How Technology Is Changing How We Treat Billing

The first recorded use of currency in human history was in 600BC, when coins were minted in what is now Turkey. It wasn’t until over 2000 years later in 1661 that the first bank notes were used. Fast forward to 1946 and we have the introduction of the credit card, and then in 1994, the first online payment.

Historically, human societies are extremely reluctant and slow to change how they handle money. The state of your finances is one of the most fundamental aspects in determining your ability to survive and thrive, and so people have always preferred to stick with what they know rather than making any radical and risky changes.

But over the last 100 years, and particularly the last two decades, our idea of money has shifted from metal and paper hidden in the mattress to the more abstract concept of numbers of a statement or screen. While this may not seem like a major change, the implications it has had are enormous.

Spending Habits

Over the years, there have been countless studies that compare consumer spending habits using cash with those using credit or debit cards, and they pretty much all come to the same conclusion: the further people are from their money, the more willing they are to part with it.

Take this study, for example, which found that consumers are willing to spend as much as 83% more when paying with credit compared to cash. The same study found that tips paid by credit are an average of 13% larger than cash tips, that the presence of a credit card logo can increase the amount spent by 10%, and that people will spend up to 15% more when using store credit or gift cards.

With the likes of online payment, direct debits, cryptocurrencies, and contactless payments becoming increasingly common with each passing day, understanding how consumers perceive their cash is critical to maximising how much they spend. But of course, technology hasn’t just impacted how payments are sent, but also how they are received.


Payment Methods

The kind of payments options you can accept depends entirely on the kind of business you run. The vast majority of market stall traders, for example, don’t take online orders, an online only business cannot accept cash, and a hotel will allow customers to pay in cash, but will most likely want credit card details in conjunction with any cash payments. If you live near the border, then you probably accept both Euro and Sterling as well.

Obviously, one of the easiest ways to ensure you maximise your sales is to make payment as easy and flexible as possible. This is where it is important to step back and properly reflect on the state of technology at present. It is easy to classify payments simply as either “cash” or “electronic”, and think that you have both of those in place already. But terms like online or electronic payments are outdated and vague, and don’t capture the reality of how people handle their finances anymore. You may have an online payment portal that customers use to pay with card every day, but that’s useless to someone who uses Bitcoin, or gets paid via PayPal. Up until 2018, all eBay sales were processed through PayPal, while Bitcoin now has an estimated 32 million users, with around $100 billion of Bitcoin in circulation. These examples illustrate how oversimplifying payment methods can cut you off from enormous groups of potential customers.

Similarly, if we return to the example of a market stall traders, it seems perfectly logical for them not to accept online payments, but only because that term is misleading. Online payments no longer need to be made behind a computer screen sitting at home. These days, there are apps such as Stripe that allow customers to make online payments in more or less the same manner as a contactless payment, which enables traditionally off-grid traders to enter the digital realm, without the need for investing in expensive POS systems.

Billing Software

Clearly, technology has made it a lot easier for vendors to accept a variety of payment methods, but not all payments are issued on the spot. Invoices are far from a recent invention, but since about the 1950s, technology has continued to make this an increasingly automated and streamlined process.

There is now a plethora of billing software that business owners can choose from, with services like Freshbooks and Xero enabling them to track exactly how much is owed by who, how much you owe others, when payments are due, and so on. Depending on the service and plan you choose, most also offer insights and analytics to help entrepreneurs get an accurate snapshot of the financial state of their business, and identify any negative cash trends. Obviously, you get what you pay for with this software, so while the cheaper options may require you to manually execute certain tasks, the more advanced subscriptions can do more by themselves. For example, the cheaper option may require you to hit “Send” on an email reminder, whereas the more expensive option will detect whether or not a payment is late, and send a reminder if required.

Making this process as seamless as possible is essential in ensuring you get paid what you are owed, and helps prevent your finances from running away from you. As we have noted before, 67% of Irish businesses have issues with late payments, and that is despite the technological advancements. If a business does not have these processes in place, not only will manually handling the billing take more time, it will make it more likely that payments will be late or missed altogether.

Productivity Paradox

While it may seem counterintuitive that there could still be so many payment issues despite these technological advancements, it is actually what we should have expected. There are many examples of productivity paradoxes in history, such as the drop in productivity that occurred in the US during the 70s and 80s, despite significant investment in IT infrastructure. While some dispute the significance of this, many experts believe that when technology improves, we work less, not better. So when looking at how technology has impacted how we treat billing, this is the point we must remember.

It has been well-documented that our attention spans are getting shorter, and people increasingly want more instant gratification. So while on paper, all the technologies we have looked at have made it easier for people to pay and get paid, the reality is that people are mostly interested in what is easiest for them personally. If they see you don’t accept their preferred method of payment, they are quite likely to move on to your nearest competitor. While not every business will need to accept every form of payment, making it as easy as possible for as many people as possible will ultimately mean more people are attracted to your business.