October 4, 2013 •Brian Watson
For something that pretty much boils down to ink-on-paper, statement processing, printing, and mailing can be a surprisingly complicated task.
There’s statement design to consider. Complex print software to be built. File transfer and verification standards to put in place. And that’s all before your job even gets to the production floor, where there’s all that printing, processing, and mailing stuff waiting to be squared away as well.
But you’re a biller, not a mailer. So why should the behind the scenes print and mail processes matter to you?
Simply put: knowledge is power. Statement processing is a critical part of the way deferred billing works. And the more you know about statement production, the better equipped you’ll be to improve the speed, effectiveness, and efficiency of your revenue cycle.
That’s why, in this blog post, I’ll be presenting the ins-and-outs of how the statement production process works.
It’s not everything you ever wanted to know about statement processing. That’s a pretty big claim that covers a wide-range of potential topics and far-out questions. So I won’t go that far.
But if you’re a billing neophyte looking to learn how a statement goes from legacy file to mail piece in 24-hours or less, you’re in the right place. The same goes if you’re an old pro that’s looking for a new spin on some tried and true statement processing techniques.
So read on for our version of statement processing 101: a seven-step guide to bill print and mail that just might help you speed revenue collection and cut billing costs.
Step 1: Statement Design
Good statements are building blocks of the most effective bill print-and-mail programs.
More than just ink-on-paper, effective statements inform in a glance, answer questions before they become service calls, and provide the instructions (and tools) that make it easy for your customers to make a balance payment. All of which helps accelerate receivables, grow cash flow, lower bad debt, and reduce collection costs.
Not surprisingly, poorly planned and executed statements have the opposite effect: stalling the revenue cycle and frustrating customers. And, unfortunately, not all statements are created equal.
For many billers, the default standard is still one-size fits all: no color, little branding, way too much information; what’s more or less a billing file printout with little respect for document readability or customer easy-of-use.
In addition to the financial damage caused by slow collections, that approach is counterintuitive for a couple of reasons.
One, for a lot of transactions, your billing will be the final interaction you’ll have with customers. So why risk alienating them at the last minute with a statement that’s confusing, or inaccurate, or hard to decipher? And two, recent advances in print technology have made it easy and affordable to provide customers with statements that are branded, personalized, and user-friendly. So there’s really no good excuse not to be sending out customer-friendly statements.
So what does a “good’ statement look like? Well, there’s no magic bullet. A lot will depend on your billing goals and customer expectations. But some of the tried-and-true statement design tools that continually resonate with customers include:
• A clean, simple payment stub that provides key billing information at a glance and features a large, easy-to-fill credit card payment form.
• An account summary call-out box that consolidates must-have customer account details (new/pending charges, what’s been paid, and the balance outstanding).
• An intuitive transaction detail that provides an itemized, in-depth breakdown of specific charges and payments.
• Easy-to-understand billing instructions and a list of the ways that customers can pay their outstanding balance.
• Use of common branded elements, including your full color logo and corporate color scheme, so that it’s easy for customers to identify your bill.
The Lesson: Study after study has proven the value of effective statements, continually linking customer-friendly billing with strong performance in key financial metrics like days in A/R and bad debt. So focus on creating statements that are clean, clear, and easy for your customers to understand and pay.
Step 2: Building a Print Program
Statement processing program are built using a specialized software application that manipulates the raw data in your legacy system file to create the statements that are produced and sent to customers.
The objective is to add value to source transaction data by re-formatting it in a way that ensures your billing correspondence is clear, concise, and easy for customers to understand and use.
Commonly called a print program, these applications essentially act as a Rosetta Stone for print production – communicating with the legacy file to identify what data will be used to populate the base statement and where that information will be positioned during printing.
In other words, they direct the action during data processing. Does your statement processing strategy incorporate encounter roll-ups for certain accounts? Use duplex printing? Suppress statements based upon A/R aging? Or present personalized statement information – say custom phone numbers or a targeted marketing message – to specific customers based upon demographic data or transaction history? If so, all that information comes from the print program.
Building detailed guidelines into a software application enables data processing, statement printing, and bill insertion to be a simple, turn-key process. There’s no need for on-the-fly instructions, because it’s all right there in the software.
The Lesson: The print program is how speed and efficiency are built into the statement production process, providing vendors with the tools they need to receive, format, produce, and mail a project all within the same business day.
Step 3: File Transfer
Now that the statement is designed and the print program built, it’s time to get down to brass-tacks: converting your source legacy file into a simple, user-friendly statement that keeps your bottom line awash in cash.
And that process begins with transfer of your legacy file – a simple enough task… that is if you make sure that you and your outsource billing partner are on the same page when it comes to encryption and delivery protocol.
Unprotected transfers, like sending a file as an attachment to an unencrypted email, are a major no-no. There’s likely a lot of sensitive information in your billing file – address data, account information, transaction details or HIPPA-protected treatment specifics – that customers would be none-too-happy about falling into the wrong hands or wildly disseminated online.
To guard against that risk, files should only be transferred using a secure web portal or FTP that’s company specific, password protected, and uses best-class encryption options, like PGP/GPG Encryption, SSL Transfer Encryption, or a Password-Protected Zip File Format.
The Lesson: When it comes to transferring sensitive information, simple is great, but protected is even better. Your statement processing partner should provide tools that make it easy for you staff to upload files, but that are also secure enough to fortify against potential intrusions or data leaks.
Step 4: File Approval and Archiving
File approval is a relatively new feature of best-class statement print and mail systems.
Until recently, once your file was uploaded and a quick record count completed to ensure file accuracy, it was immediately passed on to the production queue.
That’s good from an expediency standpoint. But it also can lead to costly, time-consuming, and potentially embarrassing print and mail snafus.
Those issues have led many statement processing vendors to add an extra layer of assessment and oversight to the production process, not just record counts and visual file inspection – but drill-down viewing and approval/suppression of each statement that will be printed and mailed during statement production.
It works like this: the file you uploaded in step three is processed using the print program described in step two. The resulting output is “printed” using a digital file creator that provides PDF digital images of each statement record in your billing file.
This image file is then passed back to authorized billing employees (usually via a secure, proprietary billing portal) where they can individually review each PDF billing image – flagging statements for suppression that are invalid or would be better served in an early-out or collections program, adding a custom message to an outgoing bill, or approving them as is for statement printing.
After the final print file is created, most statement processing companies will archive it for clients for a set period of time – usually somewhere between six months and a year – so that you can access it for compliance reasons or if billing questions arrive months after a statement was delivered
The Lesson: File approval and archiving provides an additional layer of oversight and protection against potential issues, ensuring that you’re sending the right statements to the right customers. Plus it provides another way to improve the quality of your statements – enabling critical variable bill messaging to be added last-minute.
Step 5: Postal Processing
Sure, you have customer name and address information in your billing file. But that doesn’t necessarily mean it’s up-to-date and accurate. And that can be a big problem when you rely on the USPS to deliver the billing statements that help fund your bottom line.
According to the U.S. Census Bureau, 14% of Americans change addresses each year; a steady stream of relocation that leads to over 40 million annual move updates being filed with the USPS.
To keep pace with the movement of your customers, it’s essential that you’re tapping into that data to ensure that your address info is accurate and in a send-ready format before it enters into the mailstream. If not? You run the risk of some serious revenue cycle damage: more return mail, slower receivables, and higher bad debt. In fact, address cleansing is required by the USPS to receive the bulk postal discounts that aggressively reduce print and mail costs.
Although there are several ways of cleansing your mail records – with varying degrees of cost and effectiveness – the most widespread (and useful) of the bunch is NCOALink from the USPS. NCOALink gives mailers electronic access to a database maintained by the USPS with information on the 40 million-plus annual move updates Americans file with it every year.
Prior to mailing, your list will undergo a move update analysis, where data in your billing file is verified against the NCOALink database. If any customer has submitted a Change of Address form with the USPS, this service will flag the record and provide updated information – which will then be automatically updated prior to mailing by your print program. And all updated records are sent back to you so that you can modify your customer database accordingly.
But postal processing involves more than address cleansing. There’s also mail preparation, a step that ensures statement delivery is fast and cost-effective. In order to lock-in the lowest postal rate available, best-class statement processing companies will use CASS (Coding Accuracy Support System) certification software to verify that each of your record’s address, city, state, and zip are in the format prescribed by the USPS to achieve a postal discount.
The Lesson: The best statement layout doesn’t make one bit of difference if your statements don’t actually, you know, get to your customers. And there’s too much at stake – including higher collection costs and slower receivables – to risk a list that isn’t cleansed thoroughly and certified for the lowest postal rate possible.
Step 6: Statement Printing
By now you should know that statement print and mail involves a lot more than toner, envelopes, and postage. But everything from design through pre-sorting leads up to this crucial step: when ink finally meets paper.
The key tool at the disposal of outsource billing vendors in the print arena is variable imaging.
Providers now make use of high-speed, full color variable laser printers that enable statement elements – everything from bill messaging to the entire statement – to be customized on-the-fly. This provides a major advantage over previous generations of printers, where creating a highly customized document required several passes through a printer and lots of employee attention.
Fast, flexible variable print technology makes it easy and affordable for billers to produce financial correspondence that’s branded, user-friendly, and very effective.
The Lesson: Variable, variable, variable. High-speed printers that can handle down-to-the-individual customization are a big part of the kind of statements that have a clear impact on revenue cycle speed and performance.
Step 7: Statement Mailing
Statement mailing is both the final step in the statement production process and really important to the success of deferred billers’ balance sheets.
Effective statement processing programs boil down to three things: your billing has to be accurate, it has to communicate quickly and easily with customers, and it has to, well, get there. Delivery might not get the same headlines as statement design, but make no mistake: it’s just as important to getting you paid quickly.
Statement mailing begins with envelope stuffing – specialized machines called inserters are used to input printed statements into outgoing double-window envelopes for delivery. It’s also an ideal time for mailers to determine delivery accuracy: most inserters now come with digital camera mounts that read a 2D barcode printed on each statement. If a statement is missing, out-of-order, or otherwise flawed, specialized software automatically halts insertion until the issue is resolved.
After stuffing, applying postage is the last step left in the production process. To reduce per-piece postage price, many mailers presort final statement output – sorting mail by ZIP code into lots that are headed to the same destination – during this step. The USPS considers this an example of billers doing part of the work involved in piece delivery for them. So they incentivize the practice by lowering the rates of all presorted mail.
If your statements are being presorted (and to help limit increasing postage rates, they really should be), that lower rate will be reflected in the postal indicia that will be metered onto each statement’s outgoing envelope prior to being dropped off at the nearest USPS Mail Processing and Distribution Center.
The Lesson: Even as something as simple as stuffing envelopes and applying postage requires an analytical touch. The technology that’s now used during mailing helps ensure your statements are accurate and delivered with as little cost to you as possible.
Want to go beyond what you've learned here? Download our free statement processing whitepaper – The Five Habits of Highly Effective Statement Processing Solutions.