SAP Closes Billing Cycle

By Renee Boucher Ferguson  |  Posted 2002-10-21

SAP Closes Billing Cycle

SAP AG is developing software that integrates the myriad pieces of bill presentment, payment and settlement—processes that to date have been addressed only in parts by banks and pure-play software makers.

The Walldorf, Germany, software developer is readying new and upgraded components for its Financial Supply Chain Management software, which will provide a three-part hub-and-spoke billing system that officials said will be a cheaper, Web-based alternative to products based on EDI (electronic data interchange).

Although the bill-paying software can be integrated with SAPs R/3 ERP (enterprise resource planning) software suite, officials at the company said Financial Supply Chain Management will be able to deliver invoices from an Oracle Corp. or a PeopleSoft Inc. financials application. SAP will provide a tool for small companies that dont have an ERP system to trade information with bill consolidators.

The software, components of which are available now and next quarter in Germany and due in English versions for North America next year, consists of three components that communicate via XML over the Internet. The Bill of Service Provider component maintains the basic information of the bill issuer and transforms invoices to the SAP IDoc format.

The second component, the Consolidator, maintains the relationship between the biller and its customers, as well as maintains an interface with banks to facilitate settlement. Third, the Customer Service Provider component provides a Web front end for customers to view and pay invoices.

Along the way the system can verify the parties and the invoices, post open items in the financials systems of the biller and the company receiving the bill, and create a payment file to send to the bank. Authorized banks that also install a component of the SAP software can debit and credit accounts.

SAP will market Financial Supply Chain Management first to banks that could offer it as a service and to its large corporate customers that could use it to create a private payment exchange for suppliers. Officials envision generic bill consolidators operating through consumer Web portals ultimately implementing the software.

Trelleborg YSH Inc. is in a multiyear, multimillion-dollar R/3 implementation. "This is the backbone of our supply chain management system," said Kishore Nayak, worldwide vice president of IT at Trelleborg, of South Haven, Mich. "From here we are planning to deploy SAP Supplier Portal—a portal for all supplier activities."

Page Two

: SAP Closes Billing Cycle">

While Nayak is planning to install a Web-based EDI system, he said he is interested in SAPs financial supply chain software because it could give suppliers more timely information on payments.

"EDI is so expensive that in Germany we have only two suppliers that participate in EDI. So we want to eliminate it," said Nayak. "Its a good time to [investigate financial supply chain software] because I believe its going to save some money."

Many would-be customers of the SAP software simply are not ready to take on the arduous and expensive task of deploying Financial Supply Chain Management, however, because it would require money and a fundamental change in how companies do business with one another.

"I dont look at SAP as having a significant presence on the supply chain side of things," said R/3 customer Paul Hoogenboom, CIO at RPM International Inc., in Medina, Ohio.

"We have automated cash management with our banks in each country. Whats SAP got to do with all of that?" asked Hoogenboom. "I dont deny that there are things I can do more efficiently with financial settlement issues, but thats not an overriding issue with us."

Related Stories:

  • SAP Partners to Extend Enterprise Applications
  • SAP to Split SAP America?

  • Rocket Fuel