

Since electricity market deregulation, tariff and discount structures have become more complex and customer relationship management (CRM), which is driven by data collected from sources such as the customer bill, has become a competitive differentiator. Add to this the internet as today’s favourite electronic information delivery mechanism, and it is no surprise that electronic bill presentment (EBP) is now one of the hottest technologies in the utilities industry. This is especially true as today’s economic climate is forcing companies to prioritize revenue management ” an area where EBP is delivering a host of benefits from process streamlining the customer retention to new revenue streams.

Revenue management includes a broad range of considerations that encompass operational efficiencies, customer relationship management (CRM) and the optimization of sales and marketing opportunities. No longer is revenue management measured simply in terms of a company’s sales pipeline ” it’s now acknowledged to be very much a matter of margin ” that is, the margin between costs and revenue, which is what determines the profit. In addition to revenue, margin management involves the reduction of overheads, retention of high-value customers and the streamlining of invoice presentment and payment processes in order to ensure speedier a cash flow. Behind all of this sits the driving power of EBP.

E-revenue streams

When looking at new sales and marketing channels, it is frequently overlooked that the routine bill is potentially one of the most potent vehicles for regular customer communications, information gathering and personalized marketing. When made available electronically, a static invoice can be transformed into a dynamic, interactive sales tool. EBP enables customer data to be quickly harnessed for targeted campaigns and can include an interactive response mechanism. This immediacy of customer response, and the ability to download data and generate reports electronically enables revenue growth to be assessed in virtual real time, rather waiting until the end of the month or quarter.

Since deregulation, utility providers are offering a growing range of diversified services such as power, gas and financial services, which exponentially increases the opportunities for cross-selling and up-selling. Traditionally, variations in the billing structures for different services have complicated the billing process. However, these very differences can be turned to advantage. Take the Hawaiian Energy Company (HEKO), which use CheckFree I-Series EBP and direct marketing software.

HEKO has over 20 different billing formats for its various services and types of customers and has taken advantage of these differences to create individually targeted sales messages to exploit multiple cross-selling opportunities. In terms of opportunity costs, it is interesting to measure the difference between a sales message on a web-presented bill with an online response mechanism, with the cost of a paper-based mail campaign and telesales follow-up.

Any method that encourages customers to pay bills faster is beneficial to revenue management strategy
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For most organizations, existing customers account for the lion’s share of their ongoing revenue ” a fact which makes customer retention a critical part of smart revenue management strategy. Whether it is a complex multi-page statement for a Business-to-Business (B2B) customer or a consumer bill, EBP provides important customer self-care features such as line item analysis and bill query information that takes the pressure off customer service centres and so reduces the cost of customer management.

Business process

Finding ways to generate new revenue is one part of the revenue management equation, but ensuring prompt payment is another ” and is at least as important. Here the billing process plays a key role, both in the back office and at the customer-facing end. Billing systems must be able to rate and bill accurately (not as simple as it sounds). At the front end, prompt and user-friendly presentation is vital if a healthy cash flow is to be maintained. An unacceptably high percentage of bills get held up in procedures on the other.customers’ ‘pending’ trays due to disputes and queries on the one hand, and inefficient payment approval procedures on the other.

A recent Gartner reports states that the average time it takes to collect offline business payments exceeds 40 days, due to manual review and approval procedures. The same study indicates that by enabling customers to view and query line items online, billers can reduce the cost of resolving a billing dispute by 50 per cent.

One of the great strengths of electronic billing is the business process support tools (BPRS) that can be provided to high-value customers either as a value added service, or marketed as an additional revenue stream. BPRS, as pioneered by CheckFree, provides a host of customer self-care tools and payment workflow features that not only provide churn-reducing customer support, but ensures a speedy payment process. Supporting the payments workflow prevents invoices from languishing at the bottom of the accounts payable pile, cuts down on costly collection calls (not just in terms of staff time, but also in terms of the customer relationship) and enhances a biller’s cash management position.

Electronic bill presentment can help utilities to create a positive customer experience
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One of the blockages that can occur in the presentment to payment flow is due to differences in billers and customers’ accounting environments. Because BPRS is rules-based and therefore readily customisable, the workflow process can be configured to mirror a customer’s existing organizational hierarchy. For example, individual user profiles can be set up to establish the actions that each person is authorized to make ” such as viewing only, acceptance, dispute or approval of line items, together with an individual’s budgetary limitations.

This end-to-end support process begins with a proactive email letting the customer know that an invoice has just been issued. Each step of the invoice review, analysis and approvals routing can be handled electronically, eliminating the need for photocopying or faxing invoices to multiple parties. Instead, they can just forward the invoice electronically, facilitating and speeding approvals. Everyone involved in the process can simultaneously evaluate relevant sections of the invoice and take appropriate action, whether it is an approval, dispute or sending on to another signatory. If an item is in dispute then customers can adjust totals online and choose a reason for the dispute from a drop-down menu and add additional notes and comments.

Sharing all this information between those involved in the payment approvals process eliminates interdepartmental communications gaps that can result in invoices getting sidelined whilst awaiting review.

Site bill paying

Any method that encourages customers to pay bills faster is beneficial to revenue management strategy. One such approach, emerging heavily in the B2C sector, is e-bill consolidation, a service that brings together onto a single web site (typically via an online banking or e-post portal), a collection of major bills such as those from telephone, gas, electricity, water, insurance, financial service, retail and credit card operators ” which can then be viewed and paid at a single sitting. This is not to be confused with consolidated billing, a process whereby all of the services offered by a single provider are rationalized into one master customer account and presented on a single statement.

For the payer, bill consolidation provides the twin benefits of convenience and enhanced financial control. Running balances can be checked across all of one’s bills, transactions and expenditures can be queried and payments allocated in a matter of minutes, from a single logon. For the biller, this convenience means happier customers and the potential for a speedier cash flow, depending on the payment types offered. Responding to the increased pressures from both B2B and B2C payers in high-internet usage countries like Iceland, Norway and Sweden, bill consolidators like Netskil (who presents bills for the country’s main utilities companies), Norway’s EDB Teamco, Billbyclick and the Swedish Post Office, have been signing up dozens of new billers in the past year alone.

When all aspects of EBP are considered, perhaps the most compelling argument in its favour is its ability to create a positive customer experience. Because as every utility biller knows, a satisfied customer is a loyal customer.

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