E-Billing Adopters Find Rewards

E-Billing adopters find rewards

By Ann Bednarz
Network World, 01/10/05

For a company switching from paper to electronic invoicing methods, one obvious savings potential is mailing costs - no more bills to print or postage to purchase.

But there are a lot more savings to be gleaned by going electronic, users say. For Health Alliance Medical Plans in Urbana, Ill., a key savings comes from expedited dispute management processes.

Because Health Alliance bills its corporate customers in advance, accurate invoices are a rarity. Typically, corporate customers have a change to report - an employee to add to or remove from their health plan coverage, for example.

Within Health Alliance, reconciling these changes used to be a manual, time-consuming process. "In the past, companies would write in or cross out people on their paper bill," says Traci Kleinert, director of billing, enrollment and cash services at the benefits provider. Inside Health Alliance, the accounts receivables department would log that information and pass it along to the benefits eligibility department for manual processing.

"It's those hand-offs that caused so much time delays - when multiple departments wound up having to pass around information," Kleinert says.

Today, account reconciliation is done online, thanks to AVOLENT's BizCast suite. The software aggregates eligibility, billing history and account status information from Health Alliance's back-end claims and gives customers online access to the data so they can modify rosters, approve invoices and resolve disputes online.

With BizCast, Health Alliance has cut back on billing costs, reduced billing-related calls to its customer service agents, and accelerated the payment process.

It puts customers in charge of reconciliations, Kleinert says. Customers can add members to their invoices, pay for those members online and drop members from their invoices. The software adjusts invoice totals as employees are added or dropped, and customers can pay the adjusted total. "We're able to see what they paid, and why they paid it," Kleinert says.

On the postage and printing front, BizCast also saves Health Alliance money - particularly given the size of the company's old paper bills. "The bills that we sent out, they're not one or two pages, they're 20 or 30 pages," Kleinert says.

Staging a comeback

BizCast is an example of e-billing software, more formally known as electronic invoice presentment and payment (EIPP) technology. EIPP products automate the invoicing and payment process with Web-based tools for delivering bills, moving cash and reconciling accounts among business trading partners.

It's not a new market: E-billing start-ups were a darling of the Internet bubble, until the burst put several out of business or on the acquisition block. Since then, it hasn't been easy for pure-play EIPP players to stay afloat, Gartner says. Many are on shaky ground. In fact, Gartner warns corporations to include safety clauses in contracts that will let them assume control of systems, data and intellectual property if their vendor goes out of business.

Nonetheless, Gartner describes today's EIPP market as nascent but growing. The research firm expects it will become a $500 million market by the end of 2010.

According to NACHA, an electronic payments organization, more businesses and consumers use electronic payments than checks. The number of checks processed by the Federal Reserve decreased for the fourth consecutive year in 2003, dropping 4.7% to 15.8 billion checks. Meanwhile, the Federal Reserve's Commercial Automated Clearinghouse volume increased by 12.1% to 5.6 billion payments.

One vendor eyeing the business-to-business market is Siebel Systems. Just a few weeks ago, the CRM leader announced plans to acquire Edocs, extending Siebel's customer service platform to include account inquiry and bill management capabilities. Edocs was among the largest remaining independent EIPP players, which also include AVOLENT, Pitney Bowes and CheckFree. Many of the large ERP players, such as SAP, offer some EIPP functionality in their suites, as do procurement vendors, such as Ariba.

Getting the cash

Revenue management, like EIPP, is an offshoot of ERP. Whereas EIPP technologies are focused on getting invoices sent and paid electronically, revenue management software is aimed at helping companies forecast and collect moneys owed.

Network Appliance is currently deploying revenue and receivables management software from Aceva Technologies. The storage hardware maker in Sunnyvale, Calif., uses Aceva's technology to improve its collections processes - to automate cash forecasting and dispute resolution, for example.

Aceva's software integrates with Network Appliance's ERP system. It aggregates data such as customer quotes, invoice information, purchase orders, shipping data, payment histories and credit availability - information that typically is scattered among multiple applications.

Collections and credit personnel need that information to be readily available, so they can quickly make decisions about whether to release a new order or make a phone call to a customer. "Aceva consolidates it for us," says David Gondorf, worldwide credit and collections manager at Network Appliance.

E-billing gains
Health Alliance Medical Plans expects to achieve big savings in its first year using AVOLENT's BizCast software. Here are some specifics from an early ROI tabulation.

Expense	Cost before BizCast	Cost with BizCast	First-year savings
Reconciliation and dispute process	$376,000	$188,000	$188,000 or 50%
Paper bill presentment	$55,000	$14,000	$41,000 or 75%
Manual check processing	$57,000	$43,000	$14,000 or 25%

Timing is critical, Gondorf says. Imagine a $1 million order gets put on hold because a customer account is past due. However, the check is in transit, and only a collector in Tokyo knows and has a shipping confirmation to prove it. If that information is logged in Aceva, the order can proceed without any obstacles.

In the past, ironing out payment status discrepancies could be an inefficient, time-consuming process filled with phone calls and e-mails among sales and collections staff. "Redundancy of questions is a real frustration," Gondorf says.

Along with improving communications among its global offices, a key goal of Network Appliance is to reduce its days sales outstanding (DSO), a calculation of the time that elapses between when an order is invoiced and when it's actually paid.

"DSO calculation is becoming more and more important," Gondorf says. "Analysts on Wall Street now look very closely at the balance sheet to determine the validity and health of a company."

By paying more attention and establishing standard policies and procedures for collections - strategy that includes the purchase of the Aceva software - Network Appliance has reduced its DSO from in the 70s five years ago, to in the 50s today. Over the next six quarters, Gondorf hopes to get the company's DSO down to the mid-40s.

Collecting moneys faster, in turn, frees Network Appliance to invest more in R&D, facilities, and mergers and acquisitions, for example. Gondorf also has been able to improve his DSO forecasting, which helps investment teams make more informed decisions about what to do with incoming moneys.