The cost of living crisis in the UK is hitting people’s pockets hard this winter as approximately eight million people will struggle to pay their bills. The financial turmoil the nation is facing can be attributed to several factors, such as disrupted supply chains, the aftermath of the COVID-19 pandemic and hikes in National Insurance contributions from employers.
The lack of predictability surrounding payment dates and intentions to pay will impact businesses negatively as it will affect their ability to forecast cash flow and allocate resources effectively. To make matters worse, the current economic climate is expected to intensify, and inflation will reach new heights in 2023. If businesses want to stay afloat and guarantee payment certainty, significant efforts must be made to improve the customer experience around payments. Businesses can support the ongoing challenges customers are facing with personalisation and flexibility.
But how can this be done?
Taking control of your cashflow
When people can’t afford to pay their bills, it is a common behaviour to try to find ways to feel in control of the situation. In addition, people tend to pay a bill or make a payment solely depending on what they can afford at the time. Not only is this a very stressful experience for the payer but also for the businesses looking to be paid, who heavily rely on a consistent and predictable incoming cash flow.
Another issue for customers is that many businesses use inflexible payment systems, with restrictive collection windows and a lack of personalisation. The solution? A bespoke approach. Customers with payment options on their terms have a far higher likelihood to pay their bills on time.
Moreover, tight control over cash flow has never been more important. Some businesses lack strong security systems, opening themselves up to the growing risk of fraud. Businesses with manual, disconnected processes have higher error rates, making collection more time-consuming and costly. Businesses need alternatives that can ensure higher levels of security and a digitally connected approach that supports automation and ultimately a lower cost to serve.
Flexible and personalised payment plans
During the current economic climate, financial inclusion for consumers is crucial. According to Deloitte, 45% of people said financial concerns from the COVID-19 pandemic negatively impacted their well-being. Businesses must learn from this as complex and less flexible payment methods, coupled with the current cost of living crisis will deter customers from choosing a business if they feel their financial control is at risk.
Delivering flexible and personalised billing solutions will help to simplify the relationship and make it one they favour. Businesses can reduce the cost to serve customers and remove some of the many errors inherent in more manual processes by putting the power in customer hands. This results in efficiency and, with the right technology, rich and actionable insights into customer behaviour.
Billing technology improves the customer experience, placing businesses at the top of the queue to get paid. According to the “State of Consumer Report” of the 15,000 consumers and business buyers surveyed globally, 67% stated they would be willing to pay more for a better experience. Happy customers are more likely to stay (cheaper), to advocate (better) and to pay you on time (certainty).
Streamline your finances with AI
Automation allows for cheaper and more efficient business transactions as it automates the collection and the payment process in one go. It provides transparency on who has paid their bills and who has not, allowing businesses to focus their resources and be proactive elsewhere.
AI-powered data can also be used as a tool to automatically flag those who have not paid their bills and are also likely not to pay, based on trends in past behaviours. Businesses gain valuable insight into their future transactions and who they must reach out to far in advance, reducing the chance of defaults and overdue balances.
As we see more technological advancements with billing methods, businesses unwilling to adapt are less likely to cope in this new landscape.
Adapting to the evolving digital landscape
The world is progressively becoming more digital, birthing various new services that attract and retain customers. As a result, consumer expectations of the payment journey have skyrocketed. Now, businesses must compete with industry rivals and everyone else in the commercial sector to stand out.
The key to businesses succeeding is listening and adhering to their customers personal preferences over payment journeys, which usually means making the process as simple and as seamless as possible. As budgets tighten amid the Autumn Budget, a large proportion of willing customers will struggle to keep up with their bills. Any payment options that do not recognise the customer’s needs only add further stress at an already difficult time.
New digital solutions, such as Request to Pay (RtP) tackle the issues commonly found in more traditional payment methods as it provides greater personalisation and flexibility to customers over payment dates and instalments. As we continue to evolve towards a more digital trajectory, some businesses will thrive, while others will not. Those who are unwilling to digitise their billing procedures during these financially trying times will waste time and effort dealing with outdated procedures. To avoid late or null payments, businesses must adapt or risk drowning amongst their competitors. And quite simply, if helping customers is not on a business’ agenda, they will not stay on a customer’s for long.