Sending Out the Bill(ing)

Puma outsourced its billing processes and brought in some savings.

Alix Stuart August 09, 2011

Golf clubs and running shoes ship out every day from the facilities of sporting-goods maker Puma to
11,000 retailers across the country like Dick’s Sporting Goods and Foot Locker. And every time they ship,
a new invoice is created. That can yield up to 2500 invoices per day, all of which Puma employees in
Massachusetts used to print out, fold, sort, bring to the mail room and finally to the post office for bulk
rate prices.

Not only did invoicing mean a huge volume of work for finance employees, it was also bugging
customers. They hated the trifold paper their bills were printed on, says Brian Good, director of
customer relations for Puma North America, Tretorn and Cobra Puma Golf, and the slowness of the
process. Often, retailers would receive the product before the bill, but not be able to sell it, since
many some peg retail prices to the ever-changing invoice prices.

That all changed about 18 months ago, when Good began outsourcing the billing process. Now, the
company sweeps all invoices to a company called Billtrust at the end of each day using a secure file
transfer protocol. From there, Billtrust either sends out paper bills to customers, or notifies the
customer by E-mail that an invoice is waiting for them on a secure site.

Good says the results have exceeded his expectations. For one, about 30% of customers so far have
converted to electronic billing, which saves about $.35 per transaction. Two, Billtrust can mail paper
documents out from various sites across the country, reducing the delay between product and invoice,
and at rates that are $.06 to $.08 lower than what Puma employees could get at the post office. A side
benefit: customers have been paying faster, yielding a dramatic 10-day reduction in DSO.

Such services, which typically require much less cost, technology and implementation time than the
traditional EDI systems, are just beginning to catch on, says Gartner analyst Pete Basiliere. One of the
biggest barriers is the fear many companies have about data security. “They don’t want it misused by
others or stolen en route to an outsourcer,” acknowledges Basiliere, “but those are really not an issue
with these firms.” In fact, he says the quality and accuracy of billing tends to be higher with the
outsourced firms, and they are almost always cheaper.

Some of the biggest companies in this space are Xerox Global Services and Pitney Bowes Management
Services and DST Output. Meanwhile, smaller ones are growing. Billtrust founder and CEO Flint Lane
says the firm has increased revenues by about 50% per year for the past five years. All told, Basiliere
counts about 35 providers in the US and Canada, many of which provide a broad array of document
services.
Besides data security fears, another perceived barrier to converting to electronic billing is the concern
about asking customers to change their processes, or sign up for more services. In many cases, though,
it’s a benefit for the customer, says Basiliere, since the information can feed directly into accounting
systems and eliminate the need to re-key data.

E-billing can also make it easier for customers to dispute charges, notes Aarjav Trivedi, CEO of route-
optimizing service Ridecell. Ridecell began using a free online billing service, Tradeshift, earlier this year,
says Trivedi, as its customer base of utilities and transit providers was growing and invoicing was
becoming more burdensome. While Tradeshift does not send out the bills, it provides an online
platform to create invoices and email them to customers. “There’s often some back and forth,” says
Trivedi, and with the service, customers can ask questions and write notes right on the document that
has been emailed, rather than having to make a phone call.

Going paperless in this case can not only make billing processes smoother, it also frees up staff time for
tasks that are more meaningful than printing, folding and sorting. Good says he has moved his team
onto intensifying collection efforts and creating credit updates. Trivedi says the electronic billing gives
him more time to grow his nascent business. "We're a small team here, and so we try not to focus too
much on administrative tasks," he says.