July 13, 2004, 12:00 AM

Retailers moving toward web-based trade settlement to manage invoices

Web-based trade settlement technology is emerging as a tool to help retailers match the data in purchase orders, invoices and delivery receipts, then reconcile discrepancies with suppliers, analysts say.

Kurt Peters

Executive Editor

Web-based trade settlement technology is emerging as a tool to help retailers match the data in purchase orders, invoices and delivery receipts, then reconcile discrepancies with suppliers, analysts say.

“Trade settlement is a major problem for retailers as well as their suppliers,” says Paula Rosenblum, director of retail research at research and analysis firm Aberdeen Group. “Retailers wind up having to operate a huge vendor-relations department, with operating costs that can wind up costing more than it saves in reviewing contracts.”

But now web-based systems are bringing a new kind of order to the contract settlement process. Instead of relying on a hodgepodge of communications and searches for original documents, web-based applications provide universal and simultaneous access to conduct a three-way match and reconciliation of electronically stored and organized purchase orders, invoices and delivery receipts. The applications are designed to automatically match data in the three types of business documents, and, based on rules pre-set by users, send automated alerts to managers of any discrepancies.

“They manage the trade cycle from the time a purchase order is made to when a supplier receives payment, providing a consistent view for retailers and manufacturers,” says Rob Garf, analyst with AMR Research Inc.

Web-based trade settlement is still at the head of the curve in its adoption by the retail industry, as many retailers continue to concentrate on other more traditional technologies like CRM and POS systems, experts say. But several retailers are in initial stages of testing and deploying web-based trade settlement and are realizing the technology will save them large amounts of operating costs in managing the purchasing process, according to analysts and vendors involved with the deployments.

The three leading providers of trade settlement software – Notiva, TradeCard and Lawson Software Inc. – each say they have retailer clients, among them at least one major general merchandiser and several specialty chains, in early stages of deployment.

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