Supplier-Initiated EIPP: Impacting the Entire Invoicing and Payment Lifecycle

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1 Supplier-Initiated EIPP: Impacting the Entire Invoicing and Payment Lifecycle Q Featuring Insights on... Factors Driving Interest in EIPP Underwritten in part by Billtrust CEDAR Document Technologies CTP Solutions* Nordis Direct* Standard Register* Current State of B2B Invoicing and Payments Supplier Challenges to Implementing EIPP Supplier-Initiated EIPP *Reseller of Transactis hosted solution

2 Introduction... 1 Executive Summary... 2 The Case for Migrating to EIPP... 3 The Current State of B2B Invoicing and Payments... 5 EIPP Opportunities and Challenges... 9 The Scope of Supplier-Initiated EIPP Supplier Initiated EIPP s Place in the BPA Universe Supplier Initiated EIPP Critical Roles Selecting a Solution Looking Ahead Billtrust CEDAR Document Technologies CTP Solutions Nordis Direct Standard Register Transactis About PayStream Advisors... 38

3 Introduction In the current business climate, Accounts Receivable organizations are increasingly faced with the challenge of doing more with less as resources shrink and financial processes speed up. There are more clients to manage, more invoices to transmit, and more payments to process all at faster speeds and more cost effectively than ever before. In order to keep up, AR departments must move away from paper-based invoices and manual payment handling by automating their processes and quickly. Along with the conversion of invoices and payments to electronic methods come associated technologies that streamline the entire order-to-cash process. Research indicates that these systems are maturing to the point of becoming mainstream. The software that automates the order-to-cash process most effectively is the Electronic Invoice Presentment and Payment (EIPP) solution. Besides reducing paper, EIPP offers organizations ways to make their workflow more effective through increased visibility of financial documents across the transactional relationship while simultaneously creating processing efficiencies that result in cost savings for all participants. These focused and specialized solutions do more than einvoicing or epayments alone they maximize the use of those technologies to streamline the company s workflow and offer tremendous potential for users to better manage their financial supply chain and cash flow. PayStream Advisors has developed this report for organizations that have an active interest in electronic invoice presentment and payment technologies. This report will help to identify appropriate EIPP strategies and solutions by providing an in-depth overview of supplier initiated einvoicing and payment solutions and their benefits, as well as profiles of six leading vendors in this space.

4 Executive Summary In PayStream s 2012 Supplier Initiated EIPP Report, research showed that leading EIPP solutions were primarily focused on the electronic interchange of invoice and payment data. However, in compiling this report, it has become clear that the software developers have adopted a much broader perspective that encompasses the entire billing and payment continuum. While electronic interchange is the purpose of EIPP, solution providers have come to understand that it is also a critical part of the interaction between suppliers and their buyers relative to billing and payments. Because of this, EIPP needs to be integrated into the entire orderto-cash process in order to achieve optimal results. In this report, PayStream observes: Automation solutions are needed to bridge the gap between existing AR solutions and einvoicing tools commonly adopted by AP organizations Suppliers are best served by vendors offering solutions that support all types of invoice delivery and remittance capture, not just EIPP Document management is a critical component of EIPP, and is best utilized when the entire order-to-cash process is taken into account In order to leverage the transaction intelligence captured, suppliers need EIPP solutions that contain embedded workflows for dunning, dispute resolution, and other tasks EIPP solutions are needed to provide automated remittance processing capabilities that address all sources of remittance advice The market for supplier initiated EIPP is growing, and will continue to gain momentum due to the demands of AP organizations and the need for greater AR efficiency and Days Sales Outstanding (DSO) reduction. PayStream believe today s EIPP solutions provide a proven, holistic approach to the needs of suppliers and their customers. PayStream Advisors actively works with managers and decision makers at medium and large corporations to provide deep insights on financial process improvement and neutral viewpoints about available solutions in the market. PayStream has uncovered a marketplace need for better information to understand targeted solutions that help streamline specific processes and deliver quick ROI. This report is aimed at the growing number of companies looking for complementary EIPP solutions to automate and optimize their cash conversion cycles by lowering cost, increasing efficiency, and reducing errors and exceptions.

5 The Case for Migrating to EIPP Key Insights Processing paper invoices is significantly more expensive than electronic invoice processing for both AR and AP organizations. AP organizations are making demands on AR organizations to transmit invoices electronically and accept electronic payments. AR organizations are being required to deliver invoices to their customers in multiple formats and delivery channels. AR organizations are increasingly dealing with the fragmentation of remittance details from the actual payment. The simple truth of the matter is that paper is expensive. Processing a paper invoice costs approximately one and a half times as much as an electronic bill this differential can be even greater for small organizations that don t have the advantage of scale. These cost differences hold true for invoice recipients as well. Figure 1 The Cost of Paper and Electronic Invoices Invoice Issuer Printing & Mailing Payment Reminder Remittance & Cash Mgmt. Archiving Total Paper $5.66 $0.73 $6.53 $3.19 $16.11 Electronic $0 $0.58 $4.35 $1.45 $6.38 Invoice Recipient Receive Codify Validate & Match Dispute Mgmt. Payment Archiving Total Paper $1.59 $4.35 $5.80 $3.63 $6.96 $3.19 $25.52 Electronic $0 $0.58 $1.74 $2.90 $4.21 $1.16 $10.59 Billentis, 2009 cited in Customer Self-Service in B2B Order to Cash, Genpact, 2012 Savings from einvoices are very real, especially for suppliers that previously had to rely on printing and mailing. Electronic invoice delivery eliminates printing and paper costs, and is insusceptible to changing postage rates. Electronic remittance processing and archiving also offers cost savings and efficiency over manual, paper-based processes. An increasing number of businesses are moving towards automated processes, and many suppliers are pressured by their clients to transmit invoices electronically. When considering financial automation goals, Figure 2 illustrates the fact that einvoicing and epayments rank high on the list. Buyers have an immediate need to reduce costs and drive efficiency, causing a push for greater adoption of electronic transactions with their business partners.

6 Automated workflow for invoices 33% Figure 2 What is your top automation goal for 2014? Increase electronic invoicing 29% Implement invoice imaging 16% Automate payment processing 18% ERP application upgrade 3% Outsource portions of AP process 1% 2013 PayStream Advisor s IWA survey Because of the pressure to adopt electronic transaction processing, many AP organizations are choosing their own supplier-facing solutions. Many of these put the supplier at an operational disadvantage by forcing them to choose between manually submitting data or spending money on IT resources to create an interface that will only accommodate one particular customer. With the variety of einvoice solutions used in today s business sphere, it can be quite a challenge for an AR department to accommodate all their customers demands. Another challenge arises when dealing with remittance data that is either limited in content or somehow separated from the payment. This exponentially increases identification and accuracy problems associated with the reconciliation process. Accepting electronic payments is better than the cost-intensive task of processing paper invoices and check payments, but AR departments must still find a consolidated solution that will ensure the delivery of remittance details.

7 The Current State of B2B Invoicing and Payments Key Insights EIPP continues to show steady growth. There will be a need to process paper invoices and checks for many years to come. The best solution providers need to help their clients address multiple billing and payment channels. The supplier community has not rushed to adopt einvoicing, despite the operational incentives and the hype surrounding EIPP. In 2011, only one third of vendors surveyed were distributing invoices electronically. Today, that figure has risen to 50 percent, according to an Institute of Financial Operations (IOFO) survey, see Figure 3. Even so, some firms remain beholden to traditional billing systems, and the number of firms planning to implement EIPP in the near future remains modest at best. However, PayStream believes that AP organizations growing interest in einvoicing will serve as a catalyst that stimulates more AR organizations to take action. Successful action depends on automation solutions that bridge the gap between current AR systems and the einvoicing solutions being implemented by AP organizations. Figure 3 Has your organization implemented a solution for sending out electronic invoices? 9% Yes No, but we plan to within a year No, but we plan to but are not sure when 24% 50% No, and we have no current plans Not sure 7% 10% The Institute of Financial Operations (IOFO) 2014 Order-to-Cash Automation Study

8 Despite the trend toward electronic invoicing, it appears that paper invoicing will still be used to some extent for the foreseeable future. According to the IOFO study, 83 percent of AR organizations are still distributing at least some of their invoices as a paper document, see Figure 4. Even more organizations (87 percent) are sending some invoices as an attachment. Lacking data integration tools, suppliers continue to rely on when possible because it is one of the easiest and least expensive ways to meet customer expectations for electronic invoicing. However, simply transmitting an attachment does not address the reciprocal payment from the customer associated with the invoice, and organizations miss an opportunity to leverage greater processing efficiency. Instead of an entirely electronic environment, it appears suppliers will need a variety of distribution channels for invoice delivery. All six forms of invoice delivery seen in Figure 4 are being employed by at least half of the survey participants, indicating most organizations are utilizing multiple distribution channels. In addition, 63 percent are submitting some invoices on the buyer s AP website and almost as many (61 percent) utilize EDI with at least some of their customers. Figure 4 Please choose which methods your 83% 87% organization uses for invoice delivery 63% 61% 54% 50% Paper Fax Web form EDI B2B network The Institute of Financial Operations (IOFO) 2014 Order-to-Cash Automation Study On the payment side of the equation, the use of checks is still very prevalent (59 percent). While electronic payments have grown significantly, most remittance processing still involves paper checks with the accompanying paper remittance advice, see Figure 5. Even though the implementation of EIPP holds out the promise of substantially reducing the volume of checks while increasing the use of more cost effective ACH and card payments, it appears suppliers are also going to need to adapt to a variety of different payment mechanisms no matter what they do.

9 2% Checks Figure 5 What percentage of your payments are in the following forms? 9% 9% ACH Wire Credit Card 59% Cash 21% July 2013 Credit Today Remittance Processing Survey Figure 6 illustrates the necessity of multiple remittance processing protocols. Most firms rely on at least two or three different methods for capturing payments. Interestingly, payment portals (at 19 percent) are the least-used solution, which again highlights the opportunity for growth in the EIPP sector. In line with the survey findings on invoice transmittal, lockboxes (79 percent) are the most utilized method for capturing payments. Figure 6 Which remittance processing capabilities does your organization currently possess? Payment Portal 19% Remote Deposit Capture 39% EDI 66% Lockbox 76%

10 While half of suppliers have reportedly implemented a solution for sending electronic invoices, PayStream s survey indicates that just one third have fully adopted an EIPP solution, see Figure 7. ing invoices outside of a fullydeveloped EIPP solution does not provide any benefits for payments and remittance processing. EIPP solutions fulfill a major role in terms of integrating the order-to-cash process with customer systems; the greater percentage of a customer portfolio that can be managed through an EIPP solution, the greater a company s efficiency and savings. Furthermore, with a connected einvoicing and payments procedure, companies can more easily leverage EIPP tools to improve other areas of the order-to-cash process. Figure 7 Has your accounts receivable organization implemented an einvoice presentment and payment solution? 9% No Yes Plan to within 12 months 32% 59% 2014 PayStream Advisors Accounts Receivables Survey EIPP adoption is one of the best alternatives for a significant return on investment in respect to order-to-cash automation. Halfway measures that address only invoice or remittance processing will only generate incremental improvements at best. In the end, partial solutions will always fail to completely synchronize the cycle between invoicing and payments. Only sophisticated EIPP web portals can accommodate both the demands for automation from large buyers and the convenience required by small and medium enterprises. Furthermore, a collaborative approach involving both suppliers and buyers is required to leverage the benefits of end-to-end automation between trading partners. Supplier-focused electronic invoicing and payment solutions provide the required set of advanced tools for connecting with a wide array of buyer einvoicing solutions, while ensuring that remittances and their electronic payments are easily reconciled.

11 Figure 8 What are the top three factors driving your EIPP Opportunities and Challenges Key Insights AR organizations expect EIPP to deliver cost reduction, DSO improvement and increased efficiency. Buyer Adoption is a critical factor to the success of an EIPP initiative. EIPP solutions need to be able to provide integration opportunities across the entire order-to-cash process. Marketplace acceptance of EIPP is deterred by a lack of understanding and skepticism regarding its benefits. The top 3 factors suppliers are looking to derive from EIPP are cost reduction (64 percent), DSO improvement (57 percent) and increased efficiency (57 percent), demonstrating a clear consensus regarding the impact EIPP can create for an organization. The other factors identified are subsidiary: better cash management, customer relationships, and budgeting and forecasting support, see Figure 8. Reduce overall processing cost organization to focus on electronic invoices? Speed up payment cycles (DSO) 57% 64% Better efficiency / productivity 57% Remove paper from A/R department 43% Better cash management 29% Strengthen customer relationships 21% Increase payment options 21% Improve abilities to budget and forecast 14% Lack of data integrity / internal inconsistencies 7% 2014 PayStream Advisors Accounts Receivables Survey

12 From the suppliers perspective, the biggest impediment to EIPP implementation is buyer adoption (60 percent), which is critical to reaping the benefits of EIPP. The next largest barrier involves the ability of the EIPP solution to fully integrate with existing AR solutions (55 percent), a necessity for ultimate success, see Figure 9. At the same time, 40 percent of respondents do not perceive a need to convert to electronic invoicing and payments. Some of these respondents may come from the percentage of firms that indicated low AR volumes (20 percent), as scale is a factor in determining the potential for EIPP success. From those surveyed, 35 percent expressed a lack of understanding about EIPP, and another sizable group (25 percent) indicated difficulty obtaining executive sponsorship due to skepticism regarding the benefits of EIPP. Despite these issues, as EIPP becomes more widely recognized as a competitive advantage, acceptance will grow in the marketplace. Figure 9 Please select the top three (3) barriers to electronic invoice There is no need for us to convert to electronic adoption. Shortage of IT resources 20% 40% Lack of integrations between einvoice and our AR system 55% Customers will not adopt einvoicing 60% No executive sponsorship; senior management not convinced of ROI Unable to easily gather customer information 25% 25% A lack of understanding about solutions available 35% Low AR volume 20% Other (please specify) 20% 2014 PayStream Advisors Accounts Receivables Survey

13 The Scope of Supplier-Initiated EIPP The solution providers in this report have adopted a broad and holistic perspective on the offerings in the EIPP space. They recognize that Supplier-Initiated EIPP needs to be understood within a larger context that encompasses all invoicing and payment capture activities. To accomplish this, some vendors may distribute their EIPP solution through value added partners. Others may position their EIPP platform as an extension of their document management and communication lifecycle capabilities, or may approach areas of the EIPP process from different perspectives. In effect, today s providers often offer more than just a solitary EIPP solution, and as a result, there has been growth in the market for both EIPP and related billing and payment functionality. Figure 10 represents a map of the key features that providers often offer as part of their products and services. Figure 10 Comprehensive Invoice and Payment Processing Print & Mail Support Invoice Presentment Customer Self-Service Invoice File Download Bulk Mailing Consolidation, Inserts, & Other Cost Savers Transmission (Fax/ /EDI) Electronic File Formats/Integration Supporting Documentation Account Lookup & Invoice Retrieval Dispute Notification Payment Options Payment Capture Credit Card ACH EDI Remittance Processing Remittance Advice Capture Remittance File Reconciliation Auto-Cash Reporting & Analytics AR Portfolio Penetration Transaction Monitoring Cash Forecasting Print and Mail Support Because paper invoices are not completely eliminated in most AR departments today, the need remains to efficiently and cost-effectively distribute bills through the mail. The difficulty of this increases if print and mail support is not integrated with other invoice presentment channels. By working with a vendor that provides print and mail services, suppliers can begin realizing the benefits of increased EIPP in conjunction with the cost savings. Print and mail shops reduce costs by: Barcoding and pre-sorting envelopes by zip-code to take advantage of lower postal rates Providing fully-automated processing to minimize labor costs Using technology to aggregate multiple invoices being mailed to the same address Purchasing paper and envelope stock in volume

14 Even suppliers that generate as few as 500 invoices monthly will save enough to justify outsourcing their billing process. In addition, added benefits can be realized by including other corporate communications with invoices and statements, such as inserts and printed messages, on the billing document. Invoice Presentment Electronic distribution involves automated faxing, mass ing, and online invoice gateways that transmit invoices in multiple electronic formats and integrate easily with customer invoice portals. In addition, invoice presentment increases efficiency and customer satisfaction by: Handling fax, , and point-to-point electronic transmissions within a single solution Transmitting supporting documentation such as purchase orders, shipping documents, proofs of delivery, and service tickets Grouping invoices in a daily and providing click-through capabilities to invoice details and payment functionality Because small to medium-sized buyers do not often possess the technology required to receive direct electronic invoice files, they prefer the use of a more efficient and user friendly supplier portal. A supplier initiated EIPP portal should offer invoice delivery methods designed for the convenience of these customers. Customer Self-Service No matter how customers receive their invoices, they benefit from being able to access a supplier s invoice presentment portal. If invoices are not being pushed to the customer electronically, the self-service EIPP portal provides the customer with: A convenient invoice and related document retrieval mechanism, as well as account search capabilities The ability to notify the supplier of disputes and to share electronic documents The ability to schedule electronic payments, both one-time and recurring The benefit to the supplier, besides the elimination of paper, is a substantial reduction in the number of incoming calls, requests for duplicate invoice copies, and other customer support actions. The portal also captures customer intelligence to forecast cash flow and initiate automated dispute resolution workflows.

15 Payment Capture The reciprocal process to invoice presentment is payment capture. AP departments, in their quest for cost savings, have provided impetus for AR departments to accept electronic payments primarily with ACH and credit cards. AR departments can also realize significant savings by accepting payments via ACH, reducing lockbox volumes and offsetting the merchant fees associated with card transactions. Transitioning a significant number of customers to electronic payments with an EIPP solution will: Increase visibility of scheduled payments Provide earlier notification of received payments Lower overall costs when both transaction costs and labor are factored in Enhance satisfaction especially for small and medium-sized buyers who can take advantage of alternative payment options A supply-side EIPP solution that is integrated with a buyer s electronic payment system can be used by the collection staff to process card and ACH payments over the phone, providing a solution to the payment capture puzzle. Remittance Processing The real challenge begins after payment has been received; capturing the associated remittance data and automatically applying it to the open AP system is critical. Because supply-side EIPP presents the AR data to the customer, these solutions are able to return detailed remittance information back to the Accounts Receivable system for posting. By implementing an EIPP portal, suppliers facilitate: Remittance data capture Account reconciliation Auto-cash posting The best EIPP systems use matching algorithms to identify discrepancies, automating the creation of debits and credits when payments don t line up. All these automation features reduce the time and associated labor costs required for manual cash. Portals, Dashboards, and Analytics The information collected through an EIPP portal can be readily converted into actionable intelligence through embedded reporting and query tools that clients can easily use. Besides providing more visibility into individual transaction status, the data collected over time will offer insight into trading partner relationships. This transactional transparency provides insights into:

16 Customer relationships in terms of payments, disputes, and other interactions Cash flow trends The level of customer enrollment achieved in the portal EIPP portals also provide earlier recognition of discounts and disputes, which facilitates quicker resolution and full payment.

17 Supplier Initiated EIPP s Place in the BPA Universe Research has shown that the majority of the excitement regarding electronic billing and payments has come from AP departments in an organization due to the savings in costs and time. However, AR can gain those same benefits with the right EIPP solution. The Bill and Payment Automation (BPA) Universe illustrates the advantages of a supplier initiated EIPP portal, see Figure 11. Figure 11 The BPA Galaxy Account Monitoring & Management Self-care Tools Archival & Imaging Exception Processing Cash Application Payment Receipt Payment Application Payment Initiation Account Management Reporting & Analysis Invoice Presentment Invoice Receipt Order Confirmation Invoice Creation & Delivery Biller Posting Payment Approval Processing Validation Invoice Receipt Matching & Entry Payer Routing & Review Dispute Management Payment Approval While AP can transform itself into a profit center by expanding the credit card payments that generate rebates, AR can also reduce costs with the use of EIPP through increased productivity. More AP departments have launched supplier facing invoice portals than AR organizations have instituted EIPP solutions, but a synchronized implementation effort would have lasting effects on AP and AR interaction. Supplier initiated EIPP is one of the most proactive steps towards that connectivity. Figure 12 illustrates both the biller and payer components of the order-tosettlement process. Supplier initiated EIPP is defined in the diagram as the

18 Biller-Direct model for Billing and Payment Automation. A Biller-Direct model is positioned as an alternative method of invoice delivery and payment for small to medium-size enterprises that are looking for automation and hoping to expedite dispute resolution. A Biller-Direct EIPP model provides the means to easily interface with customers and with other invoice and payment gateways. Most suppliers use a Biller-Direct EIPP model in concert with a much larger corporate EDI strategy. With EIPP portal access and robust file export-import utilities, suppliers can drastically reduce a huge majority of daily AR posting nightmares. Figure 12 Biller-Direct EIPP process flow Biller - Direct BPA Payer - Direct BPA 3 4 Login Enroll 1 Invoice 2 Notification 6 Dispute/Authorize Review 5 Enroll 1 2 Invoice 4 Login 5 Review 6 Dispute/Authorize Notification 3 Payer Payer Biller Biller Payer Consolidator Biller BPA 6b) Dispute Managment Invoice Hub Register Registration 5 Review 6a) Dispute/Authorize Notification 6 3 Biller Payer

19 Supplier Initiated EIPP Critical Roles The functional aspects of any solution need to be given careful consideration when evaluating EIPP options. If a company operates in a relatively straightforward, high transaction volume environment, a solution with basic functionality may work well. The more twists and turns that arise during a company s billing and remittance processing will dictate how flexible of an EIPP solution they will need. Implementing a solution that is inadequate for a unique business situation can cause as many problems as it solves. In order to avoid this scenario, there are ten key issues to review: Dispute Handling: At the very least, an EIPP solution should be able to identify and track disputes on a line item level and be able to accept multiple dispute codes per invoice. Even if an organization has limited exposure to customer payment disputes and deductions, they still need to make sure their solution offers these robust capabilities. All short payments should force entry of a reason code, and deductions for discounts should not be permitted beyond terms. Dunning Tools: The ability to send follow-up notices, re-transmit invoices, and make notes on an account or invoice provides added value from the EIPP solution. This is especially true if a company has not automated collections or their AR collection utilities have limitations. More advanced solutions include a workflow engine that allows users to preprogram activities based on a variety of triggers. Credit Card Acceptance: An EIPP solution needs to be able to handle all credit card types, be PCI compliant, and able to handle Level III data. Important for realizing large ticket rates, a solution should be able to aggregate multiple transactions on a single payment. Multiple Payment Options per Customer: It is counterproductive to lock customers into a single payment method a solution should be able to handle several different methods of payment. This also includes the ability to schedule one-time and recurring payments. Multiple Invoice Templates: All customers are different and will have different information and compliance requirements. The EIPP solution a company chooses needs to offer the ability to create customized invoice templates for customers and thereby reduce dispute and deduction volumes. Document Management: Maintaining all documentation is important to the remittance processing side of the AR equation. Even the invoices belonging to customers that are not enrolled in the EIPP portal need to be made available in electronic formats. The same holds true for all the documents that support the billing and delivery processes.»» Multi-Language/Multi-Currency: Global organizations must be able to transmit invoices in the local language of their customers and accept

20 payments in local currencies. PreInvoice Validation: Advanced EIPP solutions validate invoice accuracy by matching internal order details against the customer purchase order. Discrepancies can be found and corrected to ensure delivery of a correct invoice, thereby reducing disputes, deductions, and payment delays. Customer Enrollment: The user s ability to on-board customers is critical to the success of an EIPP solution. Solution providers should provide assistance and customer support in the form of training tools and enrollment guides to ensure this process is successful. Vendors should also provide assistance with customers that require an interface to the EIPP portal, as well as helping online customers pass validation by the solution itself. Administrative Functionality: In EIPP, one size does not fit all the more configurability built into the system, the more applicable it will be to varying business models. Without configurability, a company is faced with customizing a product, and that will increase costs and implementation time. Software-as-a-Service (SaaS) Expands Opportunities It should come as no surprise that larger organizations have led the way in EIPP adoption. The economies of scale and ROI associated with high invoice volumes are compelling. However, EIPP solutions have begun to evolve with SaaS models, making the software more attractive to a wider range of businesses across industries and market size. The pricing model of SaaS solutions is one of its biggest advantages in that most software providers only charge a small up-front cost for implementation followed by a monthly fee based on transaction volumes, while others operate only on a per-transaction price structure. Additional benefits of SaaS include: No big investment upfront because there is no license or software to install No client/server infrastructure required, making for a quick and easy deployment while eliminating the need for maintenance and periodic upgrades Quick and easy access through any standard Internet connection and web browser SaaS solutions have opened the door for smaller suppliers to actively participate in einvoice presentment and epayments, thus reaping all the benefits their larger peers enjoy.

21 Selecting a Solution Key Questions to Ask? Where does EIPP fit in our order-to-cash automation roadmap? What is the availability of IT and other resources that we can bring to the EIPP project? What are the challenges we are facing in billing and payments areas? What process improvements need to be addressed by the EIPP solution we implement? Can a configurable solution meet our needs or do we need a customizable solution? Organizations investigating AR automation solutions have a wide range of options. For those who have already automated parts of the order-to-cash process excluding billing and payment, EIPP can still drive significant additional improvements. For those who are just beginning to automate AR functions, EIPP can provide a compelling starting point. Once a company has decided to implement an EIPP solution, they will need to decide whether to go with a SaaS or hosted solution, or to install the software inhouse. Each of these options has its advantages, disadvantages, and associated costs, but a big consideration is the availability of IT and other resources. In the case of EIPP, it is even more important to evaluate the overall state of an organization s billing and payments capabilities. Installing an EIPP tool is key in the migration from paper to electronic processing. When approaching EIPP, it is important to first understand the service interactions between trading partners and the limitations a company may face because of their customer diversity. The ability to input data from any source in any form and aggregate it, transform it, and normalize it allows data and content to be positioned and managed in a way that supports the effective reengineering of end-to-end processes. By creating processes that support service interactions, a company can configure their system to fit their business environment instead of being forced to conform to the constraints that occur with a packaged solution. With this in mind, an effective EIPP implementation should not be viewed as a stand-alone solution but should be addressed as part of a greater whole that addresses workflow as well as invoice distribution and payment capture, including the needs of the buying organization as well as the supplier. EIPP is a bi-directional bridge between the seller s AR system and the buyer s AP process, and while EIPP can address direct costs (print, mail, transaction processing, and quality of communications) the greater benefit derives from the efficiencies it creates. Likewise, the ability of a company s customers to reconcile and process invoices for payments has a significant impact on DSO and customer satisfaction.

22 Ultimately, the ideal solution depends entirely on the individual organization s requirements. However, two other factors are critical when deciding on a solution: financial stability of the vendor and the total cost of ownership. The total cost of ownership includes implementation and integration costs, functionality fit, ease of use, and the ability to adapt to a constantly evolving business landscape.

23 Looking Ahead AR automation has come a long way over the last two decades. The introduction of automated workflow in the mid-nineties transformed the credit and collection landscape, as did auto-cash in the remittance processing arena. Over the years, the functional capabilities of AR automation solutions have increased while also becoming more integrated. The same holds true for EIPP solutions. Initially designed as stand-alone solutions, they have since evolved in both sophistication and scope, and now are a key integration tool in bridging the gap between AR departments and their customers AP organizations. We believe that the following factors will shape the ongoing evolution of this marketplace, and organizations contemplating invoice and payment automation solutions will need to take them into account: Buyer einvoicing and epayment initiatives will force many more AR organizations to seek comprehensive solutions. Because AP organizations are aggressively looking for ways to migrate their suppliers to electronic invoices and payments, as well as looking to expand the amount of spend that is settled via credit card transactions, AR departments must develop capabilities to provide alternative billing and payment options to their customers. Supplier initiated EIPP solutions will play a significant role in meeting this challenge. EIPP needs to be understood within the larger context of billing and payments. Because billing and payments are integral components of the order-tocash process, anything that increases the complexity and fragmentation of these tasks raises the risk of unexpected breakdowns in the cash conversion cycle. This is unacceptable. EIPP, like EDI, is therefore a tactical tool that can help solve the strategic need for optimization of the financial supply chain and working capital management. To view EIPP without considering its ramifications within the context of other billing and payment processes would result in missed opportunities. Data management is critical. The best solutions will be able to aggregate invoice data from every information source involved in supplier order processing, whether document or electronically based, and then transmit it in the preferred invoice format of the buyer. Likewise, an EIPP solution needs to integrate with the supplier s remittance processing environment to facilitate the capture and automated processing of all payment and remittance detail types. Configurability will grow, eliminating the need for extensive customization. This is already happening highly configurable solutions preempt the need for customization and facilitate faster, less costly implementations. Configurability also reduces the need for IT support, especially in SaaS and other hosted environments. AR automation needs to facilitate greater working capital management capabilities. The strategic impact of AR automation on the financial supply chain cannot be ignored. While DSO improvement is a core goal, innovative solutions

24 are emerging to meet strategic objectives, and corporations are looking to unlock significant value from the financial supply chain through advanced features (such as AR financing). The transactional transparency delivered by EIPP, especially when part of a holistic billing and remittance processing solution set, can be a catalyst for sophisticated working capital tools.

25 Billtrust Using its own proprietary technology, Billtrust is a leading provider in the billing and payment industry with over 1100 customers. Their clients rely on them to achieve real cost savings through the Billtrust end-to-end invoice to cash billing solution. Billtrust is known for the expertise they bring to the table along with their advanced product suite and excellent customer service. Website Founded 2001 Headquarters Hamilton, NJ Other Locations Denver, CO, Chicago, IL, Sacramento, CA, Toronto, CA Vancouver, CA Number of Employees 225 Number of Customers 1,100+ Number of End Users 25M+ Key Clients Ferguson, Iron Mountain, Land O Lakes, Under Armour, Chiquita, CDW, Estes, Kraft Foods, HD Supply, Toshiba, Callaway Golf, Avery Dennison, AutoZone, New Balance. Target Verticals Manufacturing, Distribution, Utility, Media, Transportation, Business Services Partners/Resellers SunGard, OB10, Infor, Oracle, DMSI, Mincron, Epicor Transactions Processed 250M+ Annually Awards / Recognitions INC 500/5000 for seven consecutive years, Deloitte Technology Fast 500, Payments Innovator 2014, Best Places to Work NJ Solution Name Complete Billing, Invoice Gateway (EIPP), Invoice Central (Consolidated EIPP), Connect, CustomerCare, ebank Connect, IVR Connect, QuickPay Connect Year Introduced 2001 EIPP is a core offering for Billtrust, with Invoice Central providing the primary service for small businesses to view and pay invoices across many of their vendors. Invoice Central helps clients reduce paper while driving online payment adoption. The EIPP service is sold individually or as part of a bundled package that also includes paper, , fax, online, bank, IVR, and mobile capabilities. As a hybrid that offers both print and electronic billing capabilities to over 1100 clients, Billtrust remains unique while offering a best-in-breed billing service.

26 Overview A fully hosted solution, Billtrust s entire service bundle is designed around a client s need to send invoices quickly, accurately, and efficiently to customers as well as to efficiently receive payments. Users can easily view invoices within the EIPP solution, download data into required accounting software (e.g. Quickbooks), select invoices to pay, and pay them via ACH and/or credit card. The solution integrates with a wide range of ERP/billing data file systems including SAP, Oracle, Infor, Epicor, Lawson, InforSXE, SHIMS and Mincron. Billtrust has an Open API and has developed integrations into other areas of the order-to-cash ecosystem with their partners so payment data can be pulled directly into the system in real time. Through Billtrust s Open Scan division, users can automate the cash application process, helping businesses manage the payments they receive through all channels including paper check, ACH, wire and purchase cards. Because Billtrust built its own operating system, the company can move quickly and efficiently to accommodate the needs of clients and the marketplace. There is no need to rely on third parties to support any aspect of the order-to-cash process. Implementation and Pricing Typical implementation takes about days and occurs in a few key phases. First, the client sends Billtrust their billing data file, which is then parsed and mapped to create the billing documents. Next, Billtrust builds the online payment portals and applies the required billing rules set forth by the client. Finally, the whole system is subjected to a quality review. Custom programming requirements and/or the use of multiple templates can add time to the process. Pricing is handled through a set-up fee based on the service bundle, with the remaining fees tied to transaction volumes. ROI on the initial set-up fees can occur within the first few months, as clients percent on their paper billing process on average, with savings doubling over time as clients customers are migrated to electronic billing. Billtrust offers training to each client regarding use of the portal, while training on more specific or special topics is offered on a monthly basis. One of the ways Billtrust is unique is that part of their training process includes working closely to implement best practices for driving electronic billing. Billtrust assigns each client a dedicated account manager to make sure clients are getting the most out of their system. Print/Mail Services Clients send their billing data nightly (or more often as needed) from their ERP to a secure FTP server. From here, Billtrust pulls the data into their Automated Document Factory, where billing documents are created for presentment and payment. Invoices can be generated according to multiple templates and accessed by clients in PDF format within the CustomerCare portal. Print and mail

27 services take place at 8 different locations across North America. Savings are generated by economies of scale, automated process, and a bull-penning process where special rules are applied in order to consolidate the sending of invoices and save postage. With so many options built into Billtrust s service bundle, clients can easily send personalized messages to customers with messages on bills, customized inserts, and with banners on their online portals. The client can perform all these customizations with ease in their CustomerCare portal. EIPP Functionality Billtrust has two EIPP services used by their clients. The first, Invoice Gateway, allows a one-on-one relationship between clients and their customers. This solution offers a secure, hosted online site which is branded for the client, where their customers can go to view, manage, and pay invoices. The second, Invoice Central, solves a growing problem for many smaller businesses. Using a one-tomany model, Invoice Central provides small business with a website to view and pay multiple invoices across many vendors. This product was launched in 2012, and already has billers across a wide range of industries on the network with usership growing daily. The payer selects the invoices or statements they want to pay and with a few mouse clicks makes the payment. Users can even pay invoices directly from an notification. Multi-currency payments are supported for the US and Canada, and other markets are being added strategically. Billtrust provides clients with remittance data files in their specified format for auto-posting back into their ERP. Billtrust solutions deliver invoice data to AP Systems (Ariba, OB10, Avid Xchange, etc.) and allow buyers to import data into accounting packages such as QuickBooks and Peachtree. Payments made through the portals capture key remittance information. Throughout the process, customers can view payment activity in real time. Overall Functionality Overall, Billtrust provides a flexible, fully-integrated paper and electronic billing service which allows clients to easily deploy an automated invoicing and payment process. With help from the eadoption team, clients also grown their electronic billing footprints extensively. EIPP is an important bill delivery channel, and Billtrust feels it should be integrated into an automated process to reduce costs and improve cash flow. Service bundles are designed to meet the needs of a wide range of markets and industry verticals and address the unique requirements and customization needed by those clients.

28 CEDAR Document Technologies CEDAR approaches EIPP as Invoice Lifecycle Automation and Management, a process more robust than simply composing an invoice for print or e-presentment/ delivery and processing the associated payment. A CEDAR solution is configured and deployed to the specific requirements of the invoicing enterprise, with a focus on providing customers with everything they need for invoice expense reconciliation and payment application, resulting in user-friendly documents and service interactions. In the case of unpaid invoices, CEDAR enables the enterprise to support the servicing processes of collections, dispute resolution, and write-offs. The key to a CEDAR solution is workflow automation and management of the Ps of EIPP: the Presentment (the communication workflows that support the lifecycle of the invoicing process) and the Payment (the service interactions that support the lifecycle of the payment, servicing support and collections). Website Founded 1993 Headquarters Atlanta, GA Number of Employees 135+ Number of Customers Not Disclosed Private Company Number of End Users Platform handles millions of discrete logins per month Key Clients Ally Bank, Performance Food Group, Exeter Financial, GE Bank, First Data Corporation, Penn National Insurance Target Verticals Business to Business Invoicing, Financial Services, Consumer Lending and Insurance Partners / Resellers Fidelity Information Services Solution Name CEDAR EIPP Solution Year Introduced 2004 Corporate Overview CEDAR s mission is to deliver ROI by reducing servicing friction and decreasing write-offs while lowering overall expenses through a Single Sourced servicing platform. The biggest ROI lever is replacing print and physical servicing (call centers) with a digital servicing platform that better supports the variability of customer AP processes. CEDAR s suite of integrated products is delivered as a hosted managed service. This functionality includes data aggregation, normalization, optimization, payment processing, invoice presentment, web/mobile service environments, and a holistic archive. CEDAR s archive, containing all customer documents and associated

29 data, is configured to meet the needs of different audiences. It also empowers contact center employees to better resolve inquiries and provide the recipient of communications with a complete and easily searchable view of all their correspondence. The workflow processing includes communications and alert notifications, enrollment capabilities, and optimized print/mail functionality and reporting, all within an easy to use, secure cloud-hosted solution. The company does not take a one-size-fits-all mentality, and instead believes in a unique, purpose-built approach to meet precise and variable client needs. Solution Functionality Overview CEDAR integrates with all source systems including billing, financial, and CRM. After data is normalized and aggregated, it is loaded onto the client s unique instance of the CEDAR platform, where they can manage content and presentation rules for all documents and correspondence. Based on the client s specific delivery preference, CEDAR produces the optimized output for that communication channel. The solution s flexible and user-friendly interfaces provide clear visibility into workflow management. CEDAR provides all supporting information and documentation with each invoice to allow customers to reconcile expenses and pay the invoice using any presentation channel including print, ipdf, downloadable custom data file extracts, , web/mobile, SMS, and fax. End users can view open items at any time and perform payment functions or file disputes against chosen items. There are also extensive mechanisms in place to manage payment methods, convenience fees, and limits on credit card purchases, as well as to ensure balancing between treasury and AR. All transactions are conducted in a highly secure portal experience accessible via single sign-on. CEDAR also integrates with SAP, Infinium, and PeopleSoft and facilitates data sharing as needed through web service calls and data file integrations that can be tracked and monitored for complete security. Implementation and Pricing Implementation is done in six distinct steps: Requirements/Design, Development, Configuration, Testing, Production Cutover, and Post-Production Continuous Improvement. The whole process takes approximately 6-9 months. All necessary integration work with all source systems as well as any needed data aggregation, transformation, and optimization is part of the standard implementation process. This work allows CEDAR to effectively use data and content to support the necessary re-engineering of communication and service interactions. Enrollment and onboarding workshops to optimize usage of all capabilities are part of the standard implementation process. Rather than a point solution, CEDAR provides a holistic platform approach with superior invoice lifecycle automation and management. Training is standard and offered through onsite and video based tutorials. All clients have a dedicated Service Delivery Manager (SDM) who acts as the