As mentioned in a previous post [here], the recent treasury consultation paper into billing is to be commended for exploring ways to keep the Australian billing landscape fair.
However, the paper also recognises several conflicting truths when it comes to paper vs digital billing. These confirm a concern of ours – that both billers and bill payers are still in a somewhat un-winnable situation, given the limitations of current options.
Next week’s post will explore the issues for bill payers, however below is an outline of the challenges facing billers.
The challenge of paper bills for billers
Paper billing is widely considered a higher-cost, environmentally unfriendly option for billers. This idea isn’t anything new.
As an example, the average print and postage cost for a biller issuing 650,000 bills per quarter is upward of $3.5m, before even considering overdue notices and other overheads. Costs to send paper bills have risen by 66 per cent in recent years due to dropping demand. Given the increasing digitisation of all manner of industries, the trend away from paper is also unlikely to reverse.
It will simply become untenable for businesses to keep footing a rising cost for something that is becoming increasingly less relevant – a fact we’re all mostly aware of. And given that businesses and councils have long used a cost mechanism to incentivise certain behaviour, it’s unsurprising this has been their tactic here.
To disallow this mechanism without providing an alternative method requires that the alternative is simply somehow inherently superior. The problem is…
The challenge of paperless bills for billers
Billers send bills for one specific reason: to receive timely payment. So, if paperless billing options don’t work for the bill payer, it doesn’t actually really matter how good they are for the biller.
As an example, the consultation paper espouses numerous benefits of digital billing for billers: it’s often considered a far simpler process, especially when factoring in automated reminder notices. It’s much lower-cost than paper. It’s obviously more environmentally friendly.
However, the current paperless solutions – i.e. email billing – merely imitates paper billing, except you’re looking at a PDF on a screen, instead of a piece of paper in your hand. Email bills are also regularly blocked by spam filters or lost in overflowing inboxes, and often don’t get paid for weeks. Bill payers complain that even when they see the bill, they are usually sent a month in advance, so they don’t want to pay them immediately anyway.
And what is late payments costing billers?
According to a Federal Government Department of Industry, Innovation and Science payments report, Australian SMEs lose access to a staggering $19 billion each year because of overdue payments. Some of this is never recovered. Some of it is at a huge cost of time and resources to the biller.
So even if it might seem better for businesses to send email bills – if it’s not better for bill payers, then it’s really not better for anyone.
Stay tuned for the next post on the challenges facing bill payers.