How Inefficient Payment Processes Affect Telecom Companies

A lot is happening in the telecom and broadband sector, but not everyone is keeping up with the pace of change. Savvy new competitors are stealing customers from the bigger telecom companies and one of the ways they are doing that is by creating better payment experiences. Rather than fundamentally changing their processes, the telecom giants are stuck in antiquated systems that they just keep patching and repairing. Is this something you recognize in your own organization? If it is, it may be time to review your own internal processes in order to safeguard your profitability.

Many telecom and broadband companies are encumbered with inefficient processes for invoicing and payments. Despite the growing trend of digital transformation and the changes that has brought about, many customers are still manually entering the reference number when paying their invoice online, which increases the risk of errors. Because of that, accounting departments spend a lot of time manually reviewing and matching payments with invoices. A simple error made by a customer could also result in them being sent an annoying payment reminder. Nobody wins when this happens!

A natural outcome of all this is the detrimental effect it has on the customer experience (tellingly, telecom companies were at the top of Skamlistan 2021, a consumer ranking ‘shaming’ companies). Inefficiency also has a negative impact on innovation and profitability for the entire business. The internal resources expended on managing everything from erroneous payments to dissatisfied customers could be put to better use, such as developing new services and working more data-driven and proactively with customer service. Looking at your own organization, what would you and your employees prioritize if you could free up more time?

Which Internal Processes Are Racking Up Your Costs?

Fragmented Management

Payment is an important part of the customer experience in all industries, but particularly with continuous services, such as telecom and broadband. In those industries, this is frequently the only forum where the customer is in contact with their supplier throughout the entire customer lifecycle. Nevertheless, invoice management tends to be fragmented in many such companies. Many big telecom and broadband companies have outsourced their invoicing to external suppliers, where contracts are just kept rolling, without further developing the processes to meet customers’ changing needs and preferences.

Others retain invoice management inhouse, but have divvied up the various tasks among different departments and external suppliers. This creates silos as steps like invoice distribution, debt collection and bank contacts are handled separately. Important information exists in separate systems, which is detrimental to an efficient technical flow. That in turn makes it difficult to maintain an overview and make strategic decisions that benefit the company overall.

Reactive Customer Service

Customer service is a major, resource-intensive function at many big telecom and broadband companies. Around 20–30% of all customer service inquiries in this industry are related to invoicing and payments. Customers who receive a late payment reminder (often with an associated fee) are particularly likely to contact customer service. There is thus a strong incentive to make it easier for customers to pay on time, improve their options for self-service, and increase the percentage who pay via direct debit. All of this can reduce the amount of time that your customer service employees spend managing routine cases and dealing with dissatisfied customers. It also reduces the need for manual reviews and reconciliation by the accounting department. Fragmented management of invoices and payments, however, can lead to counteracting incentives from other parts of the organization, which is something we will address shortly.

Why Is Change So Sluggish for Industry Giants?

Most of the major broadband and telecom companies are aware of the fact that they are losing customers to smaller competitors, and that they will need to adapt so they do not get overtaken. Many of the big players have even set up their own subsidiaries in order to be able to offer a more digital product that appeals to younger target groups. Lessons from these smaller companies ought to inspire new, innovative ways of thinking even at the central organization. Nevertheless, the pace of change remains sluggish. Why is that?

Unwillingness to Reduce Revenue from Payment Reminders and Invoicing Fees

The new, smaller challengers in the industry started up their businesses in a digitally mature market. This makes them more agile than the established players, who need to adapt their large organizations to a new reality. The challengers are also good at using customer data to create positive, digital customer experiences with a high level of self-service, for example by using interactive invoices that are updated in real time when a customer makes a payment. With their leaner organizations, these smaller companies are also less dependent on revenue from reminder and invoicing fees.

Larger companies, on the other hand, are frequently unwilling to stop charging for invoices, since this is regarded as a source of pure revenue. Late fees can also be an important source of income. But is this an approach that pays off in a broader perspective? If you look at the value of retaining an existing customer, relative to the cost of enlisting a new one, these fees may well be a loss-making business. Customer loyalty is significantly affected by how your company handles payments and invoices. For example, customers who receive payment reminders are a shocking six times more likely to switch providers than those who pay on time. And what does the internal handling of payment reminders cost your accounting and customer service departments?

Fear of Mammoth Projects

Frequently, organizational size alone is an obstacle to change — it is much easier to maneuver a jet ski than it is to alter the course of a large cruise ship. Also, many larger companies have comprehensive, outdated IT systems in place that have been patched and repaired multiple times over the years. Furthermore, the fragmented management of payments and invoices makes it difficult to calculate with any precision just what the ROI would be from making a comprehensive change. And, as in all industries, IT resources are in short supply. This makes it difficult to motivate and implement what could be seen as a mammoth project internally. So, they again patching and repairing the existing systems, which grow even larger and more cumbersome over time. It’s a vicious circle.

Is your organization also carrying on in this way, rather than implementing truly streamlined processes? If so, we have good news! Despite what many may think, you don’t need to undertake a massive project for setting up a payment process that significantly improves the customer experience and profitability. Read more about it in the article: More efficient payment process for telecom and broadband companies – without a cumbersome implementation.

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Clare Mills

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