Digital Billing: Show Me the Savings

After a slow start, banks are taking another look at electronic presentment and payment.

In the EIPP market, however, the banks are starting to care less about losing their middleman position in corporate cash-management services and more about helping clients make the transition to EIPP. “We see it as an extension of services we already offer,” says Paul Markovic of Cleveland-based National City Bank. “Banks are in the middle of the payment world now, and we have to think about how we’re going to stay there in the future.” Certainly, customers are looking for banks to help them reach the nirvana of straight-through processing from invoice to payment to the general ledger. “We felt a lot more secure doing it with a bank than with a dot-com,” says Blistex’s Hoolehan.

Increasingly, banks are stepping up to the plate, striking deals to resell vendor software and assuming the role of integrator between customer and supplier systems and back-office enterprise resource planning systems. Citibank, for example, has struck a deal with Bottomline Technologies to help corporate clients implement EIPP. And while the growth of EIPP has to date been slow, Norberto Spangaro, the Americas regions head for Citibank E-Business, believes it will accelerate during the next couple of years. “It’s a matter of people changing processes, and any major change in business processes is hard to accomplish,” he says. “Companies have been slow to adopt EIPP, but those that have are delighted with it.”

Some banks are offering to serve as outsourcing partners. Almost two years ago, Hoolehan hired LaSalle Bank, a division of Dutch banking giant ABN Amro, to manage a comprehensive receivables program for Blistex that eventually incorporated an EIPP application from BillingZone LLC. His A/R department was spending too much time chasing money it should have collected months earlier, and staff turnover was high because the job was unbearably boring. “I wanted my professional people working on strategic things, not on clerical work,” says Hoolehan.

During the six-week EIPP implementation, staff from Blistex and ABN Amro Services Co., which provides the technical solutions for LaSalle’s EIPP offering, mapped out Blistex’s receivables processes, determining which employees were responsible for generating invoices, who gave approvals, and which of Blistex’s more than 2,000 customers were eligible for discounts. Now Blistex simply routes all invoices through LaSalle and leaves it to the bank to determine which customers will receive paper invoices and which can handle electronic transmissions. LaSalle also helps customers connect to the BillingZone system. “We passed a lot of frustration over to our bank,” says Hoolehan. “My A/R department now focuses on important things, like the extension of customer credit.” With one large customer, Kmart, now in bankruptcy, customer credit is undoubtedly a critical issue these days.

Whether companies outsource the function, as Blistex has done, or run an EIPP system in-house, they can decrease days sales outstanding and improve their cash visibility and forecasting ability. Customers, or payers, benefit too, from lower overhead costs, more-efficient dispute settlement, and — most important — earning discounts for early payment. “There is so much ROI to be had,” says Gartner’s Litan.

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