When you work in a home office, you tend to notice things that are out of pattern -- like when the mail doesn't get delivered on a weekday holiday such as today's Martin Luther King Day.
As you probably know, no mail delivery may become the norm on Saturdays, as part of cost-cutting measures being consider to save the U.S. Postal Service. Which is why small businesses probably should be evaluating measures for managing their billing process online.
One business that focuses on this sort of operational consideration is Bill.com, a cloud services company that just closed $15.5 million in Series D financing in December 2011. The new funding brings Bill.com's total raised so far to $40 million. Here's what one of the investors, Steve Piaker, managing director of Financial Partners Fund, had to say about his organization's investment:
"I've worked closely with numerous financial services companies, and I believe that what Bill.com has built over the past five years is game changing. Bill.com is helping businesses of all sizes make the transition from time consuming and erroneous paper-based financial systems to a cloud-based system that delivers up to 50 percent gains in time and cost savings. Compared to consumers, businesses have been far slower to adopt this type of technology based on the shortcomings of available tools."
Actually, some larger companies -- especially those with recurring services such as telecommunications carriers -- have been making a lot of noise about the money saved and productivity improvements they have seen by moving to electronic billing. Not to mention the implicit benefits for the environment in paper saved. One example is how Sprint is teaming up with the Doxo bill management service, a move that quickly saved 2.4 million pounds of paper annually.
That's all nice and good, but the benefits of online billing for small businesses are centered on these three things:
- Saving money related to printing and mailing
- Improving cash flow
- Addressing security and fraud concerns
Bill.com CEO and founder Rene Lacerte estimated that approximately 80 percent of all billing is still done through paper mail, with up to $35 billion spent on printing and postage. When everything is said and done businesses could spend close to $38 processing each bill. While that is an average that certainly will vary from business to business, the value proposition of Bill.com and online billing services in general lies in helping reduce some of those hard costs while simultaneously speeding up the billing process, Lacerte said.
"When you think about all those numbers, this is a huge cost to the economy," he said.
And if/when Saturday deliveries are suspended, billing cycles for small businesses could get even longer.
Bill.com's Lacerte also pitches the fact that check fraud remains the most common form of financial fraud, with approximately one in three businesses affected every year. For those small-business owners concerned about the potential security risks of online billing systems, that is a serious consideration -- especially since the risk of computer-generated fraud while highly publicized is actually much lower, according to Lacerte.
Bill.com carries a subscription fee, depending on whether your business is using it for accounts receivable, accounts payable or both. You can still offer a hybrid billing option to your customers, although it will cost your business more per-transaction to send out paper bills than it will for them to be handled electronically, Lacerte said. That's important because fax documents are still a huge part of the business to business bill process, he noted. "You have to create bridges between the two," he said.
In fact, Bill.com has made a concerted effort to ensure that its service integrates tightly with a number of the most widely used financial and accounting applications for small businesses, including QuickBooks, Sage Peachtree, Intacct Ready, NetSuite and others.
Mind you, all is not a bed of roses when it comes to the online billing world. There has been some customer service backlass surrounding the concept: most recently, Verizon Wireless was embarrassed after a decision to charge a service fee for one-time payments accepted online backfired. But to ignore the potential impact of online billing for your small business -- especially given the uncertain fate of the U.S. Postal Service -- would be short-sighted indeed.