- 1 - B2B Banks: The future financial engines of B2B E-Commerce Oliver Slesar, June 2000 © 2001 Sixhills Consulting Ltd & Author B2B Banks: The future financial engines of B2B E-Commerce Electronic B2B marketplace pioneers may offer buyers and sellers high value added vertical content and community services, as well as excellent market data and price discovery mechanisms. However, once they’ve helped a buyer and seller agree on a transaction, even the most sophisticated B2B marketplace usually runs out of steam in the “checkout” line: payment and financing options offered are typically very poor, and may include only off-line alternatives (e.g., payment via company check) or else the corporate version of the credit card, the Corporate Purchasing Card. There is, therefore, a huge opportunity for new on-line B2B banks that can provide a sophisticated financial solutions engine tailored to serve the new Internet driven needs of online and offline B2B intermediaries and direct sellers. As a result, existing and new players are racing to create new B2B payment and value added financing products, as well as to agree on the technical standards that will be required to share B2B transaction data universally and securely. From the B2B marketplace perspective, they have a complex start-up task. On one hand, they need to offer significant new value added compared to offline business processes to get users to sign-up for their internet-based hub, but on the other hand, they also need to easily integrate into existing processes and systems, such as payments and financing, that are part of their new users’ established way of doing business. Since existing payments/finance processes are quite complex and also not typically a core skill of new B2B hubs, B2B hubs are relying on existing financial business processes. However, new B2B Bank offers will change this very rapidly. Developing a new seamless Internet–based B2B financial payment system will require new technical standards and new processes. Technical standards for transaction data needed can be divided into two main parts: 1) money transfer data – describing the movement of funds from Bank A to Bank B (amount, authorisation, etc.), and 2) invoice transfer data – data describing full invoice detail in a standard electronic format (item description, price, quantity, VAT, cost centre, general ledger code, etc). New processes will then be required in order to move from mostly manual to fully electronic payments processes. Significant additional value to users will be released from a fully on-line B2B Bank compared to current off-line, manual, paper-based process. Reducing costly and inefficient paper based billing will allow companies to downsize their expensive A/P and A/R departments and lower their high costs per invoice. Converting all paper invoice data to electronic form will allow electronic-bill databases to be created with detailed records of
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