Electronic Invoice Presentment and Payment Can Speed Dispute Resolution and Cut DSO.

High-tech, Internet-based financial solutions for business-to-business commerce generally have lost steam as investors have pulled back because of the dot-com debacle. One area where online settlement still has a lot of R&D and marketing muscle behind it is electronic bill presentment and payment (EBPP), which is starting to show up as EIPP ("invoice" instead of "bill" for B2B transactions). EBPP started as a consumer service, but software vendors have been pushing hard, with mixed success, to develop a more sophisticated version that will meet business needs.

EIPP originally was built to automate offline commerce from the invoice presentment stage onward, but when e-commerce took off with settlement conspicuously missing, EIPP providers rushed to fill the void since their solution generally would work with either an online or offline front end. What gives EIPP real power in today's sputtering economy is that the big banks have bought into it and are making a real push to sell it to their corporate customers. By year-end, the top 20 cash management banks will all be offering EIPP services, predicts Todd Barnhart, vice president of marketing for BillingZone, an EIPP vendor.

In fact, two of the three big EIPP providers, Pittsburgh-based BillingZone and Bottomline Technologies, Portsmouth, NH, are selling solutions originally developed by banks that either sold the product to a software developer (the Northern Trust Co., Chicago, sold NetTransact to Bottomline), or else spun off the product to a joint venture (PNC Bank, Pittsburgh, to BillingZone). The

third provider is BCE Emergis, Montreal. All three will sell their products to large billers but emphasize sales through banks. JP Morgan Chase & Co. has picked Emergis; Citibank has signed up with Bottomline; BillingZone has contracts with PNC, ABN Amro and KeyBank. ERP vendor PeopleSoft Inc., Pleasanton, CA, announced its EIPP solution in April.

In essence, EIPP works this way: The biller sends an invoice file to the bank, which posts it on a web site that typically is hot-linked to the. Biller's site and can be reached with a click. There the payer can review all its open invoices, make adjustments, dispute certain line items, indicate the preferred method of payment, schedule the date for the funds transfer and then click to approve the payment. Integration with the biller's A/R system is tight, and cash application is virtually automatic. Integration with the payer's A/P system is weak, but some kind of file download in a standard format is usually offered. The payer has to build an interface.

Increased Visibility = Faster Payment

EIPP is no paradigm buster like the digital settlement services produced by vendors like eCredit.com of Dedham, MA, and Aceva Technologies of Mountain View, CA, which provide trade credit from financial institutions. It is designed to automate existing invoicing, approval, payment and posting processes. No third-party financing is involved, although vendors note vaguely that such arrangements are possible in the future. Trade credit, credit risk, AIR investment and payment timing are left undisturbed.