- Supplier Recruitment & Enrollment: The solution providers work closely with the buyers in the supplier recruitment process through activation campaigns. The solution offers suppliers access to an online portal where they can log in and provide registration and bank account information. Most vendors authenticate the bank account information provided by suppliers before payments are initiated.
- Invoice Generation & Delivery: This stage includes all the steps a supplier must complete in order to produce and deliver an invoice to the buyer. Web invoicing solutions facilitate the exchange of invoices between buyers and suppliers by supporting several methods of accomplishing this – purchase order (PO) flips, blank e-forms, standard templates, pulling a template from the buyers' enterprise resource planning (ERP) systems, etc.
- Exception Handling: Invoices submitted are routinely checked for duplicity and mathematical integrity. An additional layer of validation is available for checking invoices against a set of buyer-defined criteria that can be established during the implementation phase or any time thereafter. This process identifies errors and exceptions proactively and notifies the infringing party to correct those errors through alerts.
- Workflow & Dispute Management: The process that buyers follow to sort, route, review, dispute and approve invoices for payment, including workflow. The system also allows buyers and suppliers to investigate and collaboratively resolve disputes. Comments and other related documents can be attached to transactions to provide further visibility into the approval and dispute resolution process.
- Payment Processing: The steps that buyers take to initiate, post and execute payment, including payment preparation, processing and submission to their financial institutions. This stage also includes the receipt and application of payments from buyers, including cash application, exception processing, archival, and integration with and posting to accounts payable and other enterprise systems.
- Reporting & Analytics: This includes the ability of the solution to generate standard and custom queries and reports and provide visibility across transactions to buyers and suppliers. The solutions also provide comprehensive audit trails of all actions taken within the system and vendor self-service options. This wealth of information gleaned from the procure-to-pay process, can be used to comply with regulatory requirements and to provide valuable business intelligence for strategic spend analysis.
How Will Web Invoicing & Electronic Payments Solutions Help My Organization?
Organizations like MSKK and Delta Airlines that utilize a Web Invoicing & Electronic Payments solution experience a wide range of benefits, depending on the type of solution they deploy. While MSKK's chosen implementation began with payment transmission to suppliers, others like Delta Airlines were focused on a system that delivers invoice receipt and "PO flip" functionality.
In general, technology adopters benefit in the following three areas:
- Processing Efficiency: Invoice and payment automation solutions contribute to processing efficiency by removing paper from the equation. Invoices enter processing queues more quickly, and easy access to invoices online and workflow tools accelerates their approval. Review and approval tasks can be routed automatically to individuals distributed across the organization based on clearly defined and highly customizable business rules. Further, these solutions facilitate transaction research, discrepancy resolution and reduce response times to supplier inquiries.
- Lower Costs: Invoicing solutions enable organizations to trim their full-time equivalent (FTE) requirements by automating the procure-to-pay process. Second, they provide a tool to eliminate late payment penalties and capture a higher percentage of prompt payment discounts. Finally, electronic payments reduce the costs associated with printing and mailing paper checks and the losses incurred from fraud.
- Enhanced Visibility and Control: Web Invoicing & Electronic Payments solutions provide complete visibility across the entire transaction to both buyers and suppliers through audit trails and other reporting capabilities. Additionally, they provide secure storage for invoices and support corporate policies and compliance with regulatory requirements. These solutions also improve the speed and accuracy of decision making by allowing users to easily access accurate and up-to-date information.
Where Is This Market Headed?
PayStream's research shows that the adoption of Web Invoicing & Electronic Payments solutions will grow rapidly over the next five years. The total number of transactions handled through a Web Invoicing & Electronic Payments solution is expected to increase from the current 1.6 billion to 6.9 billion in 2010, resulting in a Compound Annual Growth Rate (CAGR) of 31.25 percent. This translates to an increase in transaction value passing through these networks from $2.2 trillion in 2005 to $8.9 trillion five years from now — an amazing CAGR of 36.81 percent.
Figure 2: Forecasted Growth in Adoption of Web Invoicing & Electronic Payments
The accelerating adoption of Web Invoicing & Electronic Payments solutions is not surprising given that the savings from automation are significant. In addition to the cost savings enjoyed by organizations, we believe that the need to adapt to changes in the regulatory environment (i.e. Sarbanes-Oxley and Check 21) and a desire to achieve payables goals will provide the momentum for automation.
The following factors will also shape the evolution of the market: