It's easy to find discussions of electronic invoicing. Kiplinger's says that 77% of consumers now use an EIPP system. E-billing is being hailed as the next big thing in customer convenience, an essential part of a green office, and the answer to security and staffing woes.

While it's easy to find these discussions, it isn't always easy to understand what they're talking about. If you're new to the concept, you may run into some terms that aren't completely familiar. Since businesspeople with a broad range of backgrounds can successfully use online invoicing, you might want to read about the topic without having the kind of vocabulary the writers have. Here's a glossary of the common terms. This should make it easier to join discussions of the value of electronic invoicing, even if you're not a specialist.

• AP: accounts payable, money owed by the company.
• AR: accounts receivable, money owed to the company.
• B2B: business to business, referring to companies that sell goods ad services to other businesses, rather than to end consumers.
• Bank aggregator: a service that allows a consumer to pay bills to multiple companies, often the consumer's bank.
• Biller-direct: a service that allows a business to provide electronic invoices to their customers. Consumers visit the company's website or portal to make the payment. Onsharp's SmartPay is an example of this type of service.
• CSP: customer service provider. A company that provides EBPP services, such as SmartPay.
• DSO: days sales outstanding, or the average amount of time between a sale and the collection of the money due for the sale. E-invoicing reduces DSO.
  
• EBPP: electronic bill presentment and payment, referring most often to business-to-consumer uses.
• EDI: electronic data interchange, systems for sending information electronically. SmartPay's web-based system allows businesses http://www.onsharp.com/blog/to do their invoicing electronically without EDI.
• EIPP: electronic invoice presentment and payment. Similar to EBPP, but referring more to business-to-business uses.
• IFX: interactive financial exchange, an open standard for financial data exchange currently being developed.
• Portal: an entryway to the web. A secure portal, such as that provided by SmartPay, allows users to send information online without being open to ordinary, insecure online access. While users are online, they aren't in the open information stream, and the information they exchange can't be seen by others. 
• Presentment: the seller produces the invoice and presents it, or sends it, to the buyer. In electronic invoicing, presentment is done electronically, through email or by an email alert directing the buyer to a secure portal to see the invoice. 
• Revenue cycles: the length of time from invoicing to payment of the invoice. E-invoicing shortens the revenue cycle, so businesses receive payment faster.

When you think of electronic billing, the first thing that comes to mind may be a big office. And it's true that Onsharp's SmartPay electronic billing system will readily accomodate companies sending out hundreds of invoices a month -- or more. Analysts look at such businesses and calculate the pounds of paper they use, the gallons of ink, the hours of time file clerks and bookkeepers spend, and it's easy to conclude that such businesses can save a lot of time, money, and resources by switching to electronic billing.

Does that mean that electronic billing isn't suited to an individual doing business independently, such as an artist or musician or consultant, or to a mom-and-pop store, or to a small salon or bakery? Is online invoicing unnecessary for a private practice with one optometrist or a daycare center or an interior designer working out of a home office?

Not at all. 

In some ways, the smallest businesses need electronic billing even more than an established firm.

Consider these facts:

• A small private medical practice or day care center may already be required to have secure online record-keeping. Requirements of the new stimulus package legislation, new HIPAA requirements, and updated rules for day care agencies receiving grants all contain requirements for security measures that are most easily and inexpensively met with online billing. With Smartpay, you aren't required to provide locks and secure premises for computers, because the sensitive information is online, under the control of your patients or customers.
• The musicians in the picture above spend hours every day practicing, taking lessons, caring for their instruments, and auditioning for the gigs that pay the bills. How many of their invoices go unpaid because they don't keep careful records or follow up strictly on payments? People who make a living as independent artists or consultants often find that office tasks are the last jobs to get done. SmartPay is less expensive than hiring an accountant to get your invoices out on time.
  
• People working from a home office and sending out a few invoices every month worry about making a professional impression -- and they should. Freelance workers find that their clients view putting a check in the mail as an extra, unusual step when they're accustomed to doing most of their transactions online, through electronic banking, or with credit cards. Payments to individuals may even be looked on as less important than payments to larger comapnies, and delayed. SmartPay allows every business, large or small, to present a professional face, with a customized portal and multiple options for payment. Many small businesses find that the turnaround for payment is much faster with electronic bill presentment and payment than with paper invoices.

SmartPay will be attending the Electronic Transactions Association Annual Meeting and Expo on April 22 and 23, at the Mandelay Bay Resort in Las Vegas. We'll be there with our partner InterceptEFT for this year's big networking and training sessions.

The Electronic Transactions Association is the professional network of the electronic billing industry.  This year, educational sessions will cover issues like the future of checks, the implications of the current economic crisis, and the challenges of international payments.

It's an exciting time to be in this industry. Consumers are less likely to use cash (41% of American shoppers report this) and more comfortable with electronic transactions. This means that many businesses are having to go to electronic billing whether they feel ready or not. Some business owners are intimidated by the technology or  concerned about the cost of installing software and training staff to use new programs.

At the same time, extensions of HIPAA regulations make security a bigger issue than ever. Any computer which stores sensitive information may have to be locked and require special security measures that can be time-consuming and costly to enforce. Ironically, while there are still some who worry about the security of online transactions,  using secure online invoicing like SmartPay is the easiest and least expensive way to achieve HIPAA compliance. With SmartPay, all consumer payments take place online, at a secure portal, and no sensitive data resides in your office computers. 

Onsharp's SmartPay offers businesses of all sizes a secure, cost-effective way to initiate electronic transactions without an investment in software, new security measures, or specialized technical skills. ETA's commitment to consumer and business education  makes them a great fit for us. We look forward to seeing and being seen at the ETA Expo.