Although originally designed for use by large corporations with millions of clients, electronic billing is now available for those small businesses with only a few customers. Without a doubt, electronic billing is the most efficient way to let customers know about the payment due and the status of their accounts. The technology continues to evolve, making it easier and safer for small businesses to use. Now customers simply receive the invoice by email that can be paid by credit or debit card online. The effect is to make it cheaper and simpler for a small business to collect payment upfront and sell fewer items on credit. Ultimately, electronic billing helps to increase the quality of the company’s cash flow and in turn promotes its reputation as a consistent and enduring business.
In the past small businesses either had to bill manually or hire a billing service to send out paper bills that needed to be tracked and collected. Now small businesses can either bill electronically or collect cash when the order is made. With most online sales, goods are not shipped until payment or the ability to pay is verified.
Saving time and trouble is just a few of the many benefits of e-billing. Sending bills electronically reduces the need for paper, improves cash flow, protects the environment, and can even protect against fraud. Electronic bills require a username and password to be seen. Paper bills stolen from mailboxes can provide identity thieves with information about the account holder that can help defraud them.
A study commissioned by FISERV, a company that provides e-billing and payment services to financial institutions, suggests that electronic billing can improve customer relations, retention, and profitability. The 2008 analysis of 8 million telephone company accounts, demonstrated that those who received electronic bills were 12.5 percent more likely to be retained as customers, 35 percent more likely to pay their bills on time, and on average bought 20 percent more. Despite the noticeable benefits, smaller businesses haven’t embraced the technology to the degree that the large firms have. Lack of knowledge and experience with the technology, are the primary reasons, says Steve Roderick, founder and chief executive officer of Gotobilling.com, a provider of small business solutions that includes e-billing.
Roderick believes the paper billing could end as soon as five years from now in tandem with the end or near end of cash and checks to pay bills. “You’re going to pay your employees and vendors electronically, and you’ll get paid electronically,” he says.
The price for the service is cost efficient for even the smallest businesses. Smaller firms that require limited numbers of transactions can sign up for monthly fees that are as low as $10 a month. For larger firms, services offering an unlimited number of monthly bills should cost $35 or so monthly. Since all services are transacted online, there aren’t any software costs, a need to upgrade hardware, or for periodic software upgrades. These services are literally “plug and play” and can be implemented quickly without any significant setup fees.
In this day and age there is no longer need to conduct paper billing. This means that any small business can produce and deliver countless number of bills without the need of a receivable or billing clerk. Since the software can also track the status and age of invoices, the collection process is more efficient and less likely to show many unpaid bills due to billing mistakes. Since cost should not be an issue for most companies, it is almost compulsory that every small business find a suitable electronic billing service that is appropriate for the goods or services that they sell.
Since the inability to control billing and the collection process is a major impediment to producing a consistent earnings stream, electronic billing is a low cost solution that can help owners prove that their business is a consistent and enduring one. The ability to demonstrate stability is the first step in building market credibility and an improved market reputation.