November 12, 2012 •Brian Watson
It’s no secret that speed is a critical element of client billing and payment.
Prompt revenue collection provides all sorts of positive balance sheet outcomes – from lowering bad debt to supplying the cash to run day-to-day operations.
That’s why businesses of all shapes and sizes are more than happy to trade balance discounts in exchange for speedier payment.
While revenue outstanding can provide great peace-of-mind, it’s purely theoretical until actually on-hand. It could easily linger in A/R for months. Or, worse yet, become uncollectable bad debt.
Prompt payment, on the other hand, gets cash in the door. And that cash can be earmarked for important stuff that helps you run your business, like rewarding employees, paying vendors, and reinvesting in new technology or process improvements.
In short: two/ten, net thirty is more than an oft-used contract term; it’s a testament to the importance of the present-value of money to a business’ bottom line.
Smart Statement Processing, Fast Balance Payment
A well-performing revenue cycle has to be fast. If it lacks the proper pace it also lacks ideal effectiveness.
In essence, cash flow and days in A/R are at stake with every bill you deliver. And that’s where smart, fast statement processing practices can help accelerate payment. From fast production and delivery through automated pay channels that speed funds posting and reconciliation, customer statements are critical to consummate revenue cycle performance.
How do your statement processing practices stack up? Are they infused with speed at every turn? Or is the hard work of your financial team bogged down last-minute by slow statement processing and balance payment tools?
Let’s be honest: fast client billing isn’t rocket science. In fact, it’s pretty intuitive. It takes statements that get to customers quickly. Communicate with them succinctly. And leverage easy-to-use, automated payment channels.
But nailing the execution? That’s another story. That’s tough. That’s when statement printing and mailing roadblocks can rear their ugly little heads.
What are the billing breakdowns that slow statement delivery and balance payment? And how can you avoid them?
1). Confusing Statements. One of the most important components of fast payment has nothing to do with statement printing and mailing at all. Solid statement design is essential to a highly performing revenue cycle. It accelerates payment. It reduces costly calls to your service center. And it increases customer satisfaction with the billing process.
So how do you get there? With the four C’s of good statement design: clean, clear, colorful, and concise.
• Clean: Every element or word on your statement should perform a critical function. If it doesn’t, get rid of it. Clean statements establish a visual hierarchy and flow that makes it easy for customers to find important info.
• Clear: Key billing details – what’s owed, for what, and by when – should stand out at first glance. That’s the point of your billing, after all. Call-out account summaries, bold text, graphics, and bold color are good ways to emphasize the critical stuff.
• Colorful: Color captures attention and helps boost readability and response. Studies show that color can help improve readership by up to 40%. Use it for emphasis to enable quick scanning.
• Concise: Too much information is detrimental to statement effectiveness. Most people scan when they read. And tune out pages weighted down by too many words. So keep things simple and concise.
2). Slow Delivery. Fast billing hinges on execution at every point of the revenue cycle. What good is all the extra work your billing team puts into preparing a statement file if it’s destined to sit in the statement processing production queue for days?
Slow delivery adds days (or worse) to your A/R metrics. And reduces the amount of cash you have on hand to run your business. Considered on those terms, it’s every bit as harmful to revenue cycle speed as generic or confusing bills. Customers can still take action on poorly-designed statements. Late bills don’t even provide that opportunity.
That’s why your statement processing company should have a bulletproof delivery guarantee. To get our clients’ projects into the mailstream quickly, we process within one-business day of statement file receipt. But whatever the production terms, make sure to get the guarantee in writing. It sets expectations and helps you more accurately forecast A/R days.
Then ensure that your print and mail provider has a mechanism for proving delivery. For best practice vendors, that typically includes email confirmation when a file is received (complete with a file record count) and project processed. Plus a digital time stamp – an automatic image taken by equipment on the production floor that provides each job processed with a verifiable date and time signature.
3). Static Forms. All statement processing programs lean on variable, on-demand printing. It’s how statement file data is mapped onto each bill.
And now best-class processors are using it to speed statement production.
Instead of pre-printed, static forms, statement processing companies are begging to print all info variably on a blank sheet of paper. Why is it faster? Because there’s no pre-production setup necessary to process each job. No need to load printers with a specific paper stock for each company. And everything is done on the fly – reducing costs and speeding turnaround.
4). Bad Address Data. When it comes to revenue cycle speed, return mail is a killer.
In a best-case scenario, it takes extra time to account for return- and re-mailings. That harms A/R, reduces cash on-hand, and increases the likelihood of having an account go to collections or become bad debt.
Pre-mail tools are a must-have to reduce statement returns. Our statement print and mail platform uses a blended approach, including:
• NCOALink address clean-up
• CASS mailing list verification
• Intelligent Mail Barcode piece tracking
• Address Element Correction
5). Traditional Pay Channels Only. Don’t get me wrong - mail-in check payments, phone calls into your service center – these pay channels are really valuable. A majority of your customers still use them to pay their bill.
But the tide is slowly turning. Seventy-three percent of Internet-connected households paid at least one bill using the web in the last month according to the 2011 Fiserv Billing Household Study.
And that’s something you should welcome with open arms. Online billing and payment lowers materials costs. Provides automation that creates electronic efficiencies in many areas of the revenue cycle. And significantly speeds revenue collection.
Payments made online don’t need to be mailed in or processed by your service staff. They’re automatically posted into your bank account, cutting several days from self-pay A/R.
Revenue cycle speed is essential. But it doesn’t happen by accident. It takes purposeful action: strategies in everything from statement design to payment channel that accelerate customer payment. To learn more about how to do just that, download our free whitepaper The Five Habits of Highly Effective Statement Processing Solutions.
What strategies are you using to lower A/R Days?