In the consumer finance industry, bills that are paid by consumers through a bank or other financial institution will sometimes lead to exceptions. Bill Payment Exception (BPE) is usually defined as a situation in which a Biller receives funds from a consumer, but is unable to post the credit to the consumer’s account. Although payment exceptions are generally not high in volume, they can still cause problems. Inefficient exception management can result in increased costs for both Billers and financial institutions and can lead to a loss of customer satisfaction due to long processing times.
Consumer financial behavior is changing, and it is trending toward online payments. Not only are consumers rapidly adopting online payments to make their monthly bill payments, they are beginning to use a variety of payment channels in unison. According to a survey by NACHA, the average number of bill payment methods consumers use increased from 2.9 in 2014 to 3.6 in 2015.
Historically, consumers have only been able to make debit card payments on their mortgages as a last resort. In many cases, the option of making debit card payments was simply unavailable, and mortgage payments could only be completed through checks and ACH transfers. Mortgage servicers are usually hesitant to include debit cards as a legitimate payment option because of the processing fees associated with debit card transactions.
Consumer Finance companies that don’t accept debit cards as a form of bill payment have an opportunity to better serve their customers. Debit cards have become a mainstay for American consumers; so much so that many consumers now carry less than $20 in cash on a daily basis. A 2016 Gallup poll indicated that Americans do still use cash for some of their everyday expenses, but only 14% of Americans use cash to make most of their purchases.
Billers who haven’t adopted electronic methods of bill payment have an opportunity to save on costs. Electronic payments offer convenience to both Biller and payer, but they also introduce the ability to schedule recurring bills and receive recurring payments. But Billers who have already implemented a basic system for electronic bill presentment and payments may stand to benefit from an upgrade, especially if their systems don’t currently have the capacity to receive recurring payments. Recurring payments can improve cash flow and enhance customer service.
Here’s Why Billers Should Take Note
As a business entity that invoices your customers, or a Biller, you already know that you enjoy some great rewards through electronic billing, and even more by offering your customers the option of recurring payments. Electronic billing eliminates the hassles of paper, increases payment timeliness, streamlines documentation, and enhances security. Receiving recurring payments reduces Billers’ DSO by removing the risk of late payments.
When a property management company’s portfolio includes buildings that number in the thousands, it can be a challenge for them to settle all of their accounts and process payments accurately month after month. One of the greatest hardships is dealing with large quantities of tenant payments and settling them into hundreds, if not thousands, of bank accounts while minimizing the impact of payment errors.
Most businesses who invoice customers, also known as Billers, offer their payers a list of accepted credit cards, but other payment options, like online, mobile, IVR transactions, and written checks, are still prominent. Billers that process a large number of bill payments and rely on those payments as a major part of their cash flow are constantly faced with the challenge of reducing the average number of days it takes to collect: their day sales outstanding, or DSO. One way to address this challenge is to make it easier for customers to pay their bills by offering them more payment options.
Collecting correct payments from residents in a timely manner is one of the biggest challenges homeowners’ associations face on a regular basis. Dues are a necessity for HOAs to function. When payments are late or checks bounce, determining what fees to charge and when to charge them can get confusing and problematic, especially when there isn’t a concrete method for reporting payments and important communications. With an online solution in place for collecting payments from residents, HOAs receive fewer check payments and deal with exceptions without incurring additional operating costs.
Paying the rent is a large obligation for many Americans. For some, it is the largest expense they face on a monthly basis. The percentage of U.S. households who paid rent to a property manager increased from 36.1 percent in 2006 to 41.1 percent in 2014, and renters in 2014 paid an average of 20.89% of their incomes in home rental costs. Because of the weight of the cost of living, not every tenant is able to pay their bills and their rent on time. Dealing with late and delinquent payments is an unfortunate but common part of managing an extensive number of properties.