A Deeper Look at Amex’s S2S eInvoice & Pay Service

The S2S solution combines the capabilities of newly-acquired Harbor Payments with Amex’s strong position and skills in commercial cards.

The key issue, as ever in the B2B electronic payments space, is timing. That is, have we finally reached the long-awaited inflection point at which significant numbers of large, mainstream companies will make the investment in automating their Accounts Payable and Remittance functions?

It’s clear that American Express’s entry into the space is a watershed event, though the nature of that watershed may still be a bit ambiguous. Does the move by Amex reflect the fact that companies are now prepared to take on B2B automation, or is Amex seizing an early opportunity to legitimize this market and the specific solution offered by Harbor (“credentialing” Harbor, as it was put yesterday)?

I come down slightly for the latter case, believing that the existence of a well-developed solution, fully-endorsed by a large, public company willing to put its carefully-guarded brand on the product, represents a real change in the supplier market for B2B solutions. Think of the difference in a corporate treasurer telling his CEO he wants to invest in a Purchase Order and A/P system from American Express versus telling her that he’s decided to go with Harbor Payments. If we traced the history, I think we’d see that similar forces were at work a few years ago as online purchasing systems gained acceptance with the entry of players like Oracle and SAP, and the maturation of Ariba into a stable, public company.

For their part, Amex executives repeatedly noted that they moved on Harbor Payments late last year because their corporate clients were asking them for a solution in B2B payments. Extensive research also told them that Amex would be viewed as an appropriate provider of such a service, which makes intuitive sense to me. Obviously, Amex’s installed base of large corporate customers around the world using its T&E solutions (and the attendant sales force and account management organization) will be an enormous new asset for Harbor.

I also noted a number of clever features and implementation steps that have been built into the solution and bode well for its success:

• It utilizes a hosted network that allows buyers and suppliers to log onto the same platform and view the same documents in real-time, eliminating lost documentation and problems of version control, and especially wasted phone calls to simply determine the status of an invoice
  
• The solution has already been integrated with SAP’s purchase order system, the one most commonly used by large corporations, which will ease the transition for buyers wishing to use the S2S platform
  
• It contains buyer-established rule sets for invoice creation, along with some matching tools in order to help with automated approval of invoices. I remain a bit skeptical about the ability to do system-matches of POs with invoices (its usually not in one of the party’s interests to do so), but the system at least contains some electronic tools to mediate the dispute, again eliminating phone, fax and email traffic that is inherently inefficient
  
• Suppliers need to be enrolled in the database only once and can then be re-used by multiple buyers, and it appears that marketing efforts will focus on specific verticals in an attempt to leverage the enrolled base of suppliers.

Still, at this stage the company says it has only “tens of thousands” of suppliers enrolled, indicating that new buyers implementing the system will have a significant supplier compliance task to manage (even within a vertical already covered by the solution, a supplier match of no more than 25% can be expected).

The streets are littered with investors who once thought the time was right for automation of B2B payments and remittance data, but this acquisition and product roll-out probably represent the most significant piece of forward progress in the market in several years. We’ll be watching with great interest for other large players in the banking, payment processing or technology space to enter the fray and further build the category.

Questions, comments? Post them below or email Bryan directly.