E-payment challenges paper
Larger enterprises are increasingly using electronic payments instead of cheques when it comes to business-to-business (B2B) transactions.
This is according to a new report by MasterCard International and Ariba, published as the "B2B Spend Management Survey".
Although 80% of all B2B deals are still completed with cheques, two-thirds of companies with annual revenues of more than $500 million use some form of electronic invoicing presentment and payment (EIPP) systems to streamline their financial management processes.
The survey defines EIPP solutions as those that allow businesses to accept or make payments electronically.
Eddie Grobler, senior VP and GM at MasterCard Southern Africa, says there were about 9.58 billion B2B transactions worldwide last year. Of these, 7.63 billion, or 80%, would have involved cheques.
"However, we believe that electronic B2B payments will grow from 20% today to almost 50% by 2010," he says.
The survey shows that 66% of companies use some form of EIPP. The report says 62% rely on such technology to make electronic payments to suppliers and 35% use the technology to receive payments from customers.
"Our experience has shown that comparatively speaking, the results of the US research would closely reflect South African statistics," Grobler says.
He says purchasing professionals from large companies in virtually every industry see that paper-based and manual processes are inefficient, while EIPP saves time and money.
He adds that an April 2003 Gartner research report showed that a typical business biller could save $2.7 million a year if all business bills were delivered over the Web.