Note 52: Bill Format Options

Posted: 04 May 2008

The bill is the most frequent interaction between the biller and the customer. Unless the customer contacts the biller to report a problem or perform additional purchases, the bill is the only channel that the biller will have to influence the customer relationship. If the customer's network access is adequate, the customer's billing interactions can make or break the biller's long-term customer relationship.

After information has been extracted from upstream systems and databases, and the final, taxed price has been calculated for all transactions, the billing cycle must present the details to the customer in a manner that is informative, understandable and cost-effective to produce. To achieve this, the biller may produce a variety of bill formats targeted at different market segments or customer groups. For example, a detailed (and verbose) bill format appropriate for residential customers may be unsuitable for wholesale customers performing millions of transactions per day.

Bill format variations can be performed in areas such as:

Language: A bill's language can be used to change how and what details are presented on the bill. Language can change the presentation of the customer's bill in two ways. The first is straightforward and presents the bill text in different international or domestic languages. This allows customers to understand what is being billed and may provide the biller with a competitive point of differentiation for customers in smaller language groups. Where a biller operates their billing internationally, the same billing system can be used to perform billing for different national markets.

The second way that language can be used to change the bill format is to associate a 'language' (or a language variant) with a set of presentation options such as larger fonts (for older customers), smaller fonts (where extensive detail must be included in a condensed fashion), Braille (for the blind or visually impaired), or non-print electronic options (to include details not possible on paper). This allows the same spoken language and billed information to be presented on the bill in different forms.

Rounding: A bill can be rounded in a range of different places, with the details carried forward to the next bill or dropped from further consideration. When rounding is performed for high-value transactions the amount rounded is a small percentage of the total charge, but when small charges are rounded the amount rounded can be a material percentage of the total charge. In general, rounding performed over many transactions can be expected to balance those transactions rounded up against those rounded down.

Rounding can become material when a large number of small charges are rounded (e.g. phone calls) and the biller's price point performs rounding consistently in one direction. This can make bills consistently larger than expected (from a customer's point of view), or smaller (reducing the expected revenue from the biller's point of view).

Delaying rounding can reduce the impact of rounding to the bill's total. For example, five 9.5 cent charges that are rounded to 10 cents before summation will result in a total charge of 50 cents; performing summation before rounding results in a value of 47.5 cents that can be rounded to 48 cents. This simple result has a four percent difference in the final result. Over millions of transactions performed over a year, the small amounts involved in rounding can add up and become material to customers' bills, the biller's revenue, and the tax department's collections. Identifying a consistent rounding approach for billing assists the biller's error investigations (where charges are recalculated), can highlight where price points may have rounding issues, and supports discussions with outside groups (e.g. tax departments).

On the bill, rounding can be performed when:

Units of Measure: Rounding can be performed to the 'nearest' minute, 30 seconds, or Gigabyte.
Rounding charges: When a rate per minute is applied or a discount percentage calculated, charges must be rounded to the appropriate level of precision.
Rounding tax: Once the total price has been calculated, any taxation must also be applied and this also presents an opportunity for rounding. Where tax is identified separately on the bill, customers are likely to check that the tax is correct and may complain if the rate is more than expected.
Rounding the amount payable: In countries such as Australia, which no longer use one and two cent coins, bills may be rounded to the nearest five cents allowing them to be paid in cash. In currencies where the low value coins are not commonly used, the bill may be rounded to the nearest whole currency unit. The remainder may be carried forward and included on the next bill, or dropped from further consideration.

Numeric precision: Closely related to the topic of rounding is the level of precision involved in billing calculations. High-value transactions may be supported with fewer decimal points of precision, but high-volume low-value transactions can require a high level of precision to represent a negotiated rate (e.g. a wholesale rate of 1.432 cents per minute to terminate international phone calls). Processing transactions at the same precision as the eventual bill (e.g. 1 cent per minute) does not allow the correct rate to be captured.

As with rounding, the level of precision may be carried through onto the invoice before being rounded to represent the amount payable. A high level of precision will only be appropriate for specific customers with most consumers preferring to receive their bill details with the same level of precious as the eventual amount payable.

Graphs: Graphs can provide the customer with a visual comparison between the current and previous bills. Customers may compare their energy consumption across the year, to the same bill last year, or to 'average' customers. Subsets of customer's charges may be compared (e.g. international phone calls, calls to mobile phones) to identify where the customer's consumption is increasing or decreasing. Graphs assist the customer is verifying the bill's accuracy and modifying their own behaviour if charges are more than expected. Graphs can be used to track financial amounts (dollars on each bill), water consumed (per quarter), or visualise the amount of carbon dioxide released by the customer's energy consumption.

Product-specific sections: Billers with a wide range of product offerings may choose to highlight products in separate sections. This allows the information presented to be customised and appropriate to the product rather than presented within an unsuitable generalised format. By taking this approach, billers can tailor the information presented to different customers, and allow the same bill to present a wide range of information. The ability to perform this will depend on the sophistication of the billing system's bill presentation functionality. Billers with a limited product set may not find sufficient business benefits to offset the additional complexity of tailored bill sections.

Detail versus Summaries: Transaction details and customer services can be presented on the bill in detail, or they may be presented as a summary that omits much of the detail (though the detail may still be available through other channels). Different products and customer segments may have information presented in detail by default and require a customer request before a summarised section is included on the bill.

To reduce the complexity of managing every section in both a detailed and summary version, collections of sections may be packaged together and offered as options that are collectively included or excluded from the customer's bill. Another option for summarisation is to only present transactions over a specific value in detail. Using this approach the bill's size can be kept to a minimum, with the customer still able to view higher-value transactions (e.g. international phone calls).

Remittance advice: The payment methods available to a customer may differ by customer segment. Larger customers may not be allowed credit cards as a payment method. The payment section may contain reference details that will associate a payment to the customer or specific bill. Business customers may have their payments handled by separate staff to residential customers. Customers who have not paid their bills on time may have their subsequent payments flagged to the credit management organisation.

Corporate branding: Aside from the customer's charges and details, the biller needs to place their own corporate details on the bill. This can include their logo, internet address, contact phone numbers and corporate business registration numbers. Collectively, these corporate details plus the colour and formatting of the biller's pre-printed paper stock will form the corporate brand received by the customer. Different market or product segments may receive different paper stock, customer segments may be asked to call different contact phone numbers, and the logos may differ based on the branding of different business units (e.g. internet, mobile phone, electricity, gas).

If the biller performs 'billing on behalf' of other service providers, the billing system will need to produce bills using a 'white label' approach. White labeling allows the billed details to be branded with the service providers' logo and other details with the billing system's owner hidden from the (service provider's) end customer.

Information masking: Details on the bill may need to be purposefully obscured for reasons that include privacy. For example, when customers call toll-free numbers (i.e. 1-800 calls), the recipient business will require details about the calls it must pay for, but to protect the callers' privacy, the last digits of the callers' phone numbers may be masked with 'X' to prevent them being collected (reused, misused). Industry 'Codes of Conduct' can require such masking as part of acceptable billing practices.

Information only sections: Non-financial information may be extracted and presented on the invoice in support of the biller's marketing, or to highlight messages that their regulator requires be sent to all customers. For example, the biller may track phone calls that were not answered (or where the called number was busy) and present them on the receiving customer's bill. Such information could be used to suggest a (phone) network based call answering service, or for business customers with toll-free numbers it could identify the need for additional lines to cater for peak calling hours.

Calculated values: Information calculated during the billing cycle, including the due date and the amount due, must be presented on the bill. This information may be presented slightly differently if the customer has an amount still outstanding, if the customer's bank account or credit card is direct debited, or if the bill is in credit.

Charge presentation: The presentation of individual charges involves the selection of the details to be presented, the sort order, totaling (including any sub-totals) and decisions about which bill sections the details will be included within. Calls may be included in a detailed section for a service, summary by call type, section highlighting high-value charges, and within the front page total bill summary.

A bundle involves additional bill presentation choices including where usage charges are presented. Are the bundle's usage charges listed with other unbundled usage, or are they listed with the bundle's recurring (and non-recurring) charges? Does the bundle have a separate section, or is the bundle listed with the service's other charges? How will a multiple service bundle be presented? A bundle might be presented as:

A single recurring charge under the bundle's name: This is the simplest approach and common for cable TV bills that bundle many channels together.

e.g. 01 August - 31 August Basic Cable TV Package $40

A single recurring charge, but with the bundle's components listed beneath: This allows the customer to see what products and services are included in the bundle.

e.g. 01 August - 31 August Basic Cable TV Package $40

> Sports

> News

> Local Channels

> TV for Kids

> Weather

> Movies

A single line item under which the bundle's products and services are listed against their component prices: This approach can be used when a bundle lowers the prices charged for its included components, but the components are still charged for based on their actual use/inclusion.

e.g. 01 August - 31 August Basic Cable TV Package

> Sports $10

> News $10

> Local Channels Free

> TV for Kids $5

> Weather $5

> Movies $10

Total: $40

Tags: Billing, Bill Format, Rounding