As explained in Part One of this series, there is a big difference in architecture and purpose between enterprise-centric and supply chain-centric platforms. Enterprise-centric platforms, such as ERP, aim to provide “Enterprise Cohesion” and financial integration within the enterprise. Supply chain-centric platforms aim to provide “Supply Chain Cohesion” and trading partner integration across the supply chain. But of course these two universes are bound together; both deal with purchase orders, sales orders, invoices and payments. The difference is that Enterprise Finance focuses on internal accounting and cash management whereas Supply Chain Finance Platforms connect multiple-party networks of trading partners together and enable them to transact. These network platforms can help to reduce risks and cost of credit, promote smooth transaction flows, gain visibility, make connecting to trading partners easier, reduce disputes, and enable innovative financial services.
The universe of supply chain finance platforms is quite diverse. One way to segment it is as follows:
- Invoicing and Payment Network Platforms — This includes EIPP networks (Electronic Invoice Presentment & Payment) and related functionality, which may be standalone or part of a broader e-procurement or P2P (Procure-to-Pay) suite.
- Trade-Logistics-Visibility Network Platforms — This includes logistics networks and visibility platforms that provide or enable supply chain finance services. Often they partner with or connect to banks, insurers, and other financial service providers.
- Financing Network Platforms — These are providers of network platforms that enable new innovative ways of delivering receivables financing, VMI financing, pre-shipment financing, and trade credit services.
Invoicing and Payment Network Platforms
The “transactional culmination” of the supply chain, after delivery, is the payment. Thereby, invoicing and payment comprise the critical control point to close the loop at the “end” of the entire supply chain process (conceive-source-build-deliver), enabling the 3-way or 4-way match — ensuring that what was ordered, delivered, invoiced, and paid all match.
The traditional approach is to send paper invoices and receive checks by mail or EFT. Besides being horribly inefficient, this introduces many errors and does not allow automation of 3-way matching, leading to incorrect and duplicate payments, as well as many disputes about what was actually delivered vs. what was paid for. This also makes it difficult to forecast payment dates or to create or take advantage of early payment programs.
Once you are collecting data using electronic payments, it can be mined for purposes such as early warning about supplier financial problems, fraud detection (external and internal), and payment audit. Here we are talking not about the AP/AR functions within an ERP system, but the use of the network platform to provide invoice and payment functions, as well as other financial services (described in the next installment in this series). Invoicing and payment processes are inherently supply chain processes involving interactions between trading partners. Hence they benefit from supply chain finance network platforms. The “network” here implies not just connecting via the internet, but also having a pre-integrated community of trading partners and third parties, as illustrated in Figure 2 below.
There are several reasons why a network platform is useful to provide these services:
- Diminishes or eliminates the effort to integrate trading partners
- Allows for third party service providers to participate (for example, a financial service provider can purchase receivables)
- Provides the data, linkages, and service providers for innovative supply chain finance programs
While some of the network platform providers focus primarily on e-Invoicing (e.g. OB10, Maventa, TradeShift, Eurobits), many of the providers offer broader sourcing and procurement solutions that include invoicing and payment as one function within their suite (e.g. Ariba, Basware, Hubwoo, Rearden). These broader suites have the advantage of built-in integration from RFx through contract to PO to invoice and payment — the transactional data is carried from one stage to the next. Here are some of the invoice and payment network platform providers:
- Accelya – BPO (Business Process Outsourcing) approach to e-Invoicing and automation of other transactions.
- Ariba – Complete sourcing and procurement platform, including e-Invoicing and payment. Ariba Network has over 700,000 companies connected. Ariba also provides supply chain finance solutions which are described later in this series.
- B2Boost – B2B Integration, e-Commerce, and e-Invoicing. Focus on European Retailers (150 connected).
- Basware – Provides various P2P solutions. Basware Open Network for e-Invoice and purchase transactions connects more than 320,000 companies.
- Conexa – Buy side (sourcing and procurement), sell side, and bill/pay applications. Conexa Trading Network connects over 90,000 companies.
- Cortex – P2P and Order-to-Cash solutions. Cortex Trading Partner Network connects over 5,000 companies, primarily in the oil and gas industry.
- Coupa – Spend management suite, including invoice automation and Coupa Supplier Network.
- Elemica – Provides both the customer (procurement) and supplier (selling) functions, including order and invoice processing. ~3,000 companies in their network, including a number of the world’s largest chemical companies.
- Esker – AR, AP, Sales Order processing and automation. Focus on OCR and document capture, as well as business rules.
- Eurobits – e-Invoicing SOA platform, primarily serving customers and banks in Spain.
- Fundtech – Primarily for banks, enabling them to offer services, including e-Invoicing for corporate clients.
- Hubwoo – Cloud-based Sourcing and Procurement suite, with invoice management. Their Business Network connects about 200,000 trading partners. Close partnership with SAP.
- Invapay – Invapay’s Business Payment Network provides order and payment solutions.
- Itella – Finland-based provider of logistics services and financial automation, both buy and sell side.
- Maventa – e-Invoicing network. Over 8,000 customers.
- OB10 – B2B e-Invoicing Network. Offers services for both buyers and sellers (many of the other services are buyer-centric). Over 100,000 companies connected.
- Oracle – Oracle Supplier Network integrates with Oracle ERP (e-Business) Purchasing and AP, as well as PeopleSoft Purchasing and Payables. Adoption of OSN appears to be limited (estimates are 1,000 or fewer companies connected).
- Pagero – e-Invoicing and payment network. Several thousand customers, primarily Nordic.
- Rearden Commerce – Suite of sourcing and procurement solutions. With the acquisition of Ketera (and the Ketera Network), they have a network connecting over 1,200,000 companies.
- SAP – With the recent acquisition of Crossgate, SAP now has a Supplier Network with e-Invoicing capabilities connecting 40,000 trading partners.
- Syncada – A global payment network that banks can use to offer invoice processing, payment, and financing services. Based upon the PowerTrack platform created by U.S. Bank.
- Taulia – Dynamic discount optimization and supplier portal. Integrates with OB10 and SAP.
- Tradeshift – Describing itself as the “Skype for invoicing,” it is the world’s first large scale peer-to-peer infrastructure for e-Business, providing free e-Invoicing services. Launched in May 2010, Tradeshift integrates with PayPal as a way to bypass global bank fund transfers, making it a direct challenge to banking systems and credit card processing. Tradeshift also has a ‘social network’ for business transactions.
- Transcepta – e-Invoicing, supplier on-boarding. Has close relationship with Oracle and integrates with OSN.
In the next article, Part 2B of this series, we elaborate on Trade-Logistics-Visibility Network Platforms.
To view other articles from this issue of the brief, click here.