Can Paper Bills be More Cost-effective than E-bills?

Case Study: The Cost of Direct Mail versus E-mail Invoices

Every now and then I come across a study that flies in the face of conventional beliefs. This one in particular interested me because of our ongoing campaign to remove “anti-paper” green claims used to promote “lower cost” electronic billing. It seems that the “lower cost” feature is now also being questioned by some. Let’s take a look.

In 2009, a young Danish company called Natur-Energi A/S took on a challenge to create a better communication tool that would increase the number of invoices paid on time. Natur-Energi is dedicated to locating, generating and delivering simple and effective energy supplies and solutions that result in lower CO2 generation. Their customers are, for the most part, private small- and medium-sized companies who are committed to CO2 reduction and slowing climate change.

According to an article in the August 2013 issue of Fresh Data (an online resource from Data Services), a case study details how Natur-Energi decided to test whether switching to paper invoices with a new population of customers would improve the speed of payment. The study’s objective was to establish what effect digital invoicing has on customers and whether switching to invoices sent via physical mail could improve the on-time delivery of payments with those customers. Secondly, the campaign would investigate whether digital invoices were cheaper than physical mail in regard to overall operational costs.

A test population group of 2,879 new customers was selected and their behavior through a two-month billing and payment cycle was carefully monitored. Records were kept of the type of invoice sent, date and medium of the first and second reminders, traffic to Customer Service and date of write-off.

What they uncovered is good news for the paper industry. According to the case study, evidence shows that new customers pay the required amount significantly later if they receive their invoices by e-mail, compared to physical mail. Natur-Energi discovered that sending invoices via e-mail actually increased their overall costs.