American Express Co. has introduced a pair of business-to-business payment services in what is becoming a crowded market for vendors of corporate supply-chain integration capabilities.
The New York payment card company is tying purchasing and contract-auditing to its S2S source-to-settlement suite of services, which it introduced in March. The upgrades add shopping and compliance-management features to its electronic invoicing and payment service. The product is built on Amex's December purchase of the B-to-B payments vendor Harbor Payments Inc.
Rion Needs, a senior vice president and the general manager of purchasing services at American Express, said the new capabilities, announced Monday at the Institute for Supply Management conference in Las Vegas, will keep Amex at the forefront of this evolving market. "None of the competitors have the capabilities that we have," he said.
The capabilities, which Amex built in-house for its own use starting in 2003, are designed to differentiate its business-to-business payment services in an increasingly crowded space, Mr. Needs said in an interview Tuesday.
The features, called S2S Contract Audit and Recovery, and S2Ssm Catalog Pro, also give Amex a go-to-market strategy for large companies that want to loop their supplier networks into automated payment systems.
Mr. Needs said that more than one-third of corporate purchases are made outside of contracts negotiated with suppliers. Companies lose 22% of every dollar spent on such purchases, he said, citing research from Aberdeen Group in Boston.
Amex plans to offer its audit recovery service on a contingency-fee basis to find lost discounts and to negotiate their return, Mr. Needs said. "Companies don't know they are due these monies, so they're not spoken for."
The company plans to introduce additional features in the third and fourth quarters, he said, for example, offering corporate clients the discounted rates that it has negotiated on its own behalf with suppliers.
Amex has 175 prospects in its pipeline and is in talks with 25 to 30 of them on adopting the S2S system, he said.
The integration strategy seems to go further than those of other financial competitors in the supply-chain automation market.
Xign Corp., a vendor of electronic "order-to-pay" services that connect businesses' accounting systems, announced a partnership in February with SciQuest Inc., a company that sells software to automate the ordering of goods and services. In April JPMorgan Chase & Co. announced a deal to buy Xign.
MasterCard International Inc. announced an agreement in December to supply its detailed transaction data to the e-commerce vendor Ariba Inc., extending the ability of many issuing banks to tie in transaction reporting to business customers' systems.
In December 2004, Mellon Financial Corp. bought SourceNet Solutions Inc. in College Station, Tex., a specialist in so-called accounts-payable outsourcing. Such companies not only pay but also manage corporate clients' monthly bills, matching invoices against purchase orders to find discrepancies or capture early-payment discounts.
Nancy Atkinson, a senior analyst at the research and advisory firm Aite Group LLC, said that the less ambitious plans may be more palatable to corporate clients.
"It's difficult to do a consulting deal as a go-to-market strategy and then automatically sell into that corporate," Ms. Atkinson said. "How many companies will open their kimonos and let American Express come in and look at that? That will be a challenge."
