Saturday, March 3, 2001

B2B Internet Billing to Triple by End of 2002

According to a recent Gartner Group, Inc. study, the number of companies sending out business invoices over the Web will nearly triple by the end of 2002 to 26 percent, up from today's 9 percent. By the end of 2004, this number is projected to rise to 35 percent. Business to business electronic invoicing and payments (EIP) will dramatically reduce the current 41-day average time to collect payments, allowing companies to reduce debt and invest cash more quickly.

"Three times more companies sell products or services over the Internet than invoice customers using Internet channels, said Avivah Litan, research director at Gartner." "The primary challenges will be convincing buyers to give up their checks in order to take advantage of Internet payment benefits."

According to Gartner, EIP will enable 10 key business process improvements:

1. Improved Payment Services — Automatic application of payments to accounts receivable, online payment guarantees, and multicurrency payment management will all be possible with EIP. Currently, sellers receive one payment for every three invoices sent through traditional channels.

2. Reduced Billing Costs — According to the Gartner study, companies expect to lower the typical cost of producing a paper invoice from $5 to $1.65 for an electronic invoice, by reducing labor, postage, paper and equipment costs. The cost of manually resolving an invoice dispute is also expected to decrease from $20 per call to $10 per dispute that is handled electronically. Other more significant savings come from streamlining accounts payable and receivable system processes, and ultimately reducing inventory.

3. Links With Shipping and Logistical Systems — Linking EIP with logistical systems will enable the automatic triggering of a payment once buyers receive their goods.

4. Improved Financing Services — More than 60 percent of the companies surveyed finance sales using the open account method, so automation that leverages trading partner relationships is bound to be very widely accepted.

5. Improved Customer Bill Review and Payment Processes — Surveyed companies estimate that 11 percent of their customers face significant challenges in handling and paying paper invoices, while 46 percent experience modest challenges.

6. Integration With Billing Systems — The second major barrier inhibiting billers from adopting EIP, after lack of customer adoption, is the need to integrate with legacy billing systems. Payers are also reluctant to adopt EIP without tight integration of their accounts payable systems with new EIP applications.

7. Document Exchange and Reconciliation — EIP systems will enable buyers and sellers to exchange and easily track documents related to the sale. Buyers will also be able to review and reconcile the document information. This capability will proactively prevent disputes, leading to sellers being paid in full more quickly.

8. Integration with E-Procurement — Thirty percent of companies surveyed use e-procurement systems, but just 3 percent have linked them to EIP systems or strategies. According to Gartner, a fully integrated and automated supply chain is important to maximize e-business returns.

9. Customer Authentication Services — Of the surveyed companies selling on the Internet, 57 percent make use of user IDs and passwords to authenticate customers, while just 14 percent have implemented digital certificate authentication technology. However, less than 1 percent of the volume of B-to-B transactions are secured with digital certificates.

10. Escrow and Insurance Services — Surveyed enterprises ranked escrow and insurance services as the lowest priority on their list of EIP system enhancements.

Gartner's Internet & E-Business Conference & Expo (iEB), co-produced by Advanstar Communications, will be held at the Jacob K. Javits Convention Center, New York City, from April 2 - 4, 2001.