Wondering, “What is e-billing?” E-billing, or electronic billing, is a process businesses can use to get paid quickly and more securely without the hassle of paper bills and check payments.
E-bills allow both bill delivery and payment to take place completely online, which improves efficiency while cutting costs. Read on to learn more about the benefits of e-billing and how to select the best e-billing software for your business.
What is E-Billing?
E-billing is a method of sending bills and collecting payments electronically using the internet. To adopt e-billing, a business must integrate its billing and banking systems, connect with customers’ banks and bill-pay systems and build an online interface for the e-billing system.
Businesses that send recurring bills to customers see the biggest benefits from e-billing. For example, a utility company that bills customers for electricity each month can experience major efficiency gains and cost reductions from sending bills electronically and offering customers the ability to pay them online.
What is an E-Bill?
E-bills, or electronic bills, are paperless bills delivered via the internet, presented on a website, in an e-mail or as an electronic document such as a PDF file. An e-bill gives customers the ability to review billing details before sending payment.
E-bills offer a win-win for customers and businesses. Because they are faster, more convenient, less expensive and more secure than paper bills, everyone involved benefits from electronic billing.
What is an Electronic Billing System?
An electronic billing system, also known as an e-billing system, is a computer system that assists with generating and delivering e-bills and accepting customer payments.
Types of Electronic Billing Software
There are two main types of electronic billing software used for e-billing: biller-direct systems and bank-aggregator systems.
Biller-Direct E-Billing Software
Biller-direct electronic billing systems send bills digitally from the biller to its customer, bypassing traditional paper mail. Customers access their bills via e-mail, secure websites or mobile apps, offering convenience for bill management.
Biller-direct systems are advantageous for businesses because they reduce paper usage, mailing expenses and processing time while often incorporating encryption for security. Customers enjoy biller-direct systems because they offer features like the ability to set automatic payments and reminders.
Bank-Aggregator E-Billing Software
In a bank-aggregator electronic billing system, a bank serves as an intermediary between billers and customers. The bank aggregates bills from various billers and presents them to customers through their online banking platforms.
Customers can view, manage and pay their bills conveniently through their bank’s website or app. This system simplifies bill management for consumers by centralizing the bill payment processes. It also provides a secure environment for transactions. Additionally, bank-aggregators may offer features like bill payment scheduling and reminders.
E-Billing Examples
If you’re still asking, “What is an e-bill?” these e-billing examples may help answer that question.
Each month, your business’s janitorial service sends you an e-bill via e-mail that lists its monthly fee and occasional one-time expenses like cleanup after a special event. You can click a button that leads you to the janitorial service’s website where you can input your credit card information to pay the bill. This is an example of biller-direct e-billing.
You download a mobile bill-pay app from your bank. The app identifies recurring bills from companies like your internet provider and garbage pickup service. You can pay the bills electronically using the app, transferring money from your business’s bank account to the supplier. This is an example of bank-aggregator e-billing.
The E-Billing Process
The flow of an e-bill through an electronic billing system follows a typical path:
1. Customer billing data is aggregated in a billing system
2. A customer bill is generated by the billing system
3. The bill is passed to an e-billing system
4. The e-billing system aggregates bills and sends them to customers via e-mail
5. The customer receives a new bill notification e-mail
What Is the Difference Between E-Billing and E-Invoicing?
E-billing and e-invoicing both involve the electronic exchange of billing documents. However, e-billing encompasses a broader range of processes beyond invoicing. This includes managing billing documents electronically from invoice creation to payment processing. E-billing systems may integrate with accounting software and other business systems to automate the billing process and provide insights and reporting of financial data.
E-invoicing specifically refers to the electronic generation, transmission and receipt of invoices between a supplier and a customer. It focuses on the creation and delivery of invoices, streamlining the invoicing process by eliminating paper-based documents.
Self-Billing in Electronic Billing
Self-billing is a process in which a customer creates an invoice on behalf of their supplier, rather than the supplier creating and sending the invoice to the customer. Typically, when the customer creates the invoice, they send it to the supplier along with payment. Self-billing is prevalent in industries such as construction, where the value of goods may not be determined until they’re actually used or sold.
Self-billing can streamline the invoicing process for both parties involved. It reduces the administrative burden on the supplier while ensuring that invoices match the customer’s own systems and standards. Ultimately, this can facilitate faster processing and payment between two parties that do business frequently and have a high level of mutual trust.
Electronic billing may ease the self-billing process by empowering real-time data exchange between the supplier and the customer. With e-billing, both parties have access to up-to-date information on transactions, invoices and payment statuses, enhancing transparency and reducing billing discrepancies.
What Are the Electronic Billing and Coding Standards?
Electronic billing software requires bills and payments to be transmitted using an accepted format. The following parties must follow industry-specific standards when issuing or paying an e-bill:
• The bill payment provider
• The bill service provider
• The consolidator
• The customer service provider
Common data formats for electronic billing in the United States include Electronic Data Interchange (EDI), Extensible Markup Language (XML) and Comma-Separated Values (CSV) for file exportation. In the healthcare sector, compliance with HIPAA standards necessitates the use of EDI for e-billing and electronic claims payments.
For bank-to-bank ACH Network payments within the United States, financial institutions must adhere to the rules of Nacha. These regulations govern the transmission of electronic payments and ensure consistency across member institutions.
How Do B2B Companies Use Electronic Billing Services?
Today, individuals are becoming accustomed to paying bills electronically. This is true in the B2B space as well, as companies realize the efficiency it brings.
Electronic billing can streamline invoicing processes for B2B companies. By leveraging digital platforms, businesses can simplify invoice creation, transmission and payment processing, reducing manual labor and associated costs.
Electronic billing helps ensure faster payment cycles, enhancing cash flow predictability and operational efficiency. Moreover, it helps to minimize errors with automated validation checks, fostering trust and reliability between trading partners.
E-Billing Pros and Cons
E-billing offers numerous benefits for businesses, including:
✅ Efficiency: E-billing can streamline the invoicing process, reducing manual tasks like printing and mailing invoices, saving both time and resources.
✅ Cost savings: Electronic billing eliminates the need for paper, postage and most manual labor, resulting in lower operational expenses.
✅ Accelerated payments: E-billing can speed up the payment cycle thanks to faster invoice delivery and processing.
✅ Accuracy: Automated validation capabilities can minimize errors in e-billing.
✅ Improved cash flow: With faster payment processing, businesses can better predict and manage their cash flow.
✅ Environmental sustainability: E-billing reduces paper usage, contributing to environmental conservation efforts.
There are some drawbacks associated with e-billing as well, including:
❌ Initial costs: Implementing e-billing systems may require an upfront investment in software, infrastructure and employee training.
❌ Dependence on technology: Businesses relying on e-billing systems may be vulnerable to tech issues like system failures and cyber threats.
❌ Security concerns: E-billing involves the electronic transmission of sensitive financial data, raising concerns about data privacy and security breaches. However, electronic payments are generally less risk-prone than those involving paper checks.
❌ Resistance to change: Some customers may prefer traditional paper invoices and be reluctant to switch to e-billing.
❌ Compatibility issues: Ensuring integration between different e-billing, banking and accounting platforms may present challenges.
❌ Regulatory compliance: Businesses must ensure that their e-billing practices comply with relevant laws and regulations, which may vary across jurisdictions.
How to Choose the Best E-Billing Software
When evaluating the best e-billing software for your business, consider these factors.
Features: Ensure the features and functionality meet your business’s unique needs. This may include invoice creation, automated billing capabilities, payment processing and reporting.
Ease of Use: Look for software with an intuitive user interface and simple navigation. Consider feedback from the individuals on your team who will be using the software regularly.
Scalability: Ensure the e-billing software can grow with your business, accommodating increasing transaction volumes, additional users and evolving business requirements.
Security: This is a vital component when dealing with financial data. Choose software that implements robust security measures such as encryption, access controls and compliance with payment card industry standards.
Integrations: Check that the e-billing software you’re considering works with your existing systems, including your accounting software and enterprise resource planning (ERP) system.
Customization: If your business requires customization, including branded templates and special features, make sure the e-billing software you’re considering can meet those needs.
Training and support: Responsive customer support and thorough training resources can help address issues at the offset and along your organization’s e-billing journey.
Cost: Choose software with a pricing structure that aligns with your business’s needs. Evaluate setup fees, transaction fees, ongoing costs and additional charges to be sure they match your budget.
As with any major purchase, research reviews and testimonials from existing customers to vet the software provider’s claims.
What is E-Billing? Final Thoughts
E-billing delivers an opportunity for B2B companies to improve invoicing processes, boosting efficiency, cutting costs and offering more convenient options for customers.
With integrated tracking and reporting features, B2B companies gain real-time insights into invoice statuses and payment histories, empowering better decision-making and financial planning. By reducing manual processes and speeding both invoice and payment delivery, e-billing enables significant benefits for businesses.