Online billing solutions surge

Global Finance, Dec 2000 by Glasgow, Bo

Electronic Bill Presentment and Payment (EBPP) solution providers have revamped the old saw,"pay as you go," to provide corporate treasurers with a new suite of B2B power tools. EBPP-and even more elaborate Electronic Invoice Presentment and Payment (EIPP) fare for the B2B marketplace-now makes it possible to "show as you pay" and "know as you go" in a realtime, online, interactive mode.

The demand for EBPP is growing rapidly. According to the Gartner Group, the EBPP market will be worth $1.7 billion by 2002, and a 1998 study by Killen &Associates projects a $18.8 billion market by 2005.

While most corporations focus on the B2B ramifications of EBPP, there is an essential crossreference and overlay with B2C. Many solution providers have a stake in both arenas and several of the core issues in an electronic payment system are common in both, including efficiency, security, interactivity, customer care, and Web infrastructure software.

The major difference between the two is that 13213 payment products are designed to solve the problems of large and complex organizations, where corporate phone bills can run up to 70,000 pages, or a costly asset acquisition that might involve leasing and financing ex tensions, says Bill Zielke, vice president of product marketing for the I-Solutions unit of CheckFree, based in Norcross, Georgia.

Large companies are interested in a host of functions, including bursting unwieldy invoices; parsing out line items; e-mail notification and support; routing and tracking; dispute resolution; and gaining access to and distribution of the invoice in a sequence that meshes with the requirements of the company's payment process. These treasurers covet the ability to support complex statement analysis, viewing and sorting, and the ability to download, extract, and integrate invoicing with their other systems.

Melding these activities is a strategic undertaking, according to Tony Kavanagh, Oracle's senior director of world marketing. The "issue of integration" should be the most important consideration of all, he says. "From the front office to the back office there should be a seamless flow of information." Not surprisingly, Oracle's payments protocol is embedded in its Financials Suite, the Redwood Shores, California-based company's largest single applications revenue generator.

The potential economic benefits in 13213 are enormous. For billers, a sharp reduction is promised in administrative costs and days' sales outstanding (DSOs). For payers, a surefire streamlining of the payment process awaits. For both sides, better access to and integration of crucial information feedback supports management with an analytical tool to simultaneously improve operations and customer satisfaction. These products also provide the immediate advantage of integrating with existing ERP or accounting systems and, in general, accommodating electronic workflow.

An obvious link in the chain for EBPP solution providers is the banks.

The Efunds Corporation in Phoenix, Arizona, for example, provides online banking services-including Internet payments-with a focus on online debit payments. Efunds equates debit charges to cash equivalents. With reduced risk, any change in the cost structure of online operations, where margins are razor-thin, can be significant, says Terry Blake, an Efunds spokesman.

Tailoring EBPP to banks' credit card businesses is another major slice of the market. Atlanta-based PaySys in October forged an agreement with Visa International's EU region to deliver a commercial credit card transaction processing system to Visa EU member banks.A similar deal was struck with Barclaycard in September.

The PaySys services will utilize the company's new dBB technology system, which includes a real-time posting engine, unlimited hierarchies, and unlimited expansion capability, according to Donna Embry, PaySys's senior vice president of marketing. With sales approaching $58 million and a service network of 180 million accounts in 35 countries, the company's credit card management software handles multilingual with multicurrency differentiation.

Targeting the bottlenecks in the EBPP process is a strategic focus of Bottomline Technologies in Portsmouth, New Hampshire. Up to 30% of B2B transactions are not paid as they're billed, according to Dan McGurl, Bottomline's CEO. Damaged goods, a short shipment, a botched order, or a change in pricing structure are among reasons why a 90-day payment cycle is traditional for many companies, some of which may have hundreds of millions of dollars tied up in accounts receivable. Bottomline in March launched NetTransact, a Web-based EBPP solution engine that can parse data presented in either .html or .xml formats, allowing for the online adjustment of invoices. Some NetTransact customers already are reporting double-digit reductions in DSOs and administrative expenses. Bottomline's heritage product PayBase is a universal payment engine. The company also offers BankQuest, an electronic banking software suite that integrates back-office software with a front-end Web interface.