A major shift is taking place in how consumers manage the documents they receive by mail. Consumers now have many options for “digitizing” the paper in their lives. Third-party sites such as banks give consumers the option to view documents like bills online and make electronic payments. These third-party sites are called “consolidator sites” or “digital mailboxes,” and there are many new players in this market. While banks have often felt they have an inalienable right to own the consumer bill pay experience, new entrants like Manilla, Doxo and Zumbox would likely disagree.
Business payers haven’t historically had the same options as consumers. Instead, many use “biller direct” sites, which means if they want to pay their bills online, they must login to multiple websites – each with its own login information and user interface – to pay each vendor on a separate site. This situation has seriously hampered adoption of paperless billing, denying small businesses and their vendors the benefits of electronic bill payment. When businesses can exchange bills and payments electronically, they receive faster, more efficient processing, lower bill production and delivery costs and a reduction in the environmental impact associated with paper bill delivery.
Vendors (such as wholesalers) and their small business customers could save money and improve efficiency by moving to paperless billing, but to achieve this, players in the market must offer the right content – i.e., bills. The sticking point has been that it’s a challenge to get vendors to agree on distribution standards and to accept payments through third-party sites. Electronic Data Interchange, or EDI, was supposed to be the answer but remains a solution only for very large businesses. The Business to Consumer (B2C) sector faced – and is overcoming – these hurdles; it’s time for the Business to Business (B2B) billing sector to do the same.
There are huge monetary and efficiency gains that can be realized in the B2B sector with a switch to electronic billing and payment. For vendors, the benefits include virtually eliminating the expenses associated with producing and mailing paper invoices and drastically reducing days sales outstanding (DSO – the time that elapses between the sale and the payment). And with the right design, a consolidator site could make applying electronic payments easy by integrating with popular vendor accounts receivable systems.
For example, Cobra Puma Golf, the sports apparel leader, was an early adopter of Invoice Central, a B2B consolidator site. Invoice Central has been a key addition to the delivery channels they offer their customers, resulting in an even stronger electronic footprint to drive online bill delivery and payments. Brian Good, director of customer relations at Cobra Puma Golf, reports that his company has saved up to 75 percent on bill processing.
For vendors’ small business customers, electronic billing on a consolidator platform could eliminate the time lost logging into numerous sites to make payments. It could also reduce postage costs and increase productivity with a one-stop solution that enables them to easily track and pay invoices and schedule payments to take advantage of early-pay discounts.
For these reasons, the next big electronic billing trend is likely to be a B2B platform that catches on and changes the market, just as B2C platforms transformed the way consumers pay their bills. The marketplace is ready for a well-designed consolidator site created with the needs of businesses in mind.
The benefits of a B2B consolidator site might not be as obvious to the general public as its B2C counterparts, but there’s actually more at stake: Small businesses receive a much higher volume of bills – 50 per month on average – than consumers, who receive an average of 12 bills each month. And since most small business owners are also consumers who are not professional accountants and do not outsource household bill paying to an accounting staff, they are keenly aware of the gap that exists between the tools available for home bill paying and business bill paying and are therefore likely ready to take advantage of a new platform.
A B2B consolidation site designed to meet the security and recordkeeping needs of businesses, backed by an industry expert with the marketing and technology savvy to create and promote a highly functional electronic billing platform, can significantly change the way smaller businesses and their vendors manage billing. Along the way, it could deliver major cost and efficiency savings to the small businesses and vendors it serves.