Time Saved is Money Made

What does billing really cost? There are two ways to look at it. The first is to try adding up per-invoice costs, item-by-item, as shown below (using typical costs):

MATERIALS	Postage, 2 envelopes, paper, ink, printer maintenance	58¢
BANK FEES	Fee/item deposited, fee/deposit, terminal rental	35¢
LABOR: MAILING	Pre-check, create, print, sort/cull, fold, stuff, stamp, label, mail	67¢ *
LABOR: POSTING	Open envelope, look up account, post payment, complete deposit slip, bank run	67¢ *
LABOR: TROUBLESHOOTING	Run separate credit card/debit batches, post, troubleshoot unmatched payments, apply credits, note coupon items/respond, re-run rejected cards, etc.	33¢ *
SOFTWARE PURCHASE & MAINTENANCE	Estimated average cost per account for software purchase and monthly support, including upgrades (will vary widely)	25¢
-	TOTAL PER INVOICE	$2.85

*based on experience, time of 2/2/1 minute/invoice for each process at loaded labor rate of $20/hour

Can the entire process cost about $3 per invoice? Studies have confirmed that true billing costs for smaller companies range from $2.50 - $4.50 per invoice, depending on volume and the efficiency of the software used.

The second way is to consider the opportunity cost:

The largest cost to a security company is not shown above — opportunity cost. Opportunity cost means that "time saved" is not eliminated, but is put to better use.

For example, let's say a company that issues 200 recurring invoices per month decides to use Cornerstone to process these invoices. The company thus saves about two 8-hour days per month (~ 5 minutes per invoice). That time is then re-directed to a referral or attrition management program. For each 8-hour day, one account is added or "saved."

At the end of one year, this company has 24 more accounts. At a value of $800 per account, the company is nearly $20,000 more valuable…a multiple of fees paid for the billing services that made this gain possible. Dealers can also focus on improving job margins, better collections, and many other high-payoff projects. Opportunity cost is, by far, the most important cost to consider. As long as "freed up" time is directed toward an activity that is more valuable than routine billing procedures, a billing alliance offers a positive return on investment.