Companies need to be as efficient as possible to succeed in today’s competitivebusiness environment. E-billing can direct them toward that goal by replacing thecumbersome, error-prone process of manually sending customer invoices and processing inboundpayments with one system that does it all, often automatically. Among e-billing’s manybenefits, companies can trim their expenses and improve cash flow.
What Is E-Billing (Electronic Billing)?
E-billing is a paperless approach to sending invoices and processing customer payments viathe internet. E-billing is made possible by an electronicbilling system or accounting software with embedded capabilities in their core systems thatgenerates and sends bills to customers, accepts payments and tracks related data. Among itsbenefits: E-billing can increase invoice accuracy, accelerate the billing process andimprove cash flow.
What’s an e-bill (electronic bill)?
E-bills are electronically generated and delivered invoices requesting payment for productsor services rendered. They replace paper invoices created manually and sent via the U.S.Postal Service. E-bills typically contain the amount due, payment terms, a purchase ordernumber and a link to a secure payment portal, where customers can pay their bills onlineusing a credit or debit card, PayPal, ACH transfer or other payment method.
What’s an e-billing system?
An electronic billing system integrates several types of software that are involved in thebilling and payments process. However, e-billing does not necessarily require an electronicbilling system — ERP systems can provide functionality as well. The system requires anonline interface to communicate between a company’s billing system and its banks, andbetween the company’s customers and their banks or bill-paying systems.
E-billing vs. e-invoicing.
E-billing and e-invoicing are often used interchangeably, but e-invoicing is actually justone piece of e-billing. E-invoicing refers to theelectronic delivery of an invoice or bill to a customer for products sold or servicesrendered.
Key Takeaways
- E-billing enables a business to invoice clients and receive payments electronically.
- Among the benefits of e-billing are improved invoice accuracy, an accelerated billingprocess and better cash flow.
- It’s often more convenient for customers and may engender greater loyalty.
- E-billing can include automatic subscription renewals or automatic payment reminders.
E-Billing Explained
E-billing is a process used by accounts receivable staff to invoice customers and receivepayments electronically. Customers can access their e-bills on the company’s website,or the e-bill can be delivered via an email attached with an electronic document, such as aPDF or XML file. In either scenario, customers have the ability to examine their billsonline before making a payment.
But e-billing does more than streamline invoicing and payment. For example, e-billing canhelp a company better. E-billing reporting also provides stakeholders with the financialinsight necessary for forecasting and deciding whether to engage in invoice financing orinvoice factoring should cash flow look to be in jeopardy.
Most companies use one of two types of e-billing payment systems: biller direct or bankaggregator. In biller-direct e-billing, a customer logs onto a company’s websiteto view and pay its bills by entering their bank or credit card information. Inbank-aggregator e-billing, a customer logs onto their bank’s website for their e-billsand pays using the bank’s payment interface.
Self-Billing in Electronic Billing
Self-billing is a process where the buyer of a good or service prepares the invoice on behalfof the seller and sends a copy to the seller for their records. This system is establishedunder a prior agreement between the buyer and seller, stipulating that the buyer will beresponsible for producing the transaction invoices.
Key Characteristics of Self-Billing:
- Agreement Basis: Self-billing can only be initiated once the buyer andseller mutually agree to this system. Typically, a formal agreement is in place,specifying the terms and duration of the self-billing arrangement.
- Accuracy and Validation: The onus of ensuring the accuracy of theinvoice rests with the buyer. They must ensure that the invoice accurately reflects thegoods received or services rendered and aligns with the purchase order or contract.
- Consistency: For transparency and uniformity, the self-billing invoicesgenerated should adhere to the standard invoicing requirements, comprising all relevantdetails such as the date, invoice number, product/service details, amounts, taxes, etc.
- Audit and Verification: While the buyer generates the invoice, theseller retains the right to verify and audit the invoice. In case of discrepancies, theseller can raise disputes or concerns.
- Payment Process: The payment process remains the same as traditionalbilling. Once the self-billed invoice is generated and agreed upon, the buyer processesthe payment based on the agreed-upon terms.
- Regulatory Considerations: Self-billing must comply with local tax andregulatory requirements. In some jurisdictions, tax authorities may have specificregulations or guidelines governing the practice of self-billing.
How Does E-Billing Work?
An e-billing system eliminates time-consuming manual invoicing and payment processing. Thefollowing breaks down the array of steps involved.
- Information gathering: The system collects the customer’s billingdata from accounting or ERP software, including theprice of the product or service provided, date of purchase and payment terms.
- Bill generation: The data is poured into a bill template, and then thebill is generated.
- Bill delivery: The bill is sent to the customer electronically byemail, via a secure Web portal or through another form of file transfer. The customerreceives notification that the e-bill is available.
- Bill reminders: The system sends electronic reminders to the customerif they have not opened their bill, their payment date is nearing or they missed apayment.
- Bill payment: E-bills often include a link to an online portal wherecustomers can enter bank or credit card information and authorize bill payment.
What’s Included in an E-Bill?
Any information that appears on a traditional printed invoice will be on an e-bill. Thatincludes the date the bill was issued, the amount owed, the date payment is due, the goodsor services that were provided and payment terms. An e-bill often contains a clickable linkto a payment portal, where the customer can pay electronically using their bank account orcredit card information. E-bills make payment easier and more convenient for customers,which in turn may result in faster payment and increased customer satisfaction. To wit, 69%of more than 3,000 U.S. consumers surveyed by Fiserv in 2021 about their billing preferencessaid receiving e-bills increases their satisfaction with the billing company, and 36% saidit makes them less likely to switch to a competitor.
What Is an Electronic Billing System?
An Electronic Billing System is a digital platform or solution that facilitates theelectronic generation, dispatch, and tracking of bills or invoices, eliminating the need fortraditional paper-based billing methods. Employing technology to simplify, streamline, andenhance the accuracy of the billing process, it plays a pivotal role in modern financial andtransactional operations across various sectors.
Top E-Billing Benefits
E-billing is a win-win for both companies and customers. Here are many ways both partiesbenefit.
Enhanced visibility: E-billing provides businesses and customerswith a fast, simple way to see. Customers can be automatically reminded aboutunopened e-bills or upcoming or past due payments.
For example, a company can review reports from its e-billing system that trackmonthly e-bills and identify which customers are paying on time or are late. It cancombine sales, marketing and other operational data with historical billinginformation to help decide which products to keep in stock. It may also use thisdata to determine which clients they’d work with again or what pricing termsto offer to those who pay on time versus those who don’t.
Speedier payments: No doubt, e-billing is far faster than thetraditional paper-based billing process, which requires invoices to be printed,stuffed in stamped envelopes and sent by regular mail. Two weeks can easily passfrom the time it takes for the bill to arrive at its destination (assuming it does)and then be opened, paid and mailed back. Another assumption is that the bill willbe paid on time and won’t require the company to issue additional bills.
E-billing shrinks the time between when a bill is generated and when it’s paid,sometimes to one day. Consider the example of a utility company that automaticallysends a monthly e-bill to customers who have payments automatically withdrawn fromtheir bank accounts. E-billing can also be used for subscription renewals, such asfor a digital news media site. The bigger point: The less friction in the invoiceand payment process, the quicker a company gets paid, which can improve its cash flow metricsand key performance indicators.
Greater accuracy: When processed manually, billing is more prone todata-entry and mathematical errors; at times it can result in duplicate billing orthe need to reissue invoices that originally contained mistakes. What’s more,manual billing can open the door to invoice fraud and theft. Software-generatede-billing can help cut down on or eliminate thoseissues, as well as shorten time spent on investigating problems.
Reduced expenses: E-billing eliminates the costs associated withprinting, stuffing and mailing paper invoices. It also decreases the number ofpeople needed to process and track payments, which also cuts costs. Instead ofspending time on monotonous, repetitive activities related to billing, skilledemployees can focus on more strategic, value-creating tasks. An e-billing systemthat scales as a business grows may obviate the need to hire more employees.
Improved customer relationships: Customers are likely to havegreater trust in businesses that offer e-billingbecause every charge is displayed and all historical payment data is easilyavailable. Customers may also appreciate payment reminders that help them avoid latepayment fees, or resubscription reminders so they don’t face a gap in service.
More efficient collections: Automated reminders that payments arenear-due can reduce a company’s need to chase after customers to collectwhat’s owed. Companies can also track which customers frequently pay late andcould increase credit risk. As with the preceding point, improved collections canhelp keep a company’s cash flowing.
More flexibility: E-bills can be sent wherever customers would likethem delivered. This flexibility, plus the ability to make payments electronically,has taken on added importance as more businesses operate remotely.
Hipper and greener: E-billing requires less energy and resourcesthan a paper bill — think: paper, printer, ink, outgoing and return envelopesand postage. E-billing benefits the environment, and environmentally consciouscustomers will appreciate it.
Who Uses E-Billing?
A variety of business functions rely on an e-billing system to improve their performance.They include:
- Bookkeeping: E-billing provides the accounting department with detailedvisibility into the status of the company’s bills outstanding and paymentsreceived. E-billing helps them balance and reconcile the books, more accurately forecastcash flow and improve working capital by reducing days salesoutstanding, which is the average number of days it takes to collect paymentsfrom customers after the completion of a sale.
- Accounts receivable: A company’s accounts receivable(AR) team, which is typically part of the accounting department, uses e-billing.AR is responsible for invoicing the company’s customers for their purchases ofgoods and services and receiving their payments.
- Customer service: If a customer calls the company or initiates anonline chat with a billing or payment question, a customer service rep can refer to thee-billing system to assist them.
E-Billing and AP Automation
Accounts payable automation technology, or AP automation, handles the tasks associated withe-billing. The process begins when a company receives a bill, either electronic or paper,from a supplier; a paper bill is converted to a digital format using optical characterrecognition (OCR). AP automation performs three-waymatching, which makes sure the invoice’s details are the same as on itscorresponding purchase order and delivery receipt. If they match, the e-bill isautomatically routed to the correct person for approval, after which payment is issued. Someconsider AP automation “touchless” processing because it minimizes the need forerror-prone manual data entry.
Like e-billing, AP automation speeds bill payment, reduces the cost of storing paper records,provides an auditable digital trail and frees accounting staff for higher value tasks.Companies that pay their bills more quickly and reliably may earn a better reputation withtheir suppliers and receive more favorable financing terms.
Embrace Billing With NetSuite
NetSuite SuiteBilling, helps companies automate andstreamline the billing process. SuiteBilling can create and issue invoices that include alink to where customers can pay electronically, and it keeps track of past-due accounts.This information can be shared throughout a company to inform financial forecasting, improvecash flow and keep errors and costs to a minimum. In addition, SuiteBilling can manageservice subscriptions and prevent revenue leakage by sending out automated renewals. Thesoftware offers the flexibility of multiple pricing models and billing schedules. Also ofnote, SuiteBilling gives subscribers access to an account portal to manage their accountinformation, view their order history and, of course, pay their e-bills.
Setting up an efficient and accurate e-billing system helps a business keep costs low andcustomers happy. Digitizing everything from invoice creation to payment processing canincrease the odds that businesses will be paid on time and in full by their customers.
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E-Billing FAQs
Is e-billing safe?
An e-bill won’t get lost in the mail like a traditional bill. There’s also lesschance of human error or fraud. Electronic reminders, combined with easy electronic paymentoptions, mean customers may be more likely to pay an e-bill.
How do you use an e-bill?
Companies use e-bills to collect payment from their customers for products or servicesrendered. E-bills include the date the invoice was issued, the amount owed and date due, thegoods or services provided and payment terms. An e-bill may also contain a link to a paymentportal.
How do you create an e-bill?
Using software, an e-bill can be created either by digitizing a paper bill or by usingdigital information to create an invoice. Most companies use one of two types of e-billingpayment systems: biller direct or bank aggregator. In biller-direct e-billing, a customerlogs on to a company’s website to view and pay its bills by entering bank or creditcard information. In bank-aggregator e-billing, a customer logs on to their bank’swebsite for their e-bills and pays using the bank’s payment interface.
