Electronic Invoice Presentment and Payment (EIPP) – the process by which companies present invoices and make payments to one another through the Internet is emerging to be a promising tool in the B2B environment and thus act as the catalyst to the adoption of FVCM type solution. B2B transaction involves more participants and more complex processes, creating a longer more intricate value chain. For example, trading partners may require multiple billing accounts per customer, with a separate work flow review process for each. In addition, these B2B transactions are more likely to be disputed than B2C transactions. Invoices are often “not paid as billed” and transactions often need to account for discounts, promotions, and special buyer relationships.
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According to Gartner Group research the market size for the B2B EIPP is estimated at roughly 12 billion annual transactions in the United States. This figure is split roughly 5 billion for recurring B2B invoices and 7 billion for purchase orders driven invoices per year. Several studies by various research companies such as Gartner Group, Arberdeen, AMR, GapGemini, Ernst&Young, A.T. Kearney and trade organizations such as National Automated Clearing House Association-Council for Electronic Billing and Payment, SWIFT Payments and Settlement Initiative, and the New York Banks Settlement organization called CHIPS Settlement Initiative, have all confirmed the yearly data relative to market size, industry growth projection 5%-8% yearly and adoption rates going to 40% by the end of 2002. Additionally, data relative to average cost to create and dispatch an invoice by the seller ($2-$3) and to process it by the payer ($10) have been substantiated by these studies. The most eye opening discovery in these studies is the enormous cost savings that can be realized by implementing a robust EIPP solution is estimated to be about 75% reduction in the cost of creating, negotiating and paying an invoice on-line. Taking the 12 billion transactions per year figure and multiplying it by the $10.00 cost saving per invoice will yield an industry savings of over $100 billion in operating costs. The $100 billion figure is conservative in that it does not account for potential days sales outstanding ( DSO) benefits, significant reduced costs for processing disputes or the many “softer” benefits associated with successfully automating Invoice-to-Pay.
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