SAP Closes Billing Cycle

New financial supply chain software ends EDI reliance.

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."