December 2006

n  RESEARCH

Who’s Paying That Bill?
 

In the September issue, we presented research from American Banker that showed the dichotomy of payment patterns by students (Net Generation) and parents (the Baby Boomers).  According to the study, only 15% of those 55 years or older make payments online, yet 37% of the under 35 year olds pay online at a biller’s website.*
 

These differing payment patterns can have a significant impact on the usage of your e-billing/e-payment module. Knowing who’s paying the bill – be it parent or student, grandparent, uncle or trust fund – can provide invaluable insight into the characteristics, likes & dislikes of your customer and present opportunities to capitalize on their differences.
 

For example, Bruce Boyer, the CFO of Columbia College in Columbia Missouri, has recently implemented a recurring payment option for the College’s monthly payment plans that is very popular with his parent payers. “When we get a parent on the phone who needs to pay a tuition bill, their comment is usually, ‘Just tell me how much I owe and when it’s due’,” he comments. Parents want the bill out of their lives. This is borne out in the American Bankers study*, which shows that 57% of the 55 year plus group is making automatic, or recurring payments. By knowing what percentage of the tuition bills are paid by parents vs. students, you may identify alternative payment options that are more appealing to your core payers, which translates to faster collections for you.

Frank Aloise, the Director of Finance and Operations for Springside School, a pre-K through 12^th grade independent school in Philadelphia, is very creative with his knowledge of payers. “We track and record who makes every tuition payment. When I see that a student’s grandmother or aunt makes a tuition payment regularly, I send that name over to the development office to add to their prospective donor list. This information gives me an opportunity to help the school benefit in many ways, potentially.”

The major ERP systems and e-billing service providers offer the ability to identify and record the type of payer as the payment is processed. Even if it is a simple designation of  “guest user” vs. “account”, or a more descriptive, “School of Engineering – ‘09 - Student” vs. “School of Engineering – ‘09 – Parent” once you capture that data, you can analyze payment behaviors (i.e. payment timeliness, payment method used, payment channel used, payment amount), and evaluate whether there are any opportunities to alter your billing program to better meet their, and your, needs. Perhaps most significant, understanding your payers enables you to personalize your communications to them, establish relationship and gain their trust.