Note 54: Bill Distribution (physical)

Posted: 26 June 2008

Bill Distribution

To complete the billing cycle, details of the calculated charges and extracted data must be distributed to the customer. To answer customer's questions, bill details must also be stored for reference by the biller's staff. The stored bill can be used by the biller's internal organisation to support their business functions (e.g. problem resolution, audit, revenue assurance).

Bills can be sent to customers using one or more distribution channels. Each distribution channel to the customer requires the billing system generate a separate customised output interface with additional operational and support costs and an increased complexity in billing.

However the benefits of developing additional channels can include reduced end-to-end billing costs, and additional business won (or retained) by the biller based on their additional bill distribution options. For example, an email-based bill for residential customers can avoid the postage costs of paper bills, and providing a DVD containing billing data (that can undergo further processing) may influence the purchase decision of corporate customers.

Billers can select which distribution channels are made available to each market segment. Factors that may influence the selection decision include the biller's end-to-end costs, customer's perception of each channel's convenience, related revenue streams, support of the expected bill sizes, and competing biller's distribution offers. Billers transitioning from paper-based billing may allow customers to select both paper and digital channels. This allows the new digital channel to be experienced whilst customers retain the comfort of the old (paper) channel. The challenge in then to complete the transition and replace the paper channel with the digital channel. If this is not done the biller may have increased their billing costs and complexity without a corresponding business benefit.

Distribution Channels

In historical terms, paper bills have been the channel of choice, but newer digital technologies provide the biller with alternatives that can deliver both customer benefits and cost savings. For many billers, paper is the simplest channel due to its lower overall complexity. Billers that choose to provide additional channels must develop and support the additional infrastructure required. Bill distribution channels available to the biller include:

Paper: Despite the development of newer technologies, paper is still a well understood, customer-friendly distribution channel that does the job. For many existing billers it is all that is required, and indeed may be mandated. Paper bills can be provided in a variety of formats including large print (font) and Braille.

Paper is the existing channel for billers with billing infrastructure and/or businesses that pre-date the internet's development. Customers receiving paper bills before digital alternatives were available continue to expect their availability. As digital technologies become more widely used within the biller's customer base, customers may choose, be required or incented to receive their bills electronically.

Distribution by paper can be an expensive method of distributing a bill due to its printing and postal costs. For low margin customers, paper's bill preparation and distribution costs can exceed the customers' total margin. New billers establishing a billing infrastructure from scratch may take the opportunity to avoid the costs associated with paper and only provide their bills digitally. (The most extreme example of this is where no bill is provided at all. e.g. some pre-paid mobile phone operators and post-paid ISPs)

DVD: Use of physical media to convey the bill's detail digitally allows customers to be provided with additional details of the (usually larger) bills. The customer can load the bill details into an internal database for further analysis using their own systems, or use an analysis tool provided by the biller. One possible use of such detail is to generate cost report to a customer's internal business divisions.

Paper bills are often used for smaller customers when billers cater for customer segments ranging from individuals through to large corporate businesses. Corporate bills can become unwieldy when printed. Digital technologies and distribution channels allow a corporate customer's non-paper bills to be distributed faster, more cheaply and with the possibility of 'value-add' processing performed on the detailed (digital) information.

Generating digital details to a physical medium such as a DVD has end-to-end costs that are higher per 'bill' than paper, but the bills can be much larger and still remain manageable. As a result, distribution by DVD is more likely to be provided for larger corporate customers as part of the 'package' used to win their (higher revenue) business than for smaller residential customers.

Tags: Billing, Distribution, Physical Media