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Looking Beyond Open Networks in E-Invoicing

Tuesday, August 28, 2012

Most cellular phone users probably take it for granted that they can call any other domestic cellular phone user, without having to worry about either party's service carrier.

But it wasn't too long ago that cellular phone users had to pay close attention to their carrier's network. So-called "out-of-network" calls were either impossible or extremely costly.


Today, cellular phone towers have the ability to communicate with all of the different "bands" used by service carriers, providing an open network that facilitates calls between all cellular phone users. In fact, the cellular phone carriers share the towers, and it's in their best interests to do so.

It's for this reason that the network a cellular phone uses is playing a smaller and smaller role in the consumer's buying process. Networks merely facilitate service between cellular phone users. Few would argue that they provide unique value. Instead, consumers focus on the features of a cellular phone. They join a cellular network because they want a particular phone, not the other way around.

Exhibit A: Apple's iPhone.

Looking beyond 'open networks' in e-invoicing

The cellular industry's move to open networks offers a roadmap for the e-invoicing space.

Like those early cellular phone users, corporations are clamoring for open invoice networks. They want the ability to distribute and receive as many electronic invoices as possible, to and from as many companies as possible, without having to interface to a bunch of different networks.

E-invoicing vendors have jumped into the fray, touting their own version of an open network.

While these vendor networks have different approaches to things like invoice submission, user configurability, control, and integration, this is unquestionably a step in the right direction.

For the sooner the industry can solve the interoperability issues between networks, the better.

Like the cellular phone industry, the end-game in electronic invoicing isn't about open networks. It's about the value provided by the "edge" solutions -- like Direct Insite's PAYBOX® platform -- that work with the open networks. Open networks will solve the invoice distribution problems that cause friction in the financial supply chain. But they will do nothing to solve the considerable internal business challenges faced by accounts payable and accounts receivable departments: invoice presentment, routing and approval, disputes, inquiries, payments and more.

Once companies receive electronic invoices, they will still need to process them. It's in the processing of invoices that most accounts payable departments encounter their biggest challenges.

That's why we believe e-invoicing vendors should move as quickly as possible towards truly open, inter-connected networks, so they can focus their energies on attacking the "edge" services that will deliver the most value for companies. For its part, Direct Insite is willing to interface its network with any other vendor network. Meantime, we are investing in our PAYBOX® platform to provide even greater return on investment for accounts payable and accounts receivable departments.

In time, we believe open networks should become as commonplace in e-invoicing as they are in the cellular industry. Then, companies can focus on "edge" solutions and the value that is added to solve their biggest problems.

By Matthew E. Oakes

Matthew E. Oakes is President and CEO of Direct Insite. He can be reached at 954-510-3750.