Tuesday, May 01, 2012: 11:48:54 AM

Retail Guest Column

Online Billing and Payments: Redefining the way we transact - Sanjiv Kumar Singh, Invoicera.com

India is gradually moving towards electronic mode of transaction and technology is changing the way businesses make payments and transmit cash

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Indian payments market has been traditionally dominated by cheques and cash. Cash is the most popular mode of payment, especially when it comes to retail transactions because it gives the customer a sense of completion once the amount is paid in cash. However, if we look at the flip-side, it poses a security risk for the customer if he/she is carrying a huge amount of cash. For bill payments and fund transfers, the most frequently used method of payment is by cheques.

Recently, the Reserve Bank of India revealed that the total value of transactions made through cheques in banks across India fell 6.4% to Rs 8.17 trillion in December 2011 as compared to Rs 8.74 trillion in December 2010.
Electronic transactions gaining popularity
While India is today dominated by paper-based transactions, electronic transactions are quickly gaining favour. There is a growing trend of online payments by retail consumers, for products and services procured both online and offline, such as electricity, mobile phone services and insurance. The trend of online billing is fast catching up in the metros with average households saving up to 80 hours in a year. Netizens have adopted online bill payment for factors such as convenience, control, trust, privacy and improved record-keeping; another plus factor is that they can depend on customer service for recourse.
Even for businesses, technology is changing the way they make payments and transmit cash. In developed markets such as the US and Europe, electronic payments dominate with traditional forms such as paper cheques beginning to decline in popularity. Despite this, they remain an important payment device in mature markets.
Businesses moving towards online invoicing
There is a desire among businesses to migrate towards online invoicing in order to increase efficiency and reduce the costs associated with manual invoice handling and processing. Online invoicing involves the electronic transfer of invoicing information, i.e. billing and payment, between suppliers and buyers as opposed to the traditional method of paper invoicing.
Businesses in the study are faced with interoperability challenges, supplier enablement issues and the removal of paper and manual processes from payment systems struggling to meet corporate expectations. In the pursuit of high level efficiencies in payment processes, both large and small companies seek immediate benefits from implementation of online invoicing such as better control of cash flow, better client management and the like. Efficient invoice processing is one of the keys to the greater operational efficiency, but not all businesses are taking full advantage of the tools and the levels of operational excellence available to them.
Current non-automated systems, whether email, paper or phone, serve short-term business purposes, and allow for purchase orders to be transmitted. They do not provide for the level of operational efficiency and supplier/buyer cooperation that businesses aim for. By adopting greater levels of automation, businesses can pave the way for long-term, sustainable gains to the bottom line.
In a commercial world of increasingly sophisticated operational interdependencies and automated processes, the enduring reliance on paper transactions is remarkable. The entire financial system has effectively weaned itself away from cash, with cheques also becoming more infrequent over time. However, invoice and PO-based transactions seem addicted to what is fast becoming an outdated form of financial exchange.
Businesses are acknowledging this imbalance and asserting more clearly the need to deliver change, tackling the issues that prevent a more dynamic basis of payment processing. The requirement for any transition is that it benefits all parties. Hence, enabling suppliers to start transacting electronically becomes critical to the equation of online invoicing success.
Sanjiv Kumar Singh is the business head of Invoicera.com

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