There's been an explosion in the popularity of electronic invoicing. Where just a couple of years ago 95% of bills were paid by mail, now e-invoicing is one of the most popular business uses of the internet.
There have been predictions about the effects of a switch to paperless invoicing -- great savings in the use of natural resources, impressive reductions in waste -- and there have been plenty of reports on the immediate cost savings for businesses.These predictions and short-term benefits have been enough to drive more and more companies and consumers to choose electronic billing.
But now there's enough information to allow some speculations about the long-term effects of EIPP. Enough time has passed since significant numbers of offices began using electronic billing systems that some measurable results are in.
The news is good.
Recent studies have found that customer profitability increases with electronic billing. Comparing customers paying electronic invoices with those who paid by mail, the researchers determined that those who used EIPP were more profitable than those who did not.
Our immediate thought is that this is no surprise -- paper billing can cost three times as much as using SmartPay, so naturally the profit will increase.
However, we're talking about differences in profitability of 30-40% seen over dozens of companies. Only 1% of that increase in customer value was attributed to the savings. The rest of the improvement was about relationships.
What kind of relationship do you have with people who send you bills? You open the bill, write the check, and stick it in the mailbox. The most you could hope for in terms of an emotional response would be a moment of irritation as you search for a stamp.
Customers who pay their bills online, though, go and visit a website -- in the case of SmartPay, it's a customized secure online portal. The online visit involved in paying a bill electronically is apparently perceived as an interaction with the company, while mailing a check is not.
The researchers in these studies concluded that charging a fee for online payments -- a common practice in the past, and one which keeps people from choosing e-billing -- was not a wise approach. The increase in sales to customers brought about by the deepened relationship far outweighed the value of the fee. Since ebilling is actually a less expensive option than mailing bills, fees are unnecessary. But the knowledge that EIPP is associated with increased customer profitability ought to help remove those lingering hesitations that keep some businesses from making the move to electronic invoicing.