Bill The Way Your Clients Will Pay

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July 2, 2013 by Rick B

Outsourcing question marks

Any business that deals with receivables has exposure to bad debt. The amount of days spent in A/R is a common metric for measuring the success of your billing and payment processes. A/R days refers to how long, on average, it takes your customers to make good on their bill. A good A/R will vary by industry, as consumers prioritize the bills they can (or want to) pay. Consumers generally prioritize their bills in the following manner:

1) Housing (rent, mortgage, etc.)
2) Food
3) Utilities (electric, gas, water, etc.)
4) Secured Debt (vehicle payments, student loans, child support, etc.)
5) Unsecured Debt (credit cards, medical bills, lines of credit, etc.)

If your business falls into category 5, lookout, you are lowest priority to the general populous. Here is the question; how do you make your bill a priority to your consumers? A recent study conducted by Fiserv, a leading global provider of information management and electronic commerce systems for the financial services industry, has uncovered some interesting information. Here is a sample of their findings:

  • Mobile and E-Billing are being utilized more than ever before.
  • Consumers use multiple payment channels on an ongoing basis.
    59% of consumers use a billers direct site.
    59% of consumers write out checks.
    53% use auto-debit.
    38% utilize online banking bill-pay systems.

 

Consumers in the study indicated how important it is for billers to provide multiple payment options and many reported changing their preferred mode of payment month-to-month dependent on timing and availability of funds.
Take what you will from this data, but it seems to me that consumers need multiple options for making payments. The more options you can offer your customers, the more likely you are to be included when they pay their monthly bill.
Do you demand payment in full after 30 days? While you want to make sure your customers know you mean business when it comes to paying bills, it is important to work with people. The people in this country have become accustomed to financing almost everything. It’s not just the house payment or a car note; it’s the couch in the living room, new stove, or TV. If you’re having a tough time with consumers paying on time or at all, try a payment plan. You may not be getting all of the money right away, but if your customers’ sign up for a payment plan you will increase your odds of collecting the full balance, because they are used to paying bills monthly, not in lump sums. Sometimes, a lump sum can be overwhelming to a customer and since they can’t pay it all at once, many end up paying nothing. An agreed upon payment plan can end up as a win-win for everyone—you get the money owed to you and your customer has an affordable, doable, way of paying their bills.

Use your bills and payment options as a way of bolstering customer service, deepening the relationship you already have with your clients, all while improving your A/R.

The glass truly is half-full.

For more tips, check out http://www.unitedcreditservice.com

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