Paystream Voices » JPMorgan Chase launches fully integrated ePayment solution

JPMorgan Chase launches fully integrated ePayment solution - “AP Trac”

Posted in PayStream Analyst, Purchase to Payment, Contributed, Voices by PayStream Advisors on September 25th, 2007

Just this past week, Henry Ijams and I were talking about how, despite the rapid gains in the ePayables world, financing and integration continue to be problematic. Case in point: A client mentioned that early payment discounting is very inticing, yet currently out of thier reach due to lack of liquidity to invest in paying suppliers early. Henry and I went on to conclude that, until a solution came along to offer easy access to supply chain financing in the order of magnitude of, say, a p-card solution for larger ticket purchases, many discounts would continue to be lost even as technology for capturing became evermore sophisticated.

Enter JPMorgan Chase. They walked us through their newest ePayables solution on Friday, and Henry and I were not just impressed - we were blown away that the new Xign owners have responded so quickly to this giant market opportunity. AP Trac is being marketed as an integrated solution, a sort of “killer app,” so to speak, for the electronic payables market.

AP Trac, along with ExacTrac(SM) and pre-built adapters of the Xign Order-to-Pay solution, looks to give finance and AP managers the control they need to move to ePayments , while making financing and discount capture a reality in a way it had not been before. AP Trac uses the same ExacTrac single-use card functionality to pay suppliers electronically via a consolidated interface with their ERP System. In instances where the buyer doesnâ€™t have the funds for early payment, JP Morgan can advance funds on behalf of the payer and settle with them up to 30 days later. Of course, you have to be credit approved by JP Morgan.

AP Trac leverages an enormous amount of technology in its Purchase to Pay integrated approach. JPM Xign calls this their Order to Pay product. A web-based environment provides a variety of tools for PO authorization, buyer initiated financing, fast invoice reconciliation, and dynamic payables discount capture.

Perhaps the most exciting feature of the system, however, is its ability to inject supply chain financing on a large scale. Common wisdom is that 80% of business-to-business transactions are settled with checks - In the AP automation world, we’re constantly made aware of the inefficiency of standard B2B payment processes. But even for those companies that have begun to take full advantage of electronic payment solutions, the promise of on-demand supply chain financing on the scale that JPMorgan Chase is offering is very exciting. More payers will be able to offer dynamic discounts for their suppliers.

The AP Trac mechanism is a sort of virtual account which settles the payment via the card network or ACH. Regardless of the settlement mechanism, the seller gets a postable ePayment together with full remittance details. According to our latest research report on P-Cards titled Purchasing Card Management: Technology is a Savings Tool, the average p-card transaction is $270; Paul Simons of JP Morgan Chaseâ€™s Global Treasury Services says that virtual account transactions are on average five times larger. In effect, JP Morgan Chaseâ€™s AP Trac system allows its clients not just for a highly efficient ePayables solution, but also for the financing required to consistently take advantage of dynamic discounts.

This is an exciting turn of events - Needless to say, it is rare to see solutions that take into account such a wide scope of business payment transactions. I’m sure that we will continue to be discussing AP Trac here at Paystream Voices.

Update - There is a growing recognition in the ePayables blogosphere that the JPMorgan, Xign, and APTrac solution is possibly the wave of the future in Accounts Payable.

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