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RESEARCH
The Early Bird Gets the Worm:
Business Officers Experience the Advantages of
Early Billing
With Information Comes Understanding
With Understanding Comes Comfort
With Comfort Comes Engagement in the Process
I penned this phrase last year to describe the
change in behavior that business officers must
affect in their constituents to enable them to
use new, electronic billing services.
Another behavior change that business officers
are affecting among their payers is not the
way bills are presented and paid but when
bills are presented and paid. And this
behavior change is reaping indisputably positive
results.
RC Communications recently conducted
quantitative and in-depth studies of the billing
practices of independent, K-12 schools. We found
that those schools issuing their fall tuition
and fee bills early (before July 1) experienced
many positive outcomes from this practice. These
schools tend to have more efficient billing
preparation (less time spent and fewer FTE’s
managing the process), they spend less time
answering questions from parents (63% under 5
hours per week vs. 46% overall) and they have a
higher percentage of on-time payments (50%
report collecting 80-90% of payments at 30 days
vs. 42% overall)
 In-depth interviews revealed further benefits of
early billing. The Hill School, a 500 student
independent secondary school in Pottstown, PA,
moved from a July 1 to a May 31 bill mail out
last year. Commented Timothy Forester, Assistant
Treasurer, “We were in the middle of a $5MM
capital project – building a hockey rink. July
is normally a tight cash month, but we didn’t
have to borrow any money. Cash flow was improved
enough that we were able to keep going and still
pay our bills, including construction bills.”
Whether you are a business officer of a
mid-sized university, or a manager of a small
private school, the benefits of early billing
are the same:
-
Leverage early billing when your school is
top-of-mind. Parents having signed the
contract in the spring, send out the bill in
May/June before the “summer headset” sets in
-
Early revenue receipt provides greater
investment potential
-
Cover the cost of the refund when a student
withdraws before the semester begins
-
Improve summer cash flow; have funds
available to cover fall costs of goods
-
Buy yourself another month or two for
collections before the start of the semester
But remember the phrase above. When asked what
best practice they could offer from their
experience in introducing early billing, Mr.
Forester responded, “We got the word out early
enough. We started changing the information for
the admissions people in October, and the
contracts and the website in January. Trying to
get everything changed takes time. You have to
watch the ball with all the documents that need
to change.”
You also need to have early conversations with
your accounts receivable or ERP vendor. Ensure
that their systems support a seamless transition
to an earlier bill mail out and due date – that
billing codes are properly reset and later
payments are not posted as late.
By engaging in this type of communication with
all constituents involved in the billing process
– internal and external alike – you, too, will
experience the tangible value of early billing. |
