Cash Management

IBPP Gets Its Due

Internet billing, presentation, and payment can produce an invoice more quickly and inexpensively, resolve disputes faster through clear audit trai...
Scott LeibsFebruary 1, 2001

You may doubt whether the check is in the mail, but you can be certain the bill is. Every year in the United States, more than 26 billion bills are generated, processed, and paid. The cost and complexity of producing, mailing, and tracking those bills — not to mention arguing over them — has made some sort of Internet solution seem inevitable, yet Internet billing, presentation, and payment (IBPP, also called E [lectronic]BPP) has been slow to take hold. There are dozens of companies hawking products and services, but to date less than 1 percent of that aforementioned billing activity has taken place over the Web.

But this year, analysts say, IBPP may gain real momentum as vendors increase the functionality of their products and get a better sense of what the market wants. According to Terri Ambrose, a vice president at the global treasury management ecommerce team for KeyCorp ( in Cleveland, what the market wants, at least in the B2B space, is “round-trip” capability. That allows companies to both present bills to their customers and pay bills from their suppliers online. Some vendors concentrate on only one part of the equation — selling software that facilitates the E-mailing of invoices, for example, without addressing payment. That can force companies to cobble together a complete solution from several products, an approach that hasn’t exactly caught fire.

Ambrose spent the better part of 2000 evaluating the many IBPP options on the market so that her firm could, in a sense, be on the market itself. KeyCorp believes that offering IBPP to its corporate clients is, as Ambrose says, “a natural extension of cash management, the existing payment stream, and the move toward ebusiness.” But, she admits, it’s an “infant space” that takes time to learn.

KeyCorp ultimately partnered with BillingZone LLC (, a Web-based service that provides the round-trip capabilities Ambrose wanted. KeyCorp will build some additional functionality around the BillingZone core services and offer the resulting package to its corporate clients.

Banks may thus play a valuable role in driving the adoption of IBPP, although BillingZone has also landed a number of large companies, including Xerox Corp. and H.J. Heinz Co., as clients. Eric Smith, CEO of BillingZone, says that regardless of which party in the payment stream makes the first move, one critical element for the success of IBPP is that it focus more on the needs of payers than on billers.

“Much of the market has ignored this,” he says, “but you have to give payers flexibility and control. That is a key driver.” Sitting down with a pile of invoices may be a chore, but at least you decide which to pay when, and how much. But IBPP has always suffered from a chicken-or-egg problem, and Smith admits that “payers can’t pay if there isn’t a bill there.” So, in its early days, BillingZone will target billers and banks most heavily.

“Billers are the ones who actually pay for the service,” says Andrei Arkhipov, an analyst at Aberdeen Group, in Boston. “So naturally, vendors concentrate on their needs.” Part of BillingZone’s strategy is to assign a “payer advocate” to each biller, someone who will help develop a marketing strategy to convince payers that IBPP makes sense.

That strategy will highlight the many widely agreed-upon benefits of IBPP: An invoice can be produced more quickly and inexpensively, and can be designed to take advantage of the “drill-down” capabilities of the Web; disputes can be resolved faster through clear audit trails accessible by both parties; overall customer service can be enhanced; and days sales outstanding can often be reduced.

Large companies using EDI (electronic data interchange) already enjoy some of these advantages, but analysts say IBPP is much cheaper and easier to learn and that it offers certain features EDI can’t match. Its greater accessibility and appeal should make IBPP an accepted part of the ebusiness food chain.

That’s the hope at Saint-Gobain (, the French giant that owns CertainTeed, Norton, and hundreds of other companies. Jim Harkins, vice president and treasurer for its U.S. operation, says the firm turned to IBPP because it wanted to give some of its smaller customers an alternative way to pay electronically. “With our largest customers, EDI predominates,” he says. “But it’s expensive to build and maintain. We would never dictate how firms should do business with us, but IBPP is something we encourage our customers to consider.”

Saint-Gobain offers discounts to customers based on how quickly they pay. “To get the biggest discount,” Harkins says, “you have to pay electronically. That’s an incentive we think will make more companies look at IBPP.”

Saint-Gobain approached its bank, PNC, more than two years ago, and helped push it into IBPP. But more often, it may be the banks that do the pushing. “Banks are rushing toward it, and they have to, in order to stay competitive,” says Ian Rubin, director of online financial services research at IDC, in Framingham, Mass. “But as for billers and payers, no one knows who will embrace it first.” IBPP may be that rarest of things: a viable technology in need of a strong marketing message.

Scott Leibs is the technology editor of CFO.