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Tech Industry

Online billing for utilities

U.S. utilities could save $1.2 billion in billing costs by using electronic bill presentment and payment, according to an upcoming study.

    U.S. utilities could save $1.2 billion in billing costs by using electronic bill presentment and payment, according to an upcoming study.

    Electric utilities, water companies, and cable operators also could develop a new revenue stream by outsourcing bill presentment for other billers, concludes the study, conducted by market research firm Killen & Associates.

    The research firm estimates that sending paper bills costs 60 cents to $1.40 per bill, while presenting bills online can cut that to about 50 cents. Letting customers pay online too adds more savings.

    "If the industry is in a cost reduction mode, this is a great opportunity," said Bob Goodwin, Killen senior vice president. "It's also a revenue opportunity--a big company like Consolidated Edison could do [online presentment and payment] for themselves and smaller utilities in the region."

    Online bill presentment saves billers on labor and postage costs, and getting paid electronically can reduce the costs in receivables and improve cash flow. For those reasons, bill presentment has become a hot topic among major billers, banks, and companies that hope to provide technology for online billing.

    Killen predicts that by the end of 2000, almost 8 billion repetitive bills will be presented electronically each year, or 12 percent of all bills.

    The firm says bills for telephone companies, other utilities, insurers, large retailers, and services merchants are good candidates for online presentment and payment.

    Among billers, AT&T plans to present bills on its Web site, and Chase Manhattan Bank, Wells Fargo Bank, and other financial institutions have similar initiatives.

    Among technology firms, Oracle, Sybase>, Intuit, Microsoft, CyberCash, and a host of smaller firms are working on bill presentment offerings.

    IBM, through its Integrion joint venture with Visa and 17 major banks, is also active. Microsoft's MSFDC joint venture with First Data Corporation, was set up specifically to do bill presentment as an outsourcing service for banks as well as on an MSFDC Web site.