Web Invoicing & Electronic Payments: Moving Beyond Paper

People have dreamed of a paperless workplace for decades.  In the 1960s, for example, futurists predicted that organizations in the new millennium would exchange information in a fully electronic manner.  This sounds quaint from our current vantage point, but who knew that getting rid of paper would be more difficult than putting men on the moon?  The unfortunate reality is that corporate processes remain mired in paper, and no one knows that better than accounts payable professionals. 

The results of our 2004 Financial Automation Survey illustrate that accounts payable departments continue to experience problems at all stages of the invoice receipt-to-pay cycle.  For example, the process of receiving and preparing invoices for processing—invoice receipt, matching, and imaging/data capture—causes significant pain to roughly one quarter of respondents.  Pain increases as a transaction unfolds, building with approval processing and peaking at discrepancy resolution and exception processing. 

The survey also revealed that accounts payable professionals have a keen interest in technology solutions that will streamline and automate some or all of these functions.  Asked about the relevance of a range of technology tools and potential initiatives to their payables automation strategy, 40.0 percent of respondents said that workflow tools to automate approval processing are critical. Solutions for Web-based invoice receipt and imaging and document management were close behind with 32.1 percent and 27.4 percent of respondents respectively deeming them essential. 

Our latest research indicates that businesses are turning to Web Invoicing and Electronic Payments solutions that streamline the invoice receipt-to-pay cycle and enable them to overcome the pain experienced during all stages of the invoice approval and processing.

  What is Web Invoicing and Electronic Payments?

As the name implies, ‘Web Invoicing and Electronic Payments’ can refer to a solution that leverages the Internet to automate the delivery of purchase orders to suppliers, receipt of invoices for buyers and the payment from buyers to suppliers. What is often not clearly understood are the robust features of the typical system. For example, most solutions adhere to buyer business rules for automatic error checking, ensuring an invoice is checked before submission for approval. Further downstream, workflow routing and approval found in most systems, automate the invoice approval process, including forwarding email to approvers with links to the invoice(s) within the email. Finally, a number of payment options are available to buyers who control the timing and method of payment. Each of these features speaks to the maturity of the tools available for moving closer to the more efficient paperless environment. A bonus to productivity, efficiency and profitability gains is the de facto Sarbanes Oxley audit trail such solutions automatically create.    

The Different Flavors of Web Invoicing & Electronic Payments Solutions

Every solution is designed to help buyers and suppliers move their invoicing and payment-related activities from a paper environment to an electronic one.  Suppliers seek to streamline and accelerate the order-to-cash process, while payers want to transform the purchase-to-pay cycle. However, not every solution provides equal functionality for suppliers and buyers to achieve these goals, though, so corporate managers should understand the different forms that Web Invoicing & Electronic Payments solutions can take.

First, there are direct solutions, which enable either the supplier or the buyer to control the invoicing and payment process from their own system.  Direct solutions may be either software or a hosted service provided by an application service provider (ASP).  When a solution is controlled and managed by the supplier, it is referred to as a supplier-direct or supplier-centric solution.  On the other hand, a direct solution controlled and managed by the buyer is known as a buyer-direct or buyer-centric solution.

Second, there are consolidator solutions, which rely on a third-party to provide a single Web interface that links multiple buyers with multiple suppliers.  The consolidator controls the solution and sits between the buyers and suppliers, collecting and delivering invoices and payments between them and eliminating the need for point-to-point solutions.  In addition to providing the connectivity that links the suppliers and buyers, the consolidator also acts as the services and network provider.

Benefits of Web Invoicing & Electronic Payments

Organizations that that utilize Web Invoicing & Electronic Payments solutions experience a wide range of benefits, depending on the type of solution they deploy. In general, they benefit in the following three areas: (i) Processing Efficiency, (ii) Lower Costs and (iii) Enhanced Visibility and Control.

PayStream Advisors’ forthcoming Corporate Insights Report titled, “Web Invoicing & Electronic Payments: Moving Beyond Paper “profiles nine of the leading solution providers in this area and offers valuable insights into the electronic invoicing and payment capabilities provided by their solutions. This report helps managers compare and contrast different solutions to identify the one that bests suits their organizations' requirements. The report will be is available online at http://paystreamadvisors.com/store/details.cfm?id=56 in June 2005.