The argument for electronic bill presentment and payment (EBPP) is alarmingly clear.
By its very nature, a paper-based, multistep presentment and payment model adds to the cost of doing business and inhibits a biller's cash flow. Electronic invoice and payment processing, however, could save American businesses over $100 billion each.
"Today more than ever, American businesses are staying competitive through scalable, proven electronic solutions which eliminate inefficiencies," says Jeetu Patel, vice president of research and technology at Doculabs (www.doculabs.com), an independent industry analyst firm specializing in e-business technologies. "Doculabs has found that B2B [business to business] EBPP is three levels larger than the B2C [business to consumer] Internet billing market. Once the advantages of EBPP are fully understood, the costs to deploy relative to ongoing savings will make paper presentment and payment the exception rather than the rule."
The trend toward an electronic solution is understandable when both the time and costs of the traditional paper process are examined. "For both billers and payers, the accounts receivable and accounts payable process absorbs a significant amount of resources. Consider that it typically costs $2 to $5 to create and deliver a single paper-based invoice, and another $10 for business customers to review and pay it," Patel says. "This is especially true in the telecommunications industry where invoices are highly complex, often thousands of lines long across many different products and services. In these cases, electronic invoice presentment and automated payment options speed the entire process, shortening total days sales outstanding. When one looks at a typical company invoicing millions of dollars each year, a faster, more efficient system can translate into millions saved annually. The potential savings for telecom businesses is enormous."
With a B2B Internet billing solution, companies can expect the cost of creating and tracking invoices to be cut almost in half. Additionally, customers have more information at their fingertips to better reconcile deliveries against original orders and charges, resulting in fewer invoice disputes.
When a company does have a dispute, billing information is easily accessible, allowing the company to spend less time researching information that previously involved multiple, time-consuming phone calls.
And since billing data becomes so much easier to retrieve, companies can begin to issue more detailed invoice analyses to help them create targeted marketing messages tailored to individual customers and their buying habits.
But the benefits of EBPP also extend to the customer paying the invoice.
"From the payer's perspective, B2B EBPP results in more efficient workflow and approval, which saves time and money, and reduces errors." Patel says. "Similar to billers, payers can cut the costs associated with dispute resolution. They can also capture better payment terms, reduce late charges, improve payment accuracy and provide better invoice analysis."
Companies that are anxious to add billing and presentment to their B2B arsenal should be sure to find a scalable, secure EBPP solution. They should also ensure their systems include key features to help billers and payers reduce costs and improve cash flow, and help service bureaus create viable solutions for their customers (see "Capabilities and Benefits").
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Capabilities and Benefits
E-mail notification is one of those features. Solutions must offer system users--both billers and payers--the ability to be notified when it is time to take action. For example, when an invoice is ready for review, the payer must be sent an e-mail notifying them that it is time to log in to the system and review the bill. This capability prevents the user from having to inefficiently "look for things to do." Heavy system users should be able to turn notification on and off, preventing cases where too many e-mails could become a problem for a user.
Another key to a successful B2B EBPP solution is its ability to enable both payers and billers to effectively view information and invoice status online. Online presentment removes the barrier to fast and easy invoice management. Users should have access to information across several vendor accounts, many invoices within one account, individual invoices and line items. Users should also have the ability to sort and categorize individual line items.
Due to the massive amount of information involved in each telecom invoice, the ability to separate it into subinvoices, otherwise known as "bursting," is essential for a successful EBPP solution. Bursting enables a company to break down an invoice automatically by division, department or individual. The subinvoices can then be routed across a company's hierarchy automatically--until all required reviewers have approved the invoice.
For EBPP to be effective, it must also take into account the invoice payer's workflow. This is the ability to route phone bills from one person or group to the next for review and approval. Through a flexible user interface, payer administration personnel must be able to create the workflow on setup and make ongoing changes to it. The ability to customize the workflow and manage it is an important factor in encouraging payers with diverse requirements to adopt B2B EBPP. Without workflow, an EBPP system risks broken links and lost information as the invoice moves along an established human chain.
Payment and remittance features, which allow users to approve payments online, are also a must. It doesn't make sense to automate just a portion of the invoice and payment process. To be completely effective, any B2B online billing system should support both review and payment automation. This function should support multiple payment options for payers (e.g. full payment, scheduled payment) and a selection of payment processing options.
As mentioned earlier, perhaps one of the greatest advantages of a quality EBPP system is the ability to handle exceptions and disputes. Telecom companies stand to save a significant amount of money by streamlining this function. By establishing an EBPP-based workflow strategy, dispute resolution can be handled more rapidly and with far less stress. Payers should be able to handle disputes both with billers and within the payer organization (such as misallocations). Dispute functions should include standardized dispute codes to help users track progress, and free-form text to allow users to communicate effectively.
Another advantage of the new EBPP model is the capability to perform detailed reporting and analysis quickly, easily and cost effectively. In fact, to be effective, an EBPP system should allow both billers and payers to generate reports and analyses on any invoices. Billers and payers can have the option to generate reports to analyze both long-term and short-term expenses, system usage and dispute tracking.
Finally, integration with existing biller and payer systems is critical. An EBPP solution should integrate well with existing enterprise resource planning (ERP), customer relationship management (CRM) and accounting applications. As more of these applications move onto the web, EBPP systems that rely on extensible markup language (XML) as the standard for defining data and integration points will provide billers and payers with a distinct advantage. An XML-based EBPP solution enables quick and easy integration with existing enterprise infrastructures.
Darryl Dobin is executive vice president and chief marketing officer for Avolent Inc. (www.avolent.com). He can be reached at (415) 553-6404 or ddobin@avolent.com.
Before Giving Its EBPP Marching Orders, A Company Should Consider:
Invoice Complexity--Because telecom invoices are particularly complex, online presentment can be a challenge. The vast amount of detail and various products and services will require significant planning when developing an effective and efficient electronic invoice.
Payer Workflow and Approval Processes--Once an invoice is presented effectively, payers must manage the intricate organizational hierarchy and approval processes that exist in many companies.
Dispute Handling--Disputes can occur both within payer companies and between the billers and payers. With so many disputes, it becomes difficult to track their progress, resolve them efficiently and ensure credit is correctly applied.
Automating Payments--In addition to paying a full invoice without dispute, payers must be concerned with scheduling large payments and partial payments. Businesses employ a variety of payment methods (e.g. ACH, credit card) to handle these complex payments.
Integration--For billers, the EBPP system must be adaptable to work with existing billing, accounting and customer service functions without changing back-end infrastructure. For payers, providing posting and cost allocation information for accounts payable systems is important.
