Brian Mason has high hopes for what electronic billing can do for his Minneapolis, Minn.-based computer consultancy. He runs a tight operation, enlisting the aid of five subcontractors to keep his customer base of 50 small business clients and corporation satellite offices up and running. Mason's time is money -- $60 an hour to be exact, and anything he can do to reduce time spent on sending out and processing invoices is a boon.
"In the old days, I'd print an invoice, mail it out, they'd mail it back, then I'd stand in that horrible teller line at the bank." Mason says. "That was a pain."
"Now it's integrated so I can click a button from the invoice, and it goes via e-mail to the customer," he says. "Since I'm a computer consultant, naturally all my clients have e-mail. Many of them already use QuickBooks. Why should they be printing out invoices and sending them when they can click on the link?" But, to date, he's only convinced one of his customers to pay using electronic billing, and that took a lot of coaxing.
Mason is just discovering the problem that larger businesses using electronic bill presentment technology have struggled with for some time. According to a study by the Stamford, Conn.-based research firm, Gartner, approximately 8 million people use the technology, but only 2.5 million use it on a regular basis. The companies that have seen the greatest benefits from electronic billing are credit card and utility companies. With customers numbering in the hundreds of thousands and bills going out on a monthly basis, automating just a small percentage of their bill processing meant huge savings. Companies sending out smaller volumes of bills have not seen a return on their investment.
Payment and accounting system providers have begun targeting their products to small businesses. While these new solutions may be cheaper and require less time to implement, small businesses will want to consider whether any investment at this point is worth their while.
With ever-fluctuating subscription rolls, crunching the numbers in the circulation department at a daily newspaper can be a grim job. A majority of the San Antonio News Express' 370,000 subscribers are seasonal, signing up only for football season or to keep an eye on the Spurs' chances. For every $20 the paper charges for a four week subscription, it spends $5 to process each paper bill. When the opportunity arose to reduce those costs (each transaction costs 19 cents) and to provide its customers with additional services, the newspaper jumped at the chance.
The News Express is a fairly small paper, with only 1,200 employees. The staff at its sister paper in Houston handles its customer and billing databases. So it took more than a year working with e-billing service BillServ to implement the new system.
The News Express rolled out the electronic billing service to its customers this past October. So far, only 1,200 subscribers pay their bills on line, and of that number, only 104 receive their bills electronically. The newspaper hasn't seen much in the way of savings yet. According to Mike Meixner, special projects coordinator, the newspaper will begin to see savings as soon as adoption rates move into the 15 percent range.
"We're so far away from that, right now we're just trying to introduce it to people," he says. "San Antonio is not a big technology hub like Dallas or Houston. A lot of people don't understand it and don't trust it."
Meixner is working on a program to develop partnerships with the local cable provider and utility companies to try to make electronic billing more convenient for customers to use. Only the San Antonio Water System has signed on. "If we can get four or more billers to make it that much more convenient, then I think they'll just start jumping on," Meixner says. "But right now, there's not enough interest in it."
Where's the pay off?
"There's a lot of money to be saved if you get adoption," says Gartner's vice president of payment services, Avivah Litan. "It's much less expensive to distribute bills on the Web than to print them out, stuff them in an envelope, and mail them. It costs an average of $1 to produce a consumer invoice. That figure comes down to 50 cents on the Internet."
The problem lies in overcoming customers' attachment to paper. "Most find paper much easier -- they're still getting paper in the mail, they find the mail more reliable," she says. "Their checkbook is more secure, more private, more controllable. The only way around that is give them an incentive. You have to say, if you come on line, we'll give you a 10 percent discount, then they'll come."
Litan doubts the San Antonio News Express can generate more interest by creating a one-stop local billing shop. Convenience isn't the issue. One reason the phone utilities and credit card companies have attracted enough electronic billing users is because in addition to offering a convenient way to pay, they offer their customers a means of managing their accounts on a daily or weekly basis. And it's these types of bills, where people are actually compelled to track their credit limit or keep an eye on fraud. "But if you're talking about a newspaper bill or gardener bill, the mailbox is fine," Litan says.
As someone who's built a business helping customers tackle new technologies, Mason ascribes their reluctance to plain old fear. "I even have some people who back up their files to the Internet and they have no problems with that," he says. "It just happens when that word 'payment' comes into play."
Mason hopes to get 50 percent of his clients on board within the year, but knows it'll take a lot of hand holding. "It's just so much easier than the old way," he says. "I know we'll get there. You can lead a horse to water. Eventually they're all going to get thirsty and start drinking."
Cristina Gair is a New York-based freelance writer who covers business and technology. She sent her invoice via e-mail, but was paid by paper check.
Electronic Bill Presentation and Payment (EBPP) is starting to trickle down to smaller businesses with less-frequent billing needs. The following resources should help you decide if it's right for you.
BillServ consolidates consumer-billing information from multiple billers and delivers it to billing aggregators.
CheckFree is a billing aggregator.
Designed for small business users, CheckSpace.com offers an electronic payment service.
This company is offering e-billing application services.
Intuit's QuickBooks 2001 includes a feature that allows small businesses to send out invoices electronically and receive payments.
QuickBooks 2001 $149.95
QuickBooks Pro 2001 $249.95
The Electronic Payments Association
The Electronics Payments Association is a not-for-profit trade association that works to develop best practices and operating rules to improve the electronic payments system.