Promoting e-Invoicing to the Customer
Originally developed as an alternative viewing and delivery channel to the paper bill, the electronic invoice is rapidly becoming a mainstream application for business process management. From manufacturing and transportation to energy, business services, telecoms and even banking, organisations are looking to the e-invoice for quantum improvements in operational efficiency, cost containment, cash flow control, supply chain management, customer service and customer retention. While applauding its benefits, however, it must be recognised that creating a successful electronic invoicing and payment (EIP) service is not without its challenges.
In the rush to launch an EIP project, organisations can easily fall into the trap of concentrating all of their efforts on finding and developing the right technology infrastructure. While technology is, of course, critical to the project’s overall success, there are other elements that should be taken just as seriously – one of these being marketing and promotion. Enormous amounts of time and money can be invested to create a sophisticated, leading edge service but if the customer isn’t aware that it exists, or isn’t sufficiently convinced of its benefits, it can end up being an investment wasted.
Ideally, planning for the promotion of an EIP service to future subscribers should be an integral part of the project’s development cycle with sales and marketing carrying a vested interest in the project’s success. When the system finally goes live, there should already be a healthy build-up of internal anticipation and the momentum needed to make progress and early payback. What is the best way to spread the message to customers? There are various approaches and a mix of traditional and electronic methods is advocated.
Start with the obvious. Current paper invoices and envelopes can be used as communications medium for the new EIP service. In the same way, promotion on the corporate website and regular mailing/e-mailing campaigns should be sent out to highlight the benefits of switching to electronic invoicing, together with discount programmes and other incentives for early adopters. To highlight the importance of promotion within the overall EIP project it is key for invoicers to work with their technology providers and seek out industry best practices that can be repeated within their client base.
The first task in developing an EIP service is to identify the target market. Some invoicers make a strategic decision to focus on their largest business customers first, who are typically smaller in number but represent higher value. These customers may have been demanding EIP already or are most likely benefiting from existing intra-organisation EDI connections. Other invoicers choose to target their smaller business (SME) customers first. Typically the business market requires more sophisticated functionality but offers a higher return and potentially new revenue streams for business support applications while the SME market involves a more basic service but higher subscriber volumes and possible alternative payment options.
Creating a service that is popular within the customer base means knowing those customers and finding out which aspects of an electronic invoicing service they would use – always keeping in mind that one size doesn’t fit all. Of the different customer segments, they all have different expectations, degrees of Internet literacy and comfort levels with electronic payment channels. Some customers just want to be able to view their invoice via the web or e-mail and occasionally query a line item. Others want a host of accounting support functionality and ERP integration built into the service. Some users need a lot of ‘hand-holding’ while others will simply want e-care tools to enable them to look after themselves online.
The best EIP environments don’t happen in a vacuum, they unfold in the light of customer feedback and are driven by a continuous focus on service enhancement. Take the case of one of Southern Europe’s leading mobile operators that runs one of the most successful business-to-business e-invoicing services in its country. Even before the project was specified, this telecommunications provider canvassed its corporate customers to see what they wanted and then designed the service accordingly. Some of the items on their wish lists were multiple format data downloading, analysis, advanced reporting and cost centre segmentation. Not surprisingly, since going live in December 2002, the service has proven to be extremely popular and a model for other B2B e-invoicing sites in the same industry sector.
It’s also important to think incrementally, which means rolling out the service in phases to various customer segments in order to pre-test and remove any usability issues along the way. A common practice in financial services statements and high-volume billing, the use of pilot phases and customer segmentation into distinct customer test groups can often be overlooked by invoicers in general. One reason for this could be the breadth of customer types in certain invoicing industries, another the lack of frequency of invoicing compared to corporate billing. More often than not, the services that go on to win industry awards for look and feel, simplicity of navigation and ease of use are closely linked to defined customer contact at the pilot phase and full involvement of customer service/account management in the communications process with customers and general promotion of the new service.
Having successfully launched your service, the next challenge is to convince customers that it is now time to turn off paper. Suppressing paper is clearly an imperative from the invoicer’s point of view, considering the high cost of paper processing and especially the high cost of reprinting. Organisations considering offering both electronic and paper channels as an early phase incentive to boost adoption should be aware that some customers will be happy to sign up for EIP but still expect to receive their paper invoices as a form of backup, unless otherwise persuaded not to. In which case, offering clear education as to the organisational benefits of going ‘electronic-only’ can be an effective incentive.
For corporate customers, some of whom routinely handle hundred or even thousand-page invoices, the paperless environment offers its own inducements, especially in the area of efficiencies within the accounts payable (AP) department, streamlining operations and saving many man-hours of manual labour each month – especially if their invoicers can assure customers that historical invoices will be safely archived and can be furnished on demand.
Invoicers also need to factor in the extra demands that will be placed on the customer service help desk and individual account managers once the system has gone live – typically for a period of three or four months while new users move up the learning curve. In fact, planning for this extra traffic is a key ingredient in achieving successful customer adoption. Service reps and account managers need to be responsive in helping customers to resolve any difficulties quickly and are key to the smooth running of a successful e-invoicing service. Part of the service’s roll-out programme might involve online demonstrations, training webinars or CD demos. Having successfully attracted a user, continued communication ensures that the features and benefits of the service are made clear – and reinforced throughout the lifetime of interaction. A web-based invoice is essentially just a replica of a paper one, but it has the potential to offer customers many value-adds such as being able to download data into internal accounting packages and spreadsheets and at the corporate level directly into ERP and accounts payable processes. Online invoicing also allows the right users to quickly determine the how, when or why of any particular charge.
In the case of corporate customers, the invoicer needs to work with their accounting departments to help the migration to the new electronic invoicing environment. This may include the development of a new automated accounts payable (AP) workflow to support tasks such as reconciling invoices against purchase orders, dispute handling and distributing invoices (or parts of invoices) to different departments for payment authorisation, query resolution and associated sign-offs. As with any new technology-based change in business process, adoption will depend on having dedicated champions working with invoice recipients to manage the project from the inside and educate end users.
At this point, it’s worth taking a moment to focus on the benefits that e-invoicing can bring to business, since these benefits are driving much of today’s growth in the EIP market globally. By web-enabling the invoicing and payments process, an end-to-end straight-through platform can be created between the accounting departments of suppliers and their customers and trading partners, or between different business units within a corporation, thereby extending the reach of the electronic enterprise and streamlining the information flow – on a local, national and multinational basis. As businesses become more and more dependent on the Internet for day-to-day business, as services evolve, standards emerge and online banking matures, e-invoicing growth is finally set to meet the potential forecast back in the days of the Internet bubble.
Consider a typical manufacturing or transportation and logistics company. Previously accounts payable staff would have to wade through hundreds – sometimes thousands – of invoices a day, reconciling each against purchase orders, shipping documents and delivery notes. Everything needed to be cross-referenced and correlated, and an invoice might have multiple constituent parts. A single $1m invoice, for example, might involve the delivery of goods across multiple different offices, cost centres or geographies. In a paper environment this document would have been copied or scanned and then faxed or e-mailed to different locations. The permutations escalate when considering an environment like corporate travel where central accounting might receive hundreds of hotel invoices a day for business travellers, which then must be reconciled and checked with staff who are scattered across the country.
When it comes to sending out invoices (the accounts receivable process), it is not uncommon for organisations to have to re-issue tens of thousands of invoices every month to customers who claim to have not received them at first issue. Industry examples show that 10 per cent or more of invoices can typically be treated in this way. Previously, the follow-up procedure would involve reprinting (often manually), faxing or e-mailing and very often with costly follow-ups to check that re-issued invoices had been received. In one example, a reprint and redistribution process which used to take 15 minutes for each invoice has been shortened to two minutes per invoice by going electronic and taking advantage of the process efficiencies that this channel offers. Overall, just in this particular task, the company in question estimates it has been able to reduce its accounting overheads by two full-time staff who have been redeployed to other areas of the business.
Web-enabling the electronic invoice involves one set of technical competencies, but setting up the e-payment component involves another and is not usually within the scope of an invoicer’s expertise. The e-payment process can be more or less complex depending on whether payments are likely to involve such things as multiple currencies and geographies, batch bank transfers, real-time card authorisations, settling and reconciliations. Enter the payment partner. The best option is to team up with an organisation that specialises in payment applications, typically a bank or credit card clearing organisation. This third-party financial service provider is transparent to the payee, allowing the invoicer to retain all branding, but should be able to handle all of the complex bank transfers, direct debits or credit card payments. Payment partners should also be able to provide the level and scope of reporting and business intelligence required to assist invoicers with their business planning and cash flow forecasting needs.
Of course, not everyone has the time or budget to develop their own electronic billing or invoicing service. In fact, even those who do have the budget often decide there are advantages to outsourcing the development and running of their EIP environment. Invoicers may decide they can get to market more quickly by using an external skill set, or they may want to test the waters before making a major investment. Or they may feel they can reach a wider audience and get greater customer traction by signing up with a central e-invoicing service provider who can present their invoices as well as provide a service to match inbound invoices with purchase orders. This type of service is becoming increasingly popular as it is convenient for the payer and cost-effective for the invoicer. Traditionally EIP outsourcers were those focusing on just one side of the EIP chain – either accounts receivable or accounts payable automation. Increasingly, it is now the banks and payment clearing centres who are taking up the mantle of central e-invoicing service provider, developing e-invoicing services to complement their payment and online banking offerings.
Within the scope of this article we have only been able to touch on a few of the aspects of the rapidly evolving e-invoicing and payments industry. Hopefully, it has provided some insights into what can make a project either fly or fail, as well as highlighting some of the corporate-end benefits that are driving EIP forward at an ever-increasing pace.