Why the Resistance to Electronic Presentment & Payment? Evaluating Your Treasury Strategy -- What Does it Mean for Your Treasury Operation Most Treasury organizations devote a majority, (if not a large majority) of their time on non-strategic, non-value added activities, i.e., activities other than cash flow forecasting, cash management, and balance sheet optimization. Much of their time has been spent answering basic internal & external inquiries (usually over the phone or possibly through email) and labor-intensive activities to expedite and, to a lesser degree, defer payments, obtain balance and A/R information, process payment requests and chase money. New treasury automation systems, such as electronic payment tools, have evolved over the last few years from passive, one-way means of communications (e.g. Bank Balance Reporting) to robust, two-way information systems which facilitate information flows between buying and supplying organizations. Unfortunately, the marketplace has been slow to react to these new innovations and the obvious advantages they provide. The makers of the software and services must be asking themselves, "What is the problem with our products?" In a word, nothing. While the basics of Electronic Presentment & Payment Systems provide the visibility of the invoice and payment status, they may also include information about receiving, conformance to purchase order, and invoicing matching processes. Some companies are using advanced tools to communicate and respond to supplier payment requests or install biller systems that let their customers view and approve their bills online. The providers of leading-edge Electronic Presentment & Payment tools such as BillingZone, BottomLine and XIGN envisioned and created applications that offer a variety of capabilities, including: - Complete visibility of procure to pay transactions - Supplier management of Invoices - Supplier management of payment initiation The overarching benefit for the payer organization is the ability to focus on high value-add activities, such as better cash management, improved supplier monitoring, and reduced inquiry volumes. For the supply organization, the critical benefit is achieved by enabling the supplier to provide better customer service, speed cash application, reduce DSO and reduce overhead costs. The Problem With Electronic Presentment & Payment The problem is that these application must be accompanied with business process improvements in order to meet its potential, and that its benefits may be greater to those outside of Treasury -- in operations, customer service and finance. In many organizations, these improvements are going to only come at a minimum with additional training, a shift in priorities, and maybe even a re-deployment of resources. Supplier support projects may get derailed by process-based buyers who lack strategic skills and who are uncomfortable in a planner/scheduling role. An electronic payment and presentment product exposes many weaknesses in traditional Treasury organizations: - A dysfunctional cash forecasting system with not enough real data and too many guesses - Poor payment control as evidenced by duplicate pays and invalid open AP - Incomplete picture of true AP Outstandings – Invoicing process uneven - Poor supplier inquiry maintenance The positive side is that these challenges can be overcome, both organizationally and technically. Summary Much of the new functionality provided by a emerging payment and presentment systems can benefit those outside of Treasury -- in operations, purchasing, and finance. In order for Electronic Presentment & Payment to be accepted, the benefits must be presented to these other functional areas and to those in senior management. There are obvious benefits in improved customer service levels, lower inventory levels and costs, and improved operations and Treasury productivity. It is best understood and accepted by those with profit and loss responsibility. There are also many benefits to those within Treasury, primarily around the huge labor reduction in supplier communications on the one hand, and the huge improvement of the timeliness and accuracy of payment. An electronic payment application offers the means to automate much of the labor-intensive communications with suppliers. This should free Treasury organizations to pursue strategic objectives such as cash management, treasury optimization management. Unfortunately, many of the incumbents are not trained or conditioned to operate in a strategic mode. To maximize these benefits, the AP organization may likely require business process improvements. In some cases, it will require a shift in responsibilities and manpower within Treasury group. In the case of Electronic Presentment & Payment, the software has developed faster than its business users. Its acceptance will come in time, especially when accompanied by business process improvements and when sponsored by senior management who will see the great ROI it provides. Looking for more research on e-Billing and e-Payments? Take a look at some of our PayStream Research Reports Sign-up for today for ePayment Industry News, Analysis and Insights with PayStream ALERTS