I spend way too much of my time thinking about how to transform the Business-to-Business (B2B) invoicing process. For those who aren't familiar with this wonderfully sexy problem, about 10,000,000,000 (that's billion) times a year a business mails a piece of paper to another business asking for payment. About 2,000,000,000 times per year, the other business mails a paper check back to the first business for payment (businesses often pay multiple invoices with one check, thus the disparity in numbers). And this is just in the United States. It is a huge mess that makes it incredibly costly for businesses to transact with each other.
Anybody remember what music distribution looked like before iTunes (technically the iTunes Store)? You could buy a physical copy of an album on a CD or go to a variety of different music publisher web sites to buy music. These options were less than desirable for a lot of people so pirated music sites like Napster and Kazaa flourished.
Well along came Steve Jobs to solve this problem. Apple launched the iTunes Store in 2003 and in a single stroke of brilliance solved the music distribution problem. This wasn't solved through a some major software innovation. This wasn't solved by all music publishers following the same standard. It was solved by hammering out agreements with music publishers with an innovative business model and doing the hard work to make sure that their music catalogs were ingested into the iTunes store.
Invoicing and music have some uncanny parallels.
The businesses that send out invoices, often called suppliers or billers, are the music publishers. The businesses that receive the invoices, often called the buyers, are the music consumers. Consumers pay for music on iTunes and that money flows back to publishers and artists. Similarly, money needs to flow from buyers back to suppliers.
The invoice distribution problem is not a new problem and many smart people have tried to solve it.
Electronic Data Interchange (EDI) was a standard that was developed back in the 90's that was one of the first attempts to solve this problem. While EDI has had some success with larger suppliers and buyers, there are a millions of business that don't speak the language and at this point most people agree that EDI is not the long term solution.
Email has been used as an invoice transfer protocol and many businesses send other business invoices via email. Email has been successful because just about every business can speak email. But email is a very messy solution that only solves part of the problem. Email cuts out the US Postal Service as the middleman. However, most businesses that receive email invoices still print them out and key them in manually. Email is also only one direction, payments still come back predominantly via paper check. Yuck.
Over the last two years Billtrust has quietly launched two solutions that we believe have a great chance of being the iTunes for Invoicing. In early 2012 we launched a product called Invoice Central which is our equivalent to iTunes. It is a single website that buyers can go to get invoices and make payments to numerous suppliers. The supplier universe currently available on Invoice Central is small but growing fast and we believe will eventually will house content for most suppliers.
The problem with Invoice Central is that a lot of buyers are larger companies that don't want to go to a website to retrieve their invoices. So in 2013, we launched another product called AP Connect (Accounts Payable), which is effectively a translation engine to allow invoices to be delivered directly into AP systems like Ariba and OB10.
With these two solutions, we have built what we believe are the building blocks of a system to allow businesses to transact more efficiently. Still a lot of work to do, but we're betting that this is going to be big.