Billing Optimization Through Analytics

By Dean Boyer  |  September 12, 2020

Billing Optimization Through Analytics

The concept of optimizing your billing suggests an improvement in the process associated with billing a client. However, optimizing your billing using analytics involves much more than reengineering your current processes and procedures.

Billing optimization through analytics takes a data-centric view of the billing process. By analyzing data that is relative to the bill and the billing process, you can identify variables that impact the value of the bill. For example, when using a credit instrument, the seller knowingly adds additional cost to the bill to make the sale. This additional cost is derived from the charge associated with the credit instrument such as the merchant fee. The question impacting the value of the bill is the consistency of the cost. If the effort to obtain, apply and use the credit instrument varies by client, then this variable warrants further analysis.

 

In the example mentioned above, the cost associated with a credit instrument has the potential to adversely impact the value of the bill as do other variables such as availability, terms, submissions, contacts and data accuracy, to name a few. These variables are typically not considered part of the billing process workflow; most billing process reengineering programs would not even consider the issue of availability as a component of a billing optimization effort.

B2B Supplier – Billing Optimization Case Study

The data, however, tells a different story. A mid-tier business-to-business supplier noticed that sales had increased significantly over the past two months while revenues had remained flat. Their initial analysis indicated that they had not processed any new invoices for these additional sales since the goods associated with these new sales were on back order. At this point, the Accounting Department was satisfied with the answer that they had derived from their analysis.

Fortunately, the firm had recently made an effort to be more data-centric. While the Accounting Department was satisfied with the results, the Operations Department believed that there was more to this issue than a few back-ordered items. Using the analytics that the Finance Department had used to identify the back-ordered issue, the Operations Department drilled into the data where they were able to identify a problem caused by an inventory management system that the firm had implemented two years before.

Based on these findings, the firm invested in a data-driven billing optimization program designed to identify and analyze all of the variables in the organization that impacted the billing process. As a result, the firm experienced  a net 10 percent gain in revenue due to improved cash flow and greater customer satisfaction.

In the case study mentioned above, the firm had made a strategic decision to invest in data.  This investment returned considerable dividends as they strove to improve the overall performance of their organization.  While their standard operating reports pointed to potential problems with their billing process, it was their analytic platform that enabled them to define the root cause of the issue.

Questions to Ask

Examining the data components of the billing process demonstrates that the billing process is more involved than just generating an invoice and sending it to the customer.  The initial step of the billing process begins during the sales process. The sales process captures who is to be invoiced, where to mail the invoice, the items purchased, the price, the sales date, the delivery date if required, and the terms (conditions of the sale).  All of these data elements are crucial components of the billing process, so their impact on the process needs to be analyzed for optimization to occur. Questions such as the following need to be asked:

•  Are the name and address correct?
•  How is the bill to be paid?
•  Are the ordered items available?
•  Was the date of the sale captured?
•  Is the price correct?
•  Does the sale have value?
•  Is the sale within the regulatory guidelines of the firm?

Analytics that ask these types of questions are looking for abnormalities, trends or missing values that indicate that some action is required.  These actionable analytics ensure that the billing process is optimized and remains optimized throughout the firm’s business process.

While reporting on throughput and dates can be beneficial in providing insight into the billing process, they do not explain the causal effect of why something has become delayed, rejected or denied.  By analyzing the variables in your billing process, you can see how they impact the actual process.  Designing analytics that are actionable enables decision-makers to make midstream adjustments to those variables, thus optimizing the resulting outcome.

This discussion only addressed how the sales process potentially impacts the billing process. Functions such as pricing, product marketing, fulfillment and finance all contain data variables that, when analyzed, can provide valuable insight into how your billing process can and should be optimized.  Today’s technologies make analyzing data easier than it has ever been, so getting started is well within reach. The question to ask is not whether you should optimize your billing process, but when.

Click here to continue to read Nonprofit & Government Times, September 2020.


About Dean Boyer

Dean Boyer

Dean Boyer is a Director in the Technology Services Group at Marks Paneth LLP. To this role, he brings more than 30 years of experience in information technology and data management, with a focus on data science and business intelligence. Mr. Boyer’s diverse background in technology and digital solutions enables him to advise both for-profit and not-for-profit organizations on how to harness data to increase operational effectiveness and improve organizational performance. His experience includes product... READ MORE +


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