Navigating the Invoice Presentment and Payment Landscape

Aug 1, 2009 | Publisher: paystreamadvisors | Category: Technology |  | Collection: Migrated Docs

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(704) 523-7357 x225 mcolwell@paystreamadvisors.com 1 PAYSTREAM ADVISORS NAVIGATING THE INVOICE PRESENTMENT AND PAYMENT LANDSCAPE Executive Summary Promises of compressed working capital requirements, outsized efficiency gains, tighter trading relationships, and improved customer satisfaction are attracting increasing numbers of companies to billing and payment automation (BPA) solutions. Our 2003 Financial Automation Survey of more than 2,000 treasury, information technology (IT), and e-commerce managers at Fortune 1000 companies revealed that roughly 16 percent of respondents are using a BPA solution for business-to-business (B2B) transactions. This is a 60 percent increase over the percentage of respondents who said the same thing last year. This report is written for the 26 percent of survey respondents who said that their companies are not using a BPA solution today, but plan to adopt one in the near future. These individuals clearly understand the rationale for BPA solutions in a B2B environment, yet need assistance identifying appropriate vendors and solutions for further investigation. With this goal in mind, we interviewed 18 different BPA solution providers in order to learn about their solutions, client successes, strategies for 2003, and overall view of the market. We evaluated each vendor according to six product and organization criteria, and profiled ten that we believe every corporate manager considering a BPA solution should understand. To help readers quickly find the information that they want, we have organized this report into three sections. The first section defines key terms that we use throughout the report and explains the evaluation process that we followed. The middle section contains ten identically structured vendor and solution profiles that may be read sequentially to gain a broad understanding of the BPA market or individually to learn about specific vendors and solutions. The last section provides analytical insights to help readers compare and contrast across all of the vendors and solutions. Navigating the Invoice Presentment and Payment Landscape: A Buyer's Guide to B2B Payment Automation Solutions is one of many reports in our research library that are written for the corporate audience. Individuals who are interested to learn more about BPA after reading this report may find other titles in our Corporate Insights series of reports, such as Easing into Electronic Invoicing and Payment, helpful as well. 2 PAYSTREAM ADVISORS NAVIGATING THE INVOICE PRESENTMENT AND PAYMENT LANDSCAPE Introduction........................................................................................... 1 What is Billing and Payment Automation? .....................................1 The Different Flavors of BPA .........................................................4 Defining B2B .................................................................................6 Evaluation Criteria..........................................................................7 How to Read This Report...............................................................8 BPA Solution Profiles .......................................................................11 Mellon Financial Corporation .....................................................11 Deutsche Bank .............................................................................17 JPMorgan Chase...........................................................................23 BCE Emergis ................................................................................29 Avolent .........................................................................................35 SAP ..............................................................................................41 Xign..............................................................................................47 Case Study: Sprint .........................................................50 Bottomline Technologies ..............................................................53 Case Study: PMA Insurance Group ............................56 Velosant........................................................................................59 U.S. Bank .....................................................................................67 Case Study: Sunoco.......................................................72 Conclusions and Recommendations ..........................................75 Choosing Between Hosted and Software BPA Solutions ...............75 Choosing Between the Direct and Consolidator Models...............78 Solution Functionality ..................................................................80 Industry Focus ..............................................................................84 Market Traction ...........................................................................86 Market Traction vs. BPA Vision ...................................................88 About PayStream Advisors............................................................92 Other BPA Solution Providers Interviewed ...............................93 Table of Contents 3 PAYSTREAM ADVISORS NAVIGATING THE INVOICE PRESENTMENT AND PAYMENT LANDSCAPE Introduction........................................................................................... 1 Figure 1: The BPA Universe ..........................................................2 Figure 2: The Order-to-Settlement Process Within BPA ...............3 Figure 3: Where BPA Fits in the Financial Supply Chain ..............4 Figure 4: BPA Models: Direct vs. Consolidator ............................5 Table 1: Comparing the Direct and Consolidator Models .............6 Conclusions and Recommendations ............................................75 Table 2: Hosted vs. Software BPA Solutions................................76 Table 3: Receivables-Oriented BPA Solutions..............................79 Table 4: Payables-Oriented BPA Solutions ..................................80 Figure 5: FunctionalityReceivables-Oriented BPA Solutions....81 Figure 6: FunctionalityPayables-Oriented BPA Solutions ........82 Table 5: Vendor Target Industries ...............................................84 Table 6: Vendor Focus by Industry..............................................85 Table 7: Market TractionReceivables-Oriented...Solutions ......86 Table 8: Market TractionPayables-Oriented BPA Solutions ....87 Figure 7: Market Traction vs. BPA VisionReceivables..............89 Figure 8: Market Traction vs. BPA VisionPayables ..................90 List of Figures and Tables 4 PAYSTREAM ADVISORS NAVIGATING THE INVOICE PRESENTMENT AND PAYMENT LANDSCAPE 5 PAYSTREAM ADVISORS NAVIGATING THE INVOICE PRESENTMENT AND PAYMENT LANDSCAPE Innovation rewards organizations that can harness its power. As organizations take their first hesitant steps forward, however, errors, miscalculations, and failures in judgment can obscure terrific opportunities. This report endeavors to help corporate managers pierce these barriers to innovation by shedding light on a rapidly evolving set of technologies that we call billing and payment automation (BPA). Financial managers should be interested to know that our 2003 Financial Automation Survey of more than 2,000 treasury, information technology (IT), and e-commerce managers at Fortune 1000 companies revealed that roughly 16 percent of respondents are using a BPA solution for business-to-business (B2B) transactions. A further 26 percent reported that they are either deploying a BPA solution now or plan to do so in the near future. In light of these results, we felt that this was the perfect time to profile ten of the leading providers of B2B BPA solutions. We interviewed 18 different BPA solution providers to learn more about their solutions, customers, and strategies for approaching the market. We spoke at length with six banks, one Enterprise Resource Planning (ERP) vendor, and 11 third-party software providers, evaluating each one according to six product and organization criteria. Based on the results, we selected and profiled ten vendors and solutions that we believe every corporate manager considering a BPA solution should understand. Our primary objective is to increase corporate finance, treasury, IT, and e- commerce managers' ability to distinguish between BPA vendors and the solutions that they offer. We have written this report specifically for CFO's, treasurers, cash managers, accounts payable and receivable managers, and IT and e-commerce directors at Fortune 1000 companies who understand basic BPA concepts and opportunities, but want detailed vendor and product information in order to identify an appropriate solution. Our companion report, Easing into Electronic Invoicing and Payment, illustrates the benefits of BPA and shows corporate managers how their organizations can get started. It provides a framework for implementing a BPA strategy, as well as several interesting case studies. To view the executive summary, click this link: Easing into Electronic Invoicing and Payment. What is Billing and Payment Automation? The first challenge that corporate managers face is how to describe solutions that automate the invoice presentment, receipt, approval processing, and payment aspects of their B2B trading relationships. The term electronic Introduction 6 PAYSTREAM ADVISORS NAVIGATING THE INVOICE PRESENTMENT AND PAYMENT LANDSCAPE invoice presentment and payment (EIPP) has gained widespread acceptance, but it means different things to different people. Some use EIPP to describe any solution that enables a biller or payer to engage in electronic invoicing and payment, whereas others apply it more narrowly to solutions that billers control and operate. To make matters worse, a similar termelectronic bill presentment and payment (EBPP)is frequently used to describe analogous solutions for the business-to- consumer (B2C) market. For individuals who use the terms bill and invoice interchangeably, EBPP and EIPP appear to be identical. Vendors' tendency to interpret EIPP differently and introduce additional terms to describe their own solutions and capabilities has added to this sense of confusion. For the sake of clarity, we use the term billing and payment automation (BPA) throughout this report to refer to any solution that uses Internet technology to automate invoice- and payment-related activities in a B2B environment (see Figure 1). BPA encompasses the order-to-cash cycle that begins when a biller receives an order and ends when it receives and applies payment. It also includes the purchase-to-pay process that extends from the time when a payer receives an invoice to the moment when it pays. In fact, all of a biller's and payer's activities in this broad order-to- settlement process fit within the BPA "universe" (see Figure 2). FIGURE 1: THE BPA UNIVERSE The BPA universe encompasses all of a biller's and payer's order-to-cash and purchase-to-pay processes, uniting them into a broader order-to- settlement process. Each of the solutions profiled in this report focuses on the BPA universe, addressing its component steps differently and with varying degrees of effectiveness. 7 PAYSTREAM ADVISORS NAVIGATING THE INVOICE PRESENTMENT AND PAYMENT LANDSCAPE We define the specific components of the BPA universe as follows: Invoice presentment. Beginning with order confirmation, the steps that billers must take to produce and deliver invoices to payers, including invoice generation, email notification, invoice reprints, and online access. Invoice receipt. The steps required for payers to validate, receive, and prepare invoices for internal processing, including matching to purchase orders or physical delivery receipts, data entry, and posting to accounts payable systems. Approval processing. The process that payers follow to sort, route, review, dispute, and approve invoices for payment, including workflow, dispute resolution and escalation procedures, and authorization protocols. Payment initiation. The steps that payers take to initiate, execute, and post payment, including payment preparation, processing, and submission to their financial institutions. Payment application. The receipt and application of payments from payers, including cash application, exception processing, archival, and integration with and posting to accounts receivable and other enterprise systems. Account management. The activities that billers perform to monitor and manage customers' accounts, such as providing customer self-care tools, options to initiate inquiries or log discrepancies, and/or respond to customer inquiries, change of address requests, etc. Reporting and analysis. The process that billers and payers use to create cash forecasts, payment schedules and remittance reports, track collections, payables and discrepancies, analyze trends in supplier usage, etc. FIGURE 2: THE ORDER-TO-SETTLEMENT PROCESS How you describe the BPA universe depends on your perspective. Billers sum up their invoicing and payment-related activities with the phrase order-to-cash, while payers use the term purchase-to-pay to describe their own activities. 8 PAYSTREAM ADVISORS NAVIGATING THE INVOICE PRESENTMENT AND PAYMENT LANDSCAPE The BPA universe, in turn, fits into a larger financial value chain that includes credit facilitation, trade execution, invoice management, payment, and cash management and analytics (see Figure 3). While the entire financial value chain is beyond the scope of this report, each of the BPA solutions that we profile focuses on the invoice presentment, processing, and payment components of this chain. In the context of globalization, intensifying competition, and a trend toward deeper integration within and between trading partners, we believe that corporate managers must focus on how BPA solutions may be combined with products and services from other pieces of the financial supply chain to create complete financial automation solutions. The Different Flavors of BPA Every BPA solution is designed to help billers and payers move their invoicing and payment-related activities from a paper environment to an electronic one. Billers seek to streamline and accelerate the order-to-cash process, while payers want to transform the purchase-to-pay cycle. Not every BPA solution provides equal functionality for billers and payers to achieve these goals, though, so corporate managers should understand the different forms that BPA can take (see Figure 4). First, there are direct solutions, which enable either the biller or the payer to control the invoicing and payment process from their own system. Direct solutions may be either software or a hosted service provided by an application service provider (ASP). When a BPA solution is controlled and managed by the biller, it is referred to as a biller-direct or biller-centric solution. On the other hand, a direct solution controlled and managed by the payer is known as a payer-direct or payer-centric solution. Biller-direct BPA solutions link one biller with many payers for invoice presentment and/or payment. A biller deploys this model by asking its payers to view invoices using its BPA solution, which may also provide approval routing, dispute resolution, FIGURE 3: WHERE BPA FITS IN THE FINANCIAL SUPPLY CHAIN The BPA process is a subset of the larger financial supply chain. The solutions profiled in this report focus on the invoice presentment, processing, and payment segments of this chain, but can also be integrated with other solutions to create powerful financial automation strategies. 9 PAYSTREAM ADVISORS NAVIGATING THE INVOICE PRESENTMENT AND PAYMENT LANDSCAPE payment initiation, accounts payable and receivable integration, and reporting and analysis capabilities (see Table 1). Seven of the vendors profiled in this report offer biller-direct BPA solutions. Payer-direct BPA solutions, on the other hand, involve one payer providing an interface for many billers to present invoices and receive payments electronically. A payer deploys this model by asking its billers to post invoices to its BPA solution and giving them the instructions and capabilities to do so. Payer-direct solutions typically give billers several options to submit invoices directly into the payer's BPA system, such as completing a Web form, "flipping" a purchase order into an invoice, or sending an electronic file. Most payer-direct solutions offer billers online payment receipttypically Automated Clearing House (ACH) transactionsand access to invoice- and payment-related information. As with the biller-direct model, payer-direct solutions usually provide workflow, dispute resolution, payment initiation, accounts payable and receivable integration, and reporting and analysis capabilities. Two of the vendors profiled in this report offer payer-direct BPA solutions. Second, there are consolidator solutions, which rely on a third-party to provide a single Web interface that links multiple billers with multiple payers. The consolidator controls the BPA solution and sits between the billers and payers, collecting and delivering invoices and payments between them and eliminating the need for point-to- point solutions. In addition to providing the connectivity that links the billers and FIGURE 4: BPA MODELS: DIRECT VS. CONSOLIDATOR BPA solutions come in two distinct flavorsdirect and consolidator. Both forms of the direct model enable one-to-many relationships, whereas the consolidator model connects multiple billers with multiple payers. 10 PAYSTREAM ADVISORS NAVIGATING THE INVOICE PRESENTMENT AND PAYMENT LANDSCAPE payers, the consolidator also acts as the services and network provider. Billers and payers may both participate in a consolidator model, but none controls it. Instead, payers ask their billers to present invoices through the consolidator's BPA solution, and billers ask their payers to view and pay invoices through the consolidator. Consolidator solutions typically provide the same functionality as biller- and payer-direct solutions. Four of the vendors featured in this report offer consolidator solutions. Defining B2B Each of the BPA solutions that we profile in this report targets the B2B market, which we define as transactions for goods or services between two non-government organizations. Transactions involving governments and individuals are classified variously as B2G, B2C, or P2P (person-to-person). B2B transactions are generally more complex than B2C or P2P transactions, although this may not hold for B2G. B2B transactions are complicated because they typically involve purchase orders and invoices. Invoices summarize all services provided, as well as related charges, and frequently contain more detailed information than bills. They also follow a longer path from receipt to approval to payment that may involve multiple individuals and departments. Invoices quickly become costly and time consuming for billers and payers to process as they increase in volume, yet they contain critical information that both parties need to allocate revenue and costs internally. In contrast, consumer bills usually contain only a few line items and are read and approved by the same person. Bills provide a recurring opportunity for billers to communicate and market to their customers, but their most important feature is the information that they provide about the amount due, due date, and location where the consumer should send payment. Biller-Direct Payer-Direct Consolidator Single biller, many payers Payers view invoices on biller's system Payers communicate disputes to biller Payers approve and authorize payments Biller's bank initiates debits to payers' banks Single payer, many billers Payer views invoices on own system Payer communicates disputes to billers Payer approves and authorizes payment Payer's bank initiates credits to billers' banks Many billers to many payers Payers view invoices on consolidator's system Payers communicate disputes to billers through consolidator Payers approve and authorize payments Transactions initiated by biller's bank or payer's bank TABLE 1: FEATURES OF THE DIRECT AND CONSOLIDATOR MODELS 11 PAYSTREAM ADVISORS NAVIGATING THE INVOICE PRESENTMENT AND PAYMENT LANDSCAPE Another important attribute of B2B transactions is their cyclical or event-driven nature. A cyclical transaction takes place on a recurring basis and is not contingent on someone at the payer organization submitting a request for the goods or services each time they are needed (e.g. telephone service). Besides the absence of a purchase order, cyclical transactions may be handled differently by the payer than event-driven transactions. For instance, telephone or utility charges may be processed centrally or outsourced for processing by third-party providers with specialized capabilities. Event-driven transactions, on the other hand, are discrete purchases of goods or services that do rely on someone at the payer organization to request them each time they are needed (with or without a purchase order). More people generally "touch" event-driven transactions, making them more expensive to process than cyclical ones. As a result, the value proposition of using a BPA solution to reduce the cost and effort of event-driven transactions is especially attractive. Our focus in this report is on BPA solutions that address event-driven B2B transactions. Evaluation Criteria The solution profiles in this report are based on our conversations with members of each vendor's management team. Vendors submitted their presentation materials in advance of our briefing sessions to give our team adequate time to prepare and then provided detailed technical and product information at a later date. In addition, each vendor identified specific staff (e.g. the product manager) to lead the briefing sessions and serve as our primary point-of-contact throughout the evaluation process. Briefings typically lasted 90 minutes and consisted of a presentation by the vendor about its BPA solution, recent client "wins," and strategy for 2003 followed by a period of open dialogue and questions. No two briefings were alike, as we used them primarily to deepen our understanding of each vendor's solution and overall vision and strategy. Instead, vendors' answers to our highly specific Vendor Briefing Form ensured that we collected sufficient data about each vendor and wrote each solution profile from a common base of information. Each vendor reviewed our profile of its BPA solution for accuracy, but was not allowed to influence or change our final analysis in any way. We do not present the solutions profiled in this report on a numerical scale, although we did evaluate them against a range of product and organization criteria. First, we evaluated each solution against three product criteria in order to gain a sense of its capabilities: Scope and functionality. Does the solution utilize a direct or consolidation model? Is it biller-centric, payer-centric, or participant- neutral? Is it a licensed software or hosted solution? What elements of the BPA universe does the solution address? Does it offer limited or deep functionality in each category of the BPA universe? How many billers and payers are presently using the solution? Ease of integration. Where and how does the solution integrate with 12 PAYSTREAM ADVISORS NAVIGATING THE INVOICE PRESENTMENT AND PAYMENT LANDSCAPE clients' enterprise systems and legacy applications? How easily does it accomplish this? Does it provide bank or payment provider neutrality, or does it require billers and payers to alter their banking relationships? What is the solution's availability across banking relationships? Is it portable if the user changes banks? Security and scalability. How well does the solution handle data integrity and encryption? Does it have robust authentication and authorization capabilities? Is it reliable enough to handle large transaction volumes, demand spikes, and client growth? Next, to ensure that critical attributes like the solution provider's overall focus on the BPA market factored into our profiles, we assessed each vendor on three organizational criteria: Overall firm focus on BPA. Are BPA services a core offering or a sideline product? Is the vendor's BPA service bundled with other solutions that are core to the provider? Does the management team have a clear vision of the future direction of the BPA market and a viable strategy to enhance and extend its BPA offerings? Ability to execute and provide support. How viable are the vendor's development strategy, management vision, and operational plan? How likely is it that the vendor will be able to build its business in the current depressed market? What are its financial strength, industry influence, and overall reputation? What is its implementation process and track record? How many customers does it have in the production and implementation stages, and how many of their trading partners are using its solution? Partners and alliances. Who are the solution provider's strategic and channel partners? What is their relationship with the vendor? What access do they have to the solution's intended audience? Do they offer complementary or competing BPA solutions? How can they help the vendor achieve a critical mass of billers and payers? How to Read This Report We have organized this report into three sections to help readers quickly find the information that they desire. This initial section has set the stage for the profiles that follow by defining key terms that we use throughout the report and explaining the process that we used to evaluate each vendor and solution. The next section consists of ten BPA vendor and solution profiles. The first page of each profile contains several pieces of information to help orient readers. A sidebar displays the members of the vendor's management team that we interviewed, classifies the solution as software or a hosted service, characterizes the solution as biller-direct, payer-direct or consolidator, and uses our BPA graphic to summarize the solution's capabilities. 13 PAYSTREAM ADVISORS NAVIGATING THE INVOICE PRESENTMENT AND PAYMENT LANDSCAPE To further facilitate readers' efforts to find specific information of interest, we have structured each profile in the same way. Following a brief overview of the vendor and an explanation of how its BPA solution fits in with its other offerings, each profile describes the vendor's BPA solution, implementation process, customer and product support capabilities, and BPA vision and strategy in greater detail. The profiles are written independently of one another and do not make direct comparisons between vendors or solutions. Therefore, they may be read sequentially to gain a broad understanding of the BPA solutions available on the market today or individually to learn more about vendors and solutions of particular interest. The final section of this report provides analytical insights and consolidates information contained in the individual profiles to help readers compare the vendors and solutions. It does not prioritize or rank the vendors and solutions in a definitive manner. Instead, summary figures and tables with supporting analysis are provided so that readers may draw their own conclusions and identify appropriate vendors and solutions for investigation. 14 PAYSTREAM ADVISORS NAVIGATING THE INVOICE PRESENTMENT AND PAYMENT LANDSCAPE 15 PAYSTREAM ADVISORS NAVIGATING THE INVOICE PRESENTMENT AND PAYMENT LANDSCAPE SOLUTION ATTRIBUTES: HOSTED BILLER-DIRECT SOLUTION FUNCTIONALITY: About Mellon Financial Corporation Mellon Financial Corporation's BPA solutionMellon TradeLinksis one of many products and services offered through Mellon Global Cash Management (GCM). Mellon GCM is a recognized leader in designing integrated cash management solutions to meet organizations' treasury needs. It provides cash management services to 18 percent of U.S. corporations with annual sales above $250 million and regularly receives top ratings in surveys of quality, customer satisfaction, and product innovation. Mellon Bank offers a full range of payables, receivables, and treasury management services, including: PAYABLES Check services. Controlled disbursements, account reconcilement, disbursement image, positive pay, and check issuance; Corporate card services. Travel and entertainment (T&E), purchasing card (p-card), and Multi-Card; Electronic services. Direct deposit, wire transfer, automatic funding, electronic data interchange (EDI) comprehensive disbursements, and information reporting and transaction initiation; RECEIVABLES Lockbox services. Retail, wholesale, custom, image- based, and value-added; Check services. Deposit reconcilement and high- speed check clearing; Electronic services. ACH, wire transfer, and EDI comprehensive receivables. TREASURY MANAGEMENT iTelecash. An Internet-based information reporting and transaction initiation service that enables corporations to monitor activities for their Mellon Mellon Financial Corporation Corporate Headquarters: Mellon Financial Corporation One Mellon Center Pittsburgh, PA 15258 Interviewed for this Report: Randi Lichtenstein Senior Product Manager, Mellon TradeLinks Stefanie Kiley Product Manager, Mellon TradeLinks 16 PAYSTREAM ADVISORS NAVIGATING THE INVOICE PRESENTMENT AND PAYMENT LANDSCAPE and other bank accounts, initiate fund movements, and deliver instructions to Mellon Bank using a Web browser; Automatic investment services. Tools to track account balances and maximize the use of excess funds through short-term investments. Mellon TradeLinks falls under the rubric of electronic services. It is a hosted, biller- direct BPA solution that is a crucial to Mellon's strategy of providing a total receivables solution. Mellon Bank's ownership and operation of Mellon TradeLinks sets it apart from most other financial institutions and enhances its ability to offer clients customized solutions and integrated payments and receivables processing. Currently, nine organizations in the transportation, insurance, pension management, franchise, government, and not-for-profit sectors use Mellon TradeLinks. Mellon TradeLinks Mellon Bank has designed a robust invoice management system to complement its other receivables management solutions. Its architecture and security structure are characteristic of a well-designed bank service bureau solution, complete with heavy integration resources to round out the package. Mellon TradeLinks operates on a Unix platform and utilizes an Oracle database to support a range of legacy interface options, including EDI, standard print files, and proprietary formats. The look and feel of the system's Web front-end is customized and branded by Mellon Bank staff to meet each biller's needs and preferences. Payer enrollment in Mellon TradeLinks occurs in real-time through the use of a biller- defined Web enrollment form. The payer goes to the biller's Web site and enters whatever information the biller has designated on the enrollment form (e.g. account number or user ID). Billers also have the option to bulk enroll customers in order to accelerate the set-up process for their clients. Mellon TradeLinks enables billers to deliver invoices to payers in hypertext mark-up language (HTML) format, as well as portable document format (PDF) if a print file is sent. When an invoice is ready, Mellon TradeLinks generates an email notification to the payer, who can then go online to view and pay the invoice. Mellon TradeLinks also offers entitlements and payer workflow that allow the payer to assign roles to its users, segment approval and payment duties, and establish payment thresholds. The system provides a standard 180 days of invoice history online, meaning that billers and payers can review a full six months of transaction history whenever they want. Mellon TradeLinks' adjudication and rules processing capabilities are a real strength, as they give billers tremendous flexibility to tailor the solution to their needs. For example, they can configure Mellon TradeLinks so that payers must provide an explanation when they change the dollar amount paid on an invoice. Mellon TradeLinks also allows for more complex adjustment processing, such as that required in group insurance applications. Payments may be made via ACH debit (with Mellon Bank functioning as the biller's originating depository financial institution (ODFI), 17 PAYSTREAM ADVISORS NAVIGATING THE INVOICE PRESENTMENT AND PAYMENT LANDSCAPE Fed Wire transfer, or credit card online through Cybersource. Society for Worldwide Interbank Financial Telecommunications (SWIFT) payment instructions are also available through Mellon Bank's comprehensive disbursement service for payers that want this capability. The back-end of Mellon TradeLinks is also a powerful selling point for the solution, as it dovetails neatly with Mellon Bank's historic strength in receivables processing. Mellon TradeLinks provides billers with a way to transition from paper-based to electronic invoicing and payment, and contributes to Mellon Bank's goal of providing a total receivables solution. Mellon TradeLinks accomplishes this by sending all payment and remittance datareceived via ACH, wire transfer or checkin a single file format that vastly simplifies billers' data feeds to update their accounts receivable systems. Recently, Mellon Bank embarked on an exhaustive vendor search to upgrade the Mellon TradeLinks platform. This decision was sparked by its focus on innovation and desire to offer the wide array of features and functionality required by the B2B community. After evaluating the major providers of BPA software and services, Mellon Bank signed a contract to license CheckFree's i-Series software in order to continue offering the level of invoice and payment customization that past clients have required. Mellon Bank is currently redesigning its platform with improved capabilities, such as payer workflow, and, in the process, planning its release schedule. Its plan is to install CheckFree's software into Mellon Bank's multi-million dollar eCommerce infrastructure and integrate it with its payment processing and data translation services. Mellon Bank expects to begin adding new clients to the service in the second half of 2003. Implementation & Support Nine customers in the transportation, insurance, pension management, franchise, government and not-for-profit sectors are using Mellon TradeLinks now, and one organization is implementing it. Mellon TradeLinks' management team believes that the ability to migrate costly and labor-intensive processes to the Web was a critical factor in most of their clients' decisions to adopt Mellon TradeLinks. Every biller using the system has offered an online payment option, and most require online payment from payers who enroll in the service. Mellon TradeLinks' architecture and security structure are characteristic of a well-designed bank service bureau solution. We think [Mellon Bank's customers] will view Mellon TradeLinks as a logical way to achieve additional functionality, build a comprehensive cash management solution, and preserve an important banking relationship. 18 PAYSTREAM ADVISORS NAVIGATING THE INVOICE PRESENTMENT AND PAYMENT LANDSCAPE For instance, a transportation company is using Mellon TradeLinks to seamlessly present invoices for shipments. Electronic invoice presentment made sense for this company, given the high volume of invoices and the absence of line item detail that accompanies its invoices. Many of its customers utilize Mellon TradeLinks' ACH and online credit card payment options, whereas others prefer to view their invoices online and pay by paper check. Ultimately, Mellon TradeLinks gave it the flexibility to create a solution with the precise combination of features it wanted. Fifteen full-time staff support Mellon TradeLinks' implementations, with additional resources available from other Mellon Bank teams for Web application hosting, systems integration, database support, and general implementation backstopping. Implementation typically takes from four to six months. Mellon TradeLinks is customized to a greater extent than many service bureau solutions, so a significant portion of this time goes into consulting with the client and defining their business requirements for a BPA solution. Mellon Bank is currently exploring ways to standardize its solutions and reduce implementation times while maintaining its commitment to providing a high degree of customization around adjudication and payment processing. Mellon Bank formulates and deploys customer solutions using a highly synthesized and repeatable six-step process that encompasses planning, requirements gathering, detailed project planning and definition, construction, testing, and application release. As the only electronic services provider in the U.S. with both Capability Maturity Model Level 3 and International Standards Organization (ISO) 9001:2000 registration, Mellon Bank is able to set reasonable expectations for software development processes, achieve consensus with customers on the best way to meet their expectations, ensure the fulfillment of customer requirements, and use milestones to monitor and measure progress. During the requirements gathering phase, the customer provides Mellon Bank with specifications for the invoice file that it would like to send and the receivables file that it would like to receive, as well as its business rules for adjudication processing. Mellon Bank's implementation team then creates a Statement of Work document that contains all of the customer's requirements and a project cost and development timeline. Once the requirements are agreed upon, it begins the construction and testing of the customer's application. Since Mellon TradeLinks is branded and customized to the customer's requirements, business owner, IT, marketing, e-commerce, audit, and legal staff from the biller organization are usually involved throughout the planning and implementation process. Once Mellon TradeLinks is in place, it has a low impact on the biller's ongoing operations and requires minimal client resourcesin some cases just one customer service support person to manage the solution. Mellon Bank offers a customized marketing program called PaperlessSuccess to help 19 PAYSTREAM ADVISORS NAVIGATING THE INVOICE PRESENTMENT AND PAYMENT LANDSCAPE drive payer adoption. Its staff works with clients to segment their payer bases and develop programs to meet their needs. In effect, through PaperlessSuccess, Mellon Bank becomes an extension of the biller's marketing group, engaging in direct and telephone marketing and providing training programs. Analysis & Recommendation The receivables-oriented products and services that surround Mellon TradeLinks constitute an important competitive advantage. They distinguish Mellon TradeLinks from other BPA offerings and enable Mellon Bank o offer it as part of a total receivables solution. In our opinion, Mellon Bank's corporate customers will perceive Mellon TradeLinks as providing substantial value over and above other BPA solutions. Mellon Bank's recent decision to upgrade the TradeLinks platform will increase the likelihood of this and drives home its importance as part of a total receivables solution. We also believe that Mellon TradeLinks' prospects are good on account of Mellon Bank's large cash management customer base. This network of relationships provides a natural starting point and likely will be the source of Mellon TradeLinks' next few customers. And in fact, Mellon TradeLinks' management team reports that its strategy is to target its current customers in the financial services, insurance, consumer packaged goods, technology, and government sectors. As Mellon Bank's customers contemplate BPA solutions in the future, we think they will view Mellon TradeLinks as a logical way to achieve that additional functionality, build a comprehensive cash management solution, and preserve an important banking relationship. The sense of security that many billers derive from their banks will also benefit Mellon Bank, as our research shows that most organizations prefer to entrust their payment- related activities to their banks. This is a natural selling point for Mellon TradeLinks, which is one of the few bank owned and operated BPA solutions. We think that many billerscurrent Mellon Bank customers and new clientswill view Mellon TradeLinks as an easy and safe way to build a complete cash management solution while transitioning to electronic invoicing and payments. To achieve its goals, however, Mellon Bank must fend off competition from pure play solution providers, other banks, and ERP vendors, while making it clear that Mellon TradeLinks delivers greater value than either software or home grown solutions. It must overcome the widely held viewaccurate or notthat banks are not the best place to turn for technology solutions. Mellon Bank counters that it is selling a highly customized cash management solution, not cookie cutter technology. Its challenge lies in persuading the market to accept this view rather than its competitors'. Another point of concern is that Mellon TradeLinks' biller-direct model may require adaptation to succeed as more payer-direct and consolidator solutions enter the market. Mellon Bank is aware of this trend and plans to increase functionality for payers. We believe that Mellon TradeLinks' success will depend in large part on Mellon Bank's ability to adapt it to meet this trend as the market matures. However, 20 PAYSTREAM ADVISORS NAVIGATING THE INVOICE PRESENTMENT AND PAYMENT LANDSCAPE the fact that Mellon Bank is a focal point for many large corporate paymentswith or without Mellon TradeLinksensures that it will remain front and center in the BPA industry. 21 PAYSTREAM ADVISORS NAVIGATING THE INVOICE PRESENTMENT AND PAYMENT LANDSCAPE SOLUTION ATTRIBUTES: HOSTED BILLER-DIRECT SOLUTION FUNCTIONALITY: About Deutsche Bank Deutsche Bank's strength is evident by its roughly 77,000 employees, 12 million customers in 75 countries, and 2002 assets of 758 billion. It has earned a reputation among its customers and peers for global reach, technology leadership, and cash management excellence. Deutsche Bank is confident that it can build on these strengths to become the world's leading payment service provider, and its BPA solutiondb-eBillsis an integral part of this strategy. db-eBills contributes directly to the Global Transaction Bank (GTB) division's goal of delivering value-added cash management services to corporate customers by complementing its existing core cash management services, especially its payables and receivables management products. It is designed to be used either as a stand-alone solution or as part of a complete cash management solution. GTB's significant investment in technology and its Internet infrastructure, including db-eBills, over the past several years underlines Deutsche Bank's commitment to advanced transaction management solutions. db-eBills is a hosted, biller-direct BPA solution that was built from the ground up by Deutsche Bank's B2B EBPP/EIPP Center of Competence in Singapore and is maintained and operated solely by Deutsche Bank. It collects and warehouses disparate invoice information provided by billers and presents this data to their customers over the Internet. db-eBills works by streamlining the B2B invoice presentment and payment process, including the invoice approval, dispute resolution, payment initiation, and reconciliation steps. Billers and payers benefit from lower costs, efficiency improvements, and stronger business relationships. Deutsche Bank is focused on selling db-eBills across all industries to its existing and potential new corporate customers. This reflects Deutsche Bank's view that db-eBills is broad in scope and represents a pragmatic decision to use db-eBills to reinforce its current and prospective relationships. Seven organizations in five different industries are using or implementing db-eBills today, including Cargo Community Network, Singapore's e- Deutsche Bank U.S. Headquarters: Deutsche Bank 60 Wall Street, 28th Floor New York, NY 10005 Interviewed for this Report: Hooi-Him Saw Director, Global Head of EIPP Kevin Chang Director, db-eBills Center of Competence Edward Nolan Director Wayne Brown Vice President, EIPP Product Manager Samantha Ho Assistant Vice President, EIPP Product Manager 22 PAYSTREAM ADVISORS NAVIGATING THE INVOICE PRESENTMENT AND PAYMENT LANDSCAPE commerce marketplace for the air cargo community, and PT Satelit Palapa Indonesia (Satelindo), an Indonesian telecommunications service provider. The db-eBills Solution db-eBills is a global BPA platform that connects trading partners on multiple continents through a single bank-hosted system. db-eBills streamlines the B2B invoice presentment and payment process, and provides billers and payers with a wide array of features and functions. They can view invoices and line item details in HTML or PDF format, dispute line item charges or variances within invoices, and provide non-financial approval of line items. Payers can also configure db-eBills for pre-defined payment set-up or pre-approved authorization using criteria like invoice amount. This leads to automatic payment preparation of invoices and then the execution of payment via ACH, wire transfer, or check. Both parties can view and download reports and comprehensive audit trails, inquire about the status of invoices or payments, and limit their employees' access rights within the application. db-eBills' value proposition for billers includes: Lower costs associated with invoice creation and delivery, headcount, and bank fees; Streamlined collections and lower days sales outstanding (DSO); Improved reconciliation rates and minimal unapplied cash receipts; Better liquidity management and predictable cash flow; Fewer dispute-related payment delays; Stronger customer service; Enhanced marketing and competitive positioning; Tighter strategic payer relationships. Billers' and payers' integration with db-eBills takes place via data file exchanges between their enterprise systems and db-eBills. db-eBills utilizes an Enterprise Application Interface (EAI) that can accept and return standard and non-standard data file formats for maximum flexibility. Deutsche Bank also recommends that its customers use its file transfer protocol (FTP) product, db-g

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About paystreamadvisors

I am the Marketing Director for PayStream Advisors with a degree in Journalism from the University of North Carolina at Chapel Hill and have 6 years of marketing experience in the financial services industry.

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