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UTILITY WEEK | 5TH - 11TH MAY 2017 | 25 Operations & Assets Market view I n an age where technology has given rise to "anytime, anywhere" banking, it stands to reason that traditional bill- ing methods would be long overdue for an overhaul. That time is upon us and not a moment too soon because the working economy has changed dramatically in recent years, increasing the need for a more financially inclusive payment method. Standard 40-hour work weeks that pro- vide a predictable pay cheque twice a month are increasingly becoming the stuff of lore. Instead, many workers engage in zero-hours contracts that do not guarantee any hours, and a gig economy that employs five million people with a pay structure that is anything but consistent. It is not an environment ideally suited to rigid recurring payment structures. Enter "request for payment", a new pay- ment mechanism being proposed for the UK, slated for release in the next couple of years. This could allow billers to send indi- vidual requests for payment directly to their customers including via their mobile device. The customer would then have the option to make the payment, defer it to a more con- venient time, choose a part-payment or enter into a dialogue with the biller. Request for payment would supplement existing pay- ment methods, including the staple method of Direct Debit, giving customers more con- trol and flexibility over the timing of their outgoing payments to fit with their cash flow needs. In addition to helping customers man- age their bill payments and cash flow more effectively, supporting individuals with their financial decision-making and creating a better channel for direct dialogue between payers and billers, request for payment also represents a tremendous opportunity for the UK economy. In 2015 the total volume of person-to-business regular payments was 4.9 billion. Accenture estimates that 1 billion of these payments could be replaced by request for payment, with an annual economic ben- efit of £1.3 billion. It is understandable that the thought of customers being able to pay a given bill whenever it is convenient for them would be met with a healthy dose of resistance and a sprinkling of panic thrown in for good meas- ure. Traditional invoices with a preset due date are successful because they ensure pre- dictable cash flow, right? That's not entirely true. Set due dates really only work for people who have a predictable inflow of cash and can therefore budget for recurring expendi- tures effectively. That is why Direct Debit has become the preferred method of payment but has not created universal coverage across all payee types. For the growing number of the population who experience ongoing fluc- tuations in their cash flow, set due dates are nothing more than a burden preventing payment. If the money is not available, then a pay- ment just is not possible, triggering unex- pected bank fees, exceptions processing and a poor overall customer and biller experience. Yes, traditional due dates feel as though they provide a comfortable level of structure over the payment process, but all they really do is pose a host of constraints for people who legitimately want to pay their bills but just need some additional flexibility to do so. Organisations should be encouraged that request for payment is becoming a reality, because it offers a number of significant cash management benefits that are not available with other payment methods. • Potentially better cash flow as instances of default decrease due to greater flex- ibility for payers. • Efficiency increases and cost savings of not having to chase late payments and cover bank fees. • Decrease in cost to process each payment compared to the invoice-to-pay process – by as much as 8 per cent. • Ability to use the request for payment mechanism to pay vendor bills when it is suitable as a means of optimising work- ing capital. And let us not forget the customer service benefits that can be achieved by providing customers with greater flexibility. By eliminating the prescriptive approach to bill collection, request for payment fosters a friendlier, partnership-focused relationship between organisations and customers that is always better for business in the long run. There is still some work to do to make request for payment a widely adopted reality, as well as a number of more detailed questions around consumer education and development and launch approaches as part of the Payment Strategy Forum's plan for the UK. One thing, however, is very clear: some markets are already early adopters and request for payment is the next logical step in a constantly evolving payment landscape. Giving customers more flexibility and control over how and when they pay their bills in a noisy digital economy will not only be good for customers, but for business as well. Ed Adshead-Grant, general manager of payments and cash management, Bottomline Technologies How would you like to pay? A new payment method called 'request for payment' is due to be launched in the UK in the next two years. Ed Adshead-Grant explains what it is, and how it's well suited to our digital age. Key points Many people today on zero-hours contracts do not work standard hours or collect a predictable wage. Direct Debit is ideal for the demographic it serves but necessarily excludes those without predictable pay dates. Setting due dates on bills can give an il- lusory sense of control if the payee cannot afford to meet that time scale. Request for payment has several potential advantages: • Potentially better cash flow; • Efficiency increases and cost savings; • Decrease in cost to process each pay- ment compared to the invoice-to-pay process; • Ability to use the request for payment mechanism to pay vendor bills when it is suitable as a means of optimising working capital.