Technology

Sending Out the Bill(ing)

Puma outsourced its billing processes and brought in some savings.
Alix StuartAugust 9, 2011

Golf clubs and running shoes ship out every day from the facilities of sporting-goods maker Puma  to 11,000 retailers across the country like Dick’s Sporting Goods and Foot Locker. And every time they ship, a new invoice is created. That can yield up to 2500 invoices per day, all of which Puma employees in Massachusetts used to print out, fold, sort, bring to the mail room and finally to the post office for bulk rate prices.

Not only did invoicing mean a huge volume of work for finance employees, it was also bugging customers. They hated the trifold paper their bills were printed on, says Brian Good, director of customer relations for Puma North America, Tretorn and Cobra Puma Golf, and the slowness of the process. Often, retailers would receive the product before the bill, but not be able to sell it, since many some peg retail prices to the ever-changing invoice prices.

That all changed about 18 months ago, when Good began outsourcing the billing process. Now, the company sweeps all invoices to a company called Billtrust at the end of each day using a secure file transfer protocol.  From there, Billtrust either sends out paper bills to customers, or notifies the customer by E-mail that an invoice is waiting for them on a secure site.

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Good says the results have exceeded his expectations. For one, about 30% of customers so far have converted to electronic billing, which saves about $.35 per transaction.  Two, Billtrust can mail paper documents out from various sites across the country, reducing the delay between product and invoice, and at rates that are $.06 to $.08 lower than what Puma employees could get at the post office. A side benefit: customers have been paying faster, yielding a dramatic 10-day reduction in DSO.   

Such services, which typically require much less cost, technology and implementation time than the traditional EDI systems, are just beginning to catch on, says Gartner analyst Pete Basiliere. One of the biggest barriers is the fear many companies have about data security. “They don’t want it misused by others or stolen en route to an outsourcer,” acknowledges Basiliere, “but those are really not an issue with these firms.”  In fact, he says the quality and accuracy of billing tends to be higher with the outsourced firms, and they are almost always cheaper.

Some of the biggest companies in this space are Xerox Global Services and Pitney Bowes Management Services and DST Output. Meanwhile, smaller ones are growing. Billtrust founder and CEO Flint Lane says the firm has increased revenues by about 50% per year for the past five years. All told, Basiliere counts about 35 providers in the US and Canada, many of which provide a broad array of document services.       

Besides data security fears, another perceived barrier to converting to electronic billing is the concern about asking customers to change their processes, or sign up for more services.  In many cases, though, it’s a benefit for the customer, says Basiliere, since the information can feed directly into accounting systems and eliminate the need to re-key data.

E-billing can also make it easier for customers to dispute charges, notes Aarjav Trivedi, CEO of route-optimizing service Ridecell.  Ridecell began using a free online billing service, Tradeshift, earlier this year, says Trivedi, as its customer base of utilities and transit providers was growing and invoicing was becoming more burdensome. Tradeshift provides an online platform where small-business owners can create invoices and either post them or email them to customers.  “There’s often some back and forth,” says Trivedi, and with the service, customers can ask questions and write notes right on the document that has been emailed, rather than having to make a phone call. Customers can also pay electronically on the site.

Going paperless in this case can not only make billing processes smoother, it also frees up staff time for tasks that are more meaningful than printing, folding and sorting. Good says he has moved his team onto intensifying collection efforts and creating credit updates. Trivedi says the electronic billing gives him more time to grow his nascent business. “We’re a small team here, and so we try not to focus too much on administrative tasks,” he says.