Web Invoicing & Electronic Payments Gaining Traction

The use of Web Invoicing in tandem with Electronic Payments is gaining traction in the B2B world, thanks in part to a renewed interest in transaction cost reduction as well as the impact of Sarbanes-Oxley, specifically as it relates to the compliance risks inherent to manual, paper-based processes. PayStream Advisors’ 2004 Financial Automation Survey reveals that over 25 percent of respondents indicate significant pain with regard to receiving and preparing invoices for processing.  Not surprisingly, 30 percent of respondents believe their organization will deploy a Web invoicing solution within a few months to streamline their procure-to-pay processes.

The leading Web Invoicing and Electronic Payments solution providers bring more to businesses than standard invoicing and electronic settlement methods. Some offer shared supplier networks where thousands of buyers and suppliers can conduct business within a common framework. Most make it possible to integrate payment data into ERP and legacy general ledgers, view real-time payment activity and notify all interested parties via email of status changes and exceptions.
 

Other innovations include dynamic payables discounting, called “dynamic discounting” for short, that allows suppliers to discount their receivables at any point up to the maturity date at an interest rate determined by the buyer. This discounting capability not only serves as a short-term low-cost financing alternative to suppliers but provides buyers with an additional income stream and effectively compresses the working capital requirements for all trading partners.

Early adopters have demonstrated that in many cases automation diminishes the procure-to-pay cycle time from weeks, even months, to just days, and that the detailed transaction documentation provides a de facto Sarbanes-Oxley audit trail.

The well documented process efficiencies, lower costs and enhanced visibility and control garnered from Web invoicing and electronic payment implementations, coupled with the level of interest we’ve seen, leads us to estimate a Compound Annual Growth Rate (CAGR) of over 30 percent for Web Invoice volume and an amazing 37 percent CAGR in transaction value over the next five years.