With annual online revenues of $150 million or more, it’s safe to say that Grand & Toy is a master marksman of the Canadian e-space. But not content to rest on its laurels, the country’s leading office products supplier in the commercial sector is adding another arrow to its e-commerce quiver. It’s getting set to introduce one of the most sophisticated electronic invoicing applications in the country.
When the application rolls out, likely in the second quarter of this year, Grand & Toy will be in a position to provide its business customers a dramatically more convenient and responsive billing process, thereby strengthening customer satisfaction and loyalty. At the same time, the company’s internal processes will be streamlined, and a good deal of money will be saved in both labour and postage.
“To our knowledge there isn’t an electronic invoicing application that has all the features this has, certainly in Canada,” said project manager and lead business sponsor Dave Love, National Manager, Credit Risk. Those features include a sophisticated cost-centre billing capability and an online dispute-resolution process.
Selecting a Vendor
Grand & Toy did a tremendous amount of preparatory work in anticipation of introducing e-invoicing, thinking about what was needed, how the billing process works, and what happens at the customer’s end with the invoice. After a lot of brainstorming, a six or seven-page document was produced outlining everything that the e-invoicing system would need to have.
When the company first started to look at e-invoicing vendors in the summer of 2000, it found quite a few with B2C offerings – typically presenting an electronic copy of a basic invoice for payment – but only three with true B2B capability. As the majority of its business is B2B, those three contenders made up the short list. The frontrunners were two Canadian firms that really understood the Canadian market. The final nod went to BCE Emergis, and its ‘e-Invoicing’ product.
The fit was a good one for both parties. BCE Emergis had recently acquired InvoiceLink of Greensboro, N.C., the original developers of the application, and they were looking for the right customer to team up for the product’s Canadian introduction.
“We had the foundation for a very strong product but wanted to leverage some of the expertise and experience of one of the leading Canadian e-commerce players,” said Emergis Account Executive, Kyle Wenn. Grand & Toy was an excellent candidate – a high-volume, high-transaction distribution company, whose customers range from the smallest to the largest in their transactions. Working with Grand and Toy would help BCE Emergis understand many of the issues that come into play through the billing and payment cycle.
Grand & Toy was equally enthusiastic. “We’ve been very careful about our online strategy. We’ve addressed the needs of our customers without chasing every single customer on the street,” said Vice-president, Information Technology, John Melodysta. “And we’ve approached the back-end piece in much the same way. We found the right partner, got the best piece of software, and we’ve had lots of input into its development. When we roll this out we’ll have front-end and back-end – req. to cheque – covered off pretty well, in an online sense, for our customers.”
In the end, it was a meeting of the minds between the two organizations that really clinched the deal. This came about when Dave Love and ERP manager Chris Wakeford paid a visit to the Emergis product development team.
“We spent a day with them, tossing ideas back and forth, saying here’s what we think, what do you think?” said Love. “It was a very productive meeting and it really made our decision, because they were on the right page. They wanted to build what we wanted to have built.”
The partnership was announced in January 2001, and the work on the project began soon after.
Three Development Phases
Grand & Toy had a strong vision of what the application should be, and a lot of time was spent with the vendor, reviewing Grand & Toy’s business processes and determining what functionality needed to be in the product in order to achieve the vision.
“During that stage the challenge was to understand their requirements,” said Kathy Hardy, Project Manager, e-Invoicing, who headed the BCE Emergis implementation team. “We had to figure out how the application was going to work for them, and then analyze whether or not the requirements could be met in the product. If they couldn’t, we had to figure out how we were going to do it.”
Work on the project was tackled in three phases: Phase One was the baseline implementation, with payment integration and presentment of regular invoices; Phase Two focussed on development of the cost-centre invoice, a much more complex invoice that can be broken out and sorted by departments. As well, this phase included development of a bilingual version; and Phase Three involved the enhanced development of the online dispute initiation and resolution process.
The single-invoice phase has been running in pilot for several months, with several real customers paying real bills; with the exception of a few minor details, this portion of the application is pretty much complete. At press time, the cost-centre invoice portion of the application had been tested and was about to be put into pilot with a handful of large Canadian customers. With the bilingual piece already in place, and only the enhanced dispute resolution process needing to be tested, the company appears well positioned to hit its target of a second-quarter roll-out.
Cost Centre Invoice
The cost-centre aspect of the application is primarily aimed at large organizations. With paper-based invoicing, many large customers keep their summary invoice pages in one location and send the detailed pages to different
departments, which may be in the same building or in separate locations entirely. The detailed pages are then matched up with the delivery slips, approved, and eventually returned to accounting for payment, all of which can be very time-consuming.
With the cost-centre feature, organizations can break out their large summary invoice by department, forwarding the relevant invoicing details for approval by authorized individuals, who are able to look only at the invoice for their department. Companies can customize the cost-centre feature to reflect their own organizational structure.
“We produce 5,000 summary invoices a month. For some of our large customers, such as the banks, those invoices are literally boxes and boxes of paper,” said Melodysta. “To replace the summary invoice with this kind of a tool, which enables them to forward the appropriate billing information to all the different cost-centre departments, have them approve it, dispute it, and send it electronically back to accounts payable – that’s powerful stuff for them.”
The functionality doesn’t stop there. The system will allow customers to have online access to invoices and, eventually, delivery tickets. Grand & Toy already scans delivery tickets when they come back with the drivers, and internal staff can retrieve them online.
“We envision a link on the order number back into our system,” said Love, “where the customer could view invoices and delivery tickets. The customer would be able to see who signed for a delivery, for example, and perhaps not even want a paper copy of it. That’s going to save our customer service people a lot of time that they now spend chasing around getting reprints and faxing them to customers. And the customer doesn’t have to wait for a fax to come in a couple of hours or a paper copy to come in a couple of days. It’s instant.”
The customer’s electronic statement, which will be refreshed every day, is very similar to the paper statement that Grand & Toy now sends. It does, however, have a couple of things not on the paper copy. One is its status – the customer can see whether or not invoices have been approved or released or are waiting approval. The other is the online dispute reso-lution feature. From the statement of account, the customer can link to an invoice. If they want to dispute any line item, they can pop-up a box and respond to some questions that may enable Grand & Toy to resolve the dispute without making a phone call.
The whole philosophy around electronic disputing is that there’s no phone call. If Grand & Toy doesn’t have to phone the customer to get the details, it can get on with the dispute resolution process very quickly, saving time and money. The company envisions the dispute file coming back into its ERP system, where it will initiate the dispute in the system and notify the customer-service person or the accounts receivable person that there’s a problem. The person that has to fix the problem will also get an automatic email, along with the appropriate sales rep, telling him or her that there’s been a problem.
“Disputes often involve a large number of order corrections that take place in the background,” said Melodysta. “The advantage of the online dispute mechanism is that we can automate and streamline a lot of the process that is so manually intensive, based exactly upon what the customer wants. So it’s very powerful. This, I think, is one of the real gems of this system.”
Making It Pay
The business case Grand & Toy put together for e-invoicing suggests that the company will have a positive ROI in four to five years, with an adoption rate of around 40 to 45 % of its paper-invoice customers.
Savings in mailing alone will be substantial. The company issues 1.5 million regular invoices a year, which require paper, envelopes and postage. Then there is the cost of the 5,000 monthly cost-centre invoices: printing their sometimes hundreds of pages, putting them in special envelopes, much larger postage fees, etc. Of course the electronic versions of these invoices cost no more to deliver than regular invoices.
“Postage in and of itself wouldn’t justify doing this, though,” said Melodysta. “There’s so much back-office work and churning that goes on in the whole process – I think it’s streamlining those things that will justify the expenditure as much as anything else.”
Another important benefit will be the elimination of delays in registering payments. Orders on accounts where the customer’s credit limit is exceeded are reviewed, and maybe delayed, or in a few cases held. With electronic invoicing, payment is instantaneously applied, and the credit limit can be seen at its truest value.
Getting Customers Onboard
Grand & Toy believes its e-invoicing application is going to be heavily adopted for a number of reasons. “We think it will sell itself because of the convenience it will provide in a number of areas,” said Love. “A lot of people are looking for ways to do things without a lot of paper shuffling around and getting lost. Given the type of customers we have that are computer savvy, they’re going to be looking for this kind of thing.”
The company plans to take it slow in the beginning to make sure it hasn’t missed anything, and then it will ramp up. It’s already working on a marketing plan with Emergis to help put the application over.
Grand & Toy’s 350 road warriors will also play an important role in the adoption process. The company wants to equip its reps with tools that help them make inroads into customers that they might not otherwise make. “We’re selling the same products as our competitors, so we want to introduce things that are differentiating for us – that give us competitive advantage. This is one of those things,” said Melodysta.
Although it is anticipated that many customers will want to receive their invoices online, and perhaps dispute them online as well, it is doubtful that many will exercise the option of paying online, at least in the early going. For one thing, that would change the way they do things. For another, it will take time for customers to gain confidence in the new system.
“When you get into the payment side of things, people are very nervous,” said Melodysta. “But in BCE we’ve chosen a partner that has a very good track record in the area of payment processing – they know this business. And we’ve got a brand name and our customers know we’re not going to do this without doing a good job. So I think it will happen over time. They just have to get comfortable with the idea and with the concepts, and then eventually it will take care of itself.”
Training and Support
Customers will, of course, be able to move to e-invoicing at no cost to themselves. As for training, Grand & Toy believes the system can easily be self-learned.
“It’s not that difficult once you pick up some of the basics,” said Love. “We’re developing an online tutorial and perhaps a CD ROM that our sales force can leave with some of their customers.”
Just in case there is the need for personal instruction, Grand & Toy has what it calls electronic commerce coordinators in all its major locations across the country, who will introduce customers to the new system and get them started on it.
An online ‘customer service’ feature will also help smooth out any rough patches. Customer service associates will have the ability to log-on to the site and provide assistance to customers experiencing problems. The associates can actually “log-in as customer” and view the same screens the customer is viewing and help address problems they may be having with the system or answer questions they have about an invoice or their account.
“We’re a very customer-centric company. We’ll let them decide what direction they want to take,” said Melodysta. “If they want to have traditional paper, they’ll get it; if they want to have online, they’ll get it; if they want help with the online, they’ll get that too. The customer is king.”
With the introduction of Grand & Toy’s e-invoicing system, the king’s accountants should have a much easier time paying the bills.
David Carey is a veteran journalist specializing in information technology and IT management. Based in Toronto, he is managing editor of CIO Canada.