Recast your ballot: Does BIP or SIP win your vote?

Given the various candidates, how do you choose an ePayables solution that will best serve your needs? As with voting in a political election, you do not want buyer’s remorse later. If you think of ePayables as a two-party system, the two major options are buyer-initiated payments (BIP) and supplier-initiated payments (SIP), with possibly some independents sprinkled in. Which one is right for you?

One Provider’s Opinion

I asked Bora Payment Systems LLC (“Bora”), a business-to-business BIP solution provider, about their views. Of course they campaign for what they offer, but they were also quick to point out that the “best” AP system is one that:

  • matches the needs of the buying organization and
  • meets any existing contractual terms with suppliers

Bora explained certain end-user (payer) and supplier (payee) attributes that often lend themselves to one option or the other. For example, consider your annual AP card spend (actual or targeted) and the frequency of payments to each supplier. 

SIP can be a good choice if annual AP card spend is less than $5 million and there are many non-recurring payments to suppliers. Conversely, BIP is ideal when 10% to 20% of suppliers receive 80% to 90% of payments. Per Bora, end-users who benefit from BIP include healthcare/medical organizations, universities, large corporations, etc.

Read the complete input provided by Bora.

 Rock-paper-scissors is no way to decide your payment strategy. Do your research and then demonstrate your support for what best meets your organization's needs.

Rock-paper-scissors is no way to decide your payment strategy. Do your research and then demonstrate your support for what best meets your organization's needs.

ePayables In Review

With an ePayables solution, the end-user organization receives and approves a supplier’s invoice through its established processes. In this way, it mirrors a traditional purchase-to-pay process, making it different than a streamlined P-Card process. Following invoice approval, the end-user initiates payment to the supplier through its card issuer/provider, usually by providing a “payment instruction file” or similar. Then, depending on the specific solution (some providers offer more than one), the supplier either:

  1. processes a charge transaction for the approved amount to a designated Virtual Card account number; this reflects the supplier-initiated payment (SIP) option or

  2. receives payment directly through the card rails and its merchant account, which is reflective of buyer-initiated payments (BIP)

Learn more... 


What Do You Think?

Do you agree with Bora's input? What else would you add about BIP versus SIP? I encourage you to comment below. Please do not bash a particular provider or solution! 


About the Author

Blog post author Lynn Larson, CPCP, is the founder of Recharged Education. With more than 15 years of Commercial Card experience, her mission is to make industry education readily accessible to all. Learn more

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