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Empowering Your Customers with Electronic Bill Presentment and Payment (EBPP)

by Juergen Weiss | SAPinsider

October 1, 2001

by Juergen Weiss, SAP AG SAPinsider - 2001 (Volume 2), October (Issue 4)

How many bills do you receive at home every month? Quite a few, I imagine. And I'd venture to say that paying those bills does not rank among your favorite activities - not just because paying bills eats into your savings, but also because of the drudgery of dealing with them. They pile up on your desk. You can't always be sure what every line item represents. When you finally find time to call the customer assistance number, you don't always get the answers you need. There may even be the additional issue of which payment method you should use.

     Extrapolate this to the corporate level, where analysts estimate that in the United States alone, 12 billion invoices were issued over the past year. Worldwide, the number approaches 48 billion. Within the corporate world, drudgery and inefficiencies prevail as well. Accounts Payable departments spend an inordinate amount of time resolving disputes and processing invoices and payments. Without integrated systems, invoice information is rekeyed into the accounting system, which can lead to errors. Disputes can't be handled online, and reconciliation requires many manual - and often cumbersome - steps. The collections process is also not fully integrated with accounting data, and adds further inefficiencies to the system.

     Now consider business-to-business processes: while a company's business partners browse through digital catalogs and use special procurement solutions for purchasing goods, the company itself is issuing invoices, in 90 percent of all cases, just as it always has - by post - and then, in most cases, payment is made electronically! The result is a disjointed approach that can be a barrier to e-commerce. The efficiency of closed, integrated process chains continues to be the exception rather than the rule.

     Electronic Bill Presentment and Payment (EBPP), hailed by analysts as the "killer application of the Internet," offers the remedy. EBPP truly optimizes invoicing and payment processes and eliminates many of these manual processes, curtailing the cost of issuing invoices. Market researchers Ovum have concluded that costs can be reduced by up to 70 percent through EBPP.

     SAP is incorporating this "killer app" into mySAP Financials as part of the SAP Financial Supply Chain initiative. Not only can EBPP reduce costs and increase efficiency, but it gives companies yet another tool for building relationships with customers and business partners.

Streamlined, Less Costly Invoicing and Payment Processes

The conventional dispatch of invoices entails numerous steps by both the issuer and the receiver - from printing the invoice and dispatching it via post, to collection, reconciliation, and closing. It has been estimated that each invoice sent by post can cost up to $15 US. Now, instead of printing an invoice, stuffing it into an envelope, and mailing it, the invoicing party can send an electronic invoice. Savings can accrue into the millions.

     Currently there are two basic models for electronic billing:

  • Direct Biller: The issuer sends an electronic invoice directly to the party responsible for payment. This is the preferred model for large billers (those companies that generate a minimum of 1 million invoices per year), for companies that want to control data access, and those that want to maintain a close relationship with their customers.
  • Consolidator: A bank or specialized service provider collects the invoices of various companies and presents them in a consolidated fashion on a web site or portal. This consolidated approach is ideally suited for companies that want to avoid implementation efforts and prefer a hosted solution.

     An invoice can be dispatched either directly, as an e-mail attachment sent to the customer, or indirectly, as a hyperlink that redirects the customer to the biller's or consolidator's web page. From there, the customer can access the SAP system of the biller or consolidator (see Figure 1). Whichever approach is used, payment is made electronically - for instance, by debiting a credit card or by direct debit. Of course, payment methods can vary from company to company.

Figure 1 EBPP Displays Both Open Items and Credits

Cost Savings - Just One Part of the Benefits Picture

Cost savings, while profound, are only a small part of the overall benefits picture. Companies that have implemented EBPP also regard it as an essential element of their e-business activities.

     For example, EBPP is increasingly being used to cultivate a more intensive relationship with customers, with a view to cross-selling. Many companies, such as insurance companies and utilities, only communicate with their customers once a year - when they send an invoice. What could be more natural than to use this document as a marketing tool at the same time? As a result, the future of EBPP will mainly be in the business-to-consumer (B2C) area, as "the bill becomes the portal," with individual and personalized web sites designed to offer the customer better value.

      However, you can lock into similar benefits on the business-to-business (B2B) side. With clear audit trails, disputes can be resolved faster and days sales outstanding (DSO) can often be reduced. The exchange of information between two business partners can be simplified, enabling company-wide financial processes to be carried out with greater efficiency.1 EBPP enables the exchange of information on the financial process regarding invoices, payments, and master data. Traditionally, such information is exchanged in written form (by letter, fax, etc.) or by telephone. These time-intensive forms of communication can be simplified significantly.

Financial Supply Chain Initiative Supports EBPP in B2C and B2B Environments

The new EBPP solution from SAP is suitable for both the B2C and B2B environments, and will provide support for both the direct biller and consolidator models. From a business perspective, the focus is not just on electronic billing and payment, but on other aspects of the overall financial supply chain.

     According to the research institute Killen & Associates, a financial supply chain "parallels the physical or materials supply chain, and represents all transaction activities related to the flow of cash, from the customer's initial order through reconciliation and payment to the seller." Optimizing this financial supply chain is becoming the key differentiator for many companies in a networked and collaborative environment.

     SAP's Financial Supply Chain Management initiative contains EBPP, dispute management, and credit management, which will help companies reduce their working capital and float, improve billing and payment processes, and create more accurate cash management forecasts. To facilitate this, the business partners involved have the option of viewing their account balance and consequently their overall position with regard to their suppliers. In this way, the customer can see any possible credits along with any open items, and can offset these with the receivables that are still open.

     SAP's groundbreaking approach to EBPP ensures high performance and scalability (see Figure 2). The entire presentation logic of the SAP EBPP frontend is being implemented using Java Server Pages (JSP), while the larger part of the business logic remains in the SAP backend system. Communication between Java and ABAP Objects is secured by the SAP Java Connector (JCo).2 This enables both inbound and outbound calls making use of the RFC (Remote Function Call) protocol, and is also intended to support SOAP, the Simple Objects Access Protocol.

Figure 2 SAP EBPP Architecture Based on Java Technologies

     The traditional modules for accounts receivable accounting (FI-AR - Accounts Receivable) and contract accounts receivable and payable (FI-CA - Contracts Accounts) are included as SAP backend systems. FI-CA, for example, is used with several SAP industry solutions for insurance companies, the telecommunications sector, the public sector, and utilities. It is precisely these business areas that are already keen to implement online billing.

     The new EBPP product also provides interfaces to industry business solutions and billing creation systems (for instance, the SD Sales and Distribution component or CRM Billing). This ensures that users can drill down from the overview of open items to view detailed invoice data.

     The first release of SAP's EBPP functionality in October 2001 covers all the functions of the core processes of the direct biller model; from the point of view of the invoice issuer, credit card payments and direct debit are supported as payment methods. Future releases will extend the focus to cover the consolidator model and dispute management functions.


SAP's EBPP solution can deliver huge cost savings and a better means for communicating with your business partners and customers. If you make EBPP part of your accounting processes, while also incorporating it into your Customer Relationship Management strategy, you can achieve financial savings, benefit from a unique differentiator in your e-business offerings, and truly empower your customers.

Jürgen Weiss studied Business Economics at the University of Heidelberg. He joined SAP in 1997 as a partner manager in the Complementary Software Program and as also worked as a consultant for IBU Insurance. Since 2000, he has been the Product Manager for EBPP in SAP's Financials GBU.

1 In B2B scenarios, it is quite common for business partners to need more information before they can close a business transaction. For example, when the vendor cannot tell which payments relate to which invoices, the vendor's accounts receivable accountant then has to contact the customer's accounts payable accountant by telephone, letter, or fax to obtain further details. Only then can they close the transaction and post it. With EBPP, the vendor only needs to send the customer an e-mail requesting more payment information.

2 For more information on JCo, see the article by Thomas G. Schuessler in this issue of SAP Insider, and online at

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