E-Billing: the Most Overlooked Green Practice?
How can the average U.S. household save almost a tenth of a tree each year? By switching to electronic bills, statements, and payments, the average household saves 6.6 pounds of paper, avoids producing 171 pounds of greenhouse gas emissions, and saves .079 of a tree annually, reports the Pay It Green Alliance.
The hurdles to e-billing are dropping away as more businesses and consumers embrace the technology behind e-billing and see the timesaving benefits involved. The environmental arguments for e-billing are simple: less paper waste and lower greenhouse gas emissions.
E-billing equals business savings
"The marriage of electronic billing and corresponding electronic payment has a net positive reduction in time," explained George K. Roach, Systems Specialist at Con Edison. "We are saving the expenses related to paper allocation for the bill, as well as the billing and payment return envelopes we send to customers, along with bill inserts or other enclosed items. Electronic billing results in postage savings. Furthermore, the processing costs for electronic payments are lower than the costs for paper bills."
With over 3 million customers in New York City and Westchester County, energy giant Con Edison sends out a lot of bills. The company has been promoting its paperless billing option, e*bill, and enrolling rolling around 6,500 consumers a month, with 60,000 Con Edison customers enrolled in 2007 alone. Since starting its marketing campaign promoting green billing, Con Edison reports a 65 percent increase in e-billing activation and a 20 percent increase in online e-bill payments over the prior twelve months
Con Edison believes that e-billing is a "green" practice and is a member of the national Pay It Green Alliance. The Pay it Green Alliance, started in 2007, includes twenty leaders in the financial and consumer billing industries, including Bank of America, The Federal Reserve Banks and AT&T. The Electronic Payments Association (NACHA) leads the Alliance.
The Alliance works to educate consumers about the positive environmental impact of choosing e-bills over paper alternatives. Customers may use the Pay it Green Alliance consumer calculator found on their website to find out how much paper they could save by switching to e-billing and e-payments. Pay It Green also works with businesses to help them set up and market e-billing services.
Utilities and communication companies are actively pushing e-billing service. Comcast has offered some form of e-statements and e-billing for several years with the two billing systems they use. "Recent enhancements to those systems have enabled us to commonly brand and market the Ecobill offering, which we introduced in early summer 2008," said Patty Thorell, Vice President of Payment Processing for Comcast. "Ecobill provides a distinct communication of the benefits to suppressing paper statements to all customers."
Billtrust, headquartered in Jamesburg, N.J., helps companies migrate more of their customers to electronic billing. They report that companies that offer e-billing can reduce the cost of sending a bill by an impressive 70 percent via savings in material, postage and labor. Furthermore, Billtrust reports that customers are more satisfied receiving their bills electronically.
"We make it easy for companies to outsource the delivery of their billing documents," said Mitch Rose, Vice President of marketing for Billtrust. "Our system is designed to allow a business to send us their billing file in just about any format. Billtrust will create a bill design with an improved look and send it based on the preferences of the bill recipient. We help companies promote e-billing through messages that can be placed on the bills or via inserts."
Accounts payable departments can also achieve significant efficiencies by viewing and paying their bills online. The billing data can be downloaded right into their accounting system. "This saves time and minimizes the chance of data error that can occur with manual data entry," said Rose. "Significant savings are achieved in labor, processing and material costs associated with paying bills. To pay a bill, a company logs into a secure payment site, selects the bills they want to pay and schedules the payment."
Educating about E-billing
Are individual consumers buying into e-billing? Mitch Rose of Billtrust says the answer is a resounding yes. "According to the Tower Group, almost five billion payments will be made electronically in 2008," said Rose. "Consumers' acceptance of online payment as a safe and convenient method is driving this trend. One could go back to the mid-eighties where ATMs were in early stages of adoption. Today, many people never have to step foot into a bank. "
Comcast's Thorell added, "We've seen positive customer response as more customers are interested in managing their accounts online and reducing the amount of paper they receive in the mail. In addition, e-billing offers customers the convenience of being able to set up recurring payments to automatically pay their bills each month as well as the ability to access and check their account from any Internet connection. It's also more private and secure because there are no paper statements to dispose of."
E-billing can have a significant impact on your business, but it will only take off if you have internal and external plans in place to promote it.
• Create reasonable goals
Understand the legal and financial ramifications of e-billing. In the long term, your company can save time and resources, but it will take time, research, infrastructure upgrades, collaboration with e-bill providers, and employee education. Plan to sign up clients over months and years, not weeks.
• Educate Staff and Shareholders
Your employees need to know how e-billing will simplify their jobs. Less phone calls for your accounting department. Easier payment tracking for accounts receivable. Smarter credit decisions based on more accurate, up-to-the-minute information. With e-billing tied into companies' databases and Enterprise Resource Planning (ERP) systems, cash flow management becomes easier.
• Communicate the benefits to consumers and business customers
Let your clients know that seemingly little changes, like getting and paying bills electronically, can add up to a large positive benefit for the environment. Use your existing client communication channels, from bill stuffers to newspaper ads, to spread the word about your e-billing offerings.
• Embrace the environmental impacts of a paperless (or paper-light) office
Use less paper in your day-to-day activities. When you need a hard copy, buy non-virgin paper. Pay your bills electronically and use other companies' Interactive Web Response (IWR) systems. Not only will you file less, you can often create useful reports with the information found on other companies' IWR interfaces. Business is changing-a move to e-billing allows more flexibility for employees. An August 2008 survey by information technology provider Fiserv finds that for the second year in a row, more U.S. households are paying bills online with 63.1 million households paying bills over the internet. The number one barrier for consumers in the 2008 survey is a lack of understanding about how e-billing works. Concern about online security was only listed by 13 percent of respondents.
In fact, the NACHA reports that 85 percent of identity theft cases are from paper transactions like lost checkbooks and statements. The same secure networks that financial and governments use to send electronic ACH payments are used in business-to-business and business-to-consumer transactions.
A 2008 survey sponsored by Checkfree and conducted by Harris Interactive found that approximately 31 million U.S. households use online banking websites to pay their bills, 47.8 million households use bill websites, and 16 million households pay online using both billing and biller sites.
Fifty-one percent of those surveyed in the Harris poll said the environment was the number one reason why they use e-bills and online payments. Paper waste and clutter reduction were listed as the chief benefits of e-billing by 72 percent of respondents. Tree conservation and gas consumption were other reasons for using e-billing.
Further emphasizing the connection between e-billing and the environment, Con Edison has tied e-billing to an environmental incentive: For every customer who chooses paying utility bills online, Con Edison donates $1 to a local, non-profit tree planting fund to help the environment in New York.
What to Consider Before Making the E-Billing Leap
Technology upgrades and marketing are the major expenses for businesses that want to offer e-billing and e-payment. Making the conversion and getting the news out can be costly upfront. Website portals also have to be simple enough not to lose consumers. Having another password to remember can put people off. Perhaps that's why most e-billers are moving to email-based billing instead of websites that consumers must visit.
Businesses also have to make sure that NACHA and Federal Reserve rules and applicable privacy laws are followed. Using a third-party e-bill provider can help make sure all laws are correctly applied.
As more business clients demand e-bills and 24-hour online access to invoices, e-billing isn't going to be an option for business-to-business billing, but a necessity for working with companies. However, in the current economic downturn, it will be interesting to watch how e-billing evolves for business-to-consumer billing. Are consumers going to turn to e-billing even more as they try to save postage and gas money? Or are they going to instead shuffle their paper bills around on the kitchen table, wondering and worrying about which bills to pay first?
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