EIPP Adoption Growing among Large Companies

Cost, time savings cited in survey as primary benefits of electronic invoicing presentment and payment

Cost, time savings cited in survey as primary benefits of electronic invoicing presentment and payment

Purchase, NY  August 18, 2004  While 80 percent of all business-to-business (B2B) transactions are still being completed with paper checks, a trend toward greater utilization of electronic payments by larger enterprises is emerging, according to the results of a new survey report.

The "B2B Spend Management Survey," released by MasterCard International and spend management solutions provider Ariba, revealed that two out of every three companies with annual revenues exceeding $500 million now use some form of electronic invoicing presentment and payment (EIPP) systems to streamline their financial management processes. The survey characterized forms of EIPP as solutions that enable either electronic data interchange (EDI) or non-EDI electronic invoice receipt or presentment, or the ability to accept or make electronic payments.

"Although paper checks continue to be the dominant payment method for B2B transactions today, the opportunity for electronic payments to displace paper is enormous," said Alenka Grealish, an analyst at research firm Celent Communications. "Of the estimated 9.58 billion B2B transactions that will be completed in 2004, 7.63 billion, or 80 percent, will be done with checks. However, we believe that electronic B2B payments will grow from 20 percent today to almost 50 percent by 2010."

The "B2B Spend Management Survey," jointly sponsored by MasterCard and Ariba, reflects the views of purchasing professionals from companies in a variety of industry segments, including financial services, manufacturing and retailing, who attended the Ariba LIVE 2004 conference earlier this year.

Among the survey's most significant findings:

  • 66 percent of respondents currently use some form of EIPP (including both EDI and non-EDI);

  • 62 percent rely on such technology to make electronic payments to suppliers; and,

  • 35 percent use the technology to receive payments from customers.
Just over half the respondents (51 percent) cited the reduced processing time and resulting lower costs as the primary benefits of using EIPP. According to an April 2003 Gartner research report, "The Big Payoff of Web Billing and Online Customer Service," by Avivah Litan, vice president and research director, a typical business biller could save $2.7 million a year if all business bills were delivered over the Web. Others have shaved the costs of processing and delivering paper invoices from an average of $5.00 to as low as $2.00, according to Gartner.

Despite the growing utilization and popularity of EIPP, barriers to its adoption still persist. Survey respondents cited cost (25 percent), complexity (22 percent) and aversion to making changes to their IT systems (19 percent) as the top reasons for not deploying an EIPP system.

However, 69 percent of respondents whose companies currently do not have EIPP systems reported plans for a future deployment; 48 percent of those implementations are expected in the next year and an additional 32 percent are planned for the next one to two years.

"The survey results clearly demonstrate that purchasing professionals from large companies in virtually every industry recognize just how inefficient paper-based and manual processes are for their business," said Phil Philliou, vice president of e-business and emerging technologies with MasterCard International. "The majority have seen first-hand that EIPP saves their companies time and money and has a positive impact on bottom line performance. We believe that's why eight out of 10 respondents from companies that don't currently have EIPP are planning to implement it within the next two years."

The MasterCard and Ariba "B2B Spend Management Survey" was based on a survey of 105 professionals with decision-making or influencing power over corporate purchasing methods. All respondents surveyed worked for organizations with more than $500 million in annual revenue, and the majority (66 percent) were employed at organizations with more than $2.5 billion in annual revenue. The survey was conducted during Ariba LIVE 2004 (May 3-4, 2004). The survey has a margin of error of +/-7.92.

Complimentary copies of the survey report are available at www.mastercardbusiness.com/e-P3.