Table of Contents

> Intro: The Future of Invoices
> EBPP Advantages
> Billing and Payment: Value beyond ACH
> System Features
> EBPP and Collections
> Marketing Inserts
> System Security
> NextBill Service Options
> Implementation
> Contact Us (800-397-2380 x14)

In a recent release, Jupiter Research reports that online bill viewing and payment will be among the fastest growing applications over the next three years. For proof, look no further than the consumer markets. By 2006, it is estimated that more than 50 million households will view bills online and 52 million households will be viewing and paying bills online. This represents a compound annual growth rate of 23 percent over 2001's figure.

The move to EBPP for businesses is not a question of if, but when. Because invoicing and receiving payments using paper checks is labor intensive, the cost to a business to process these payments is significant.

Businesses of all sizes and industries are evaluating their current practices, looking for ways to increase their bottom line profits. Companies are responding by reengineering how they collect and process payments because most profit margin increases are a result of efficiency gains, innovation, and introducing new services. Reducing operating costs can have an exponential effect on profit. Industry estimates show a 5% reduction in operating cost can have the same impact as a 30% increase in sales.

Electronic Bill Presentment and Payment speeds the Accounts Receivable process by getting invoices to your customers faster and by enabling them to pay the invoice and resolve disputes electronically. EBPP can also strengthen your competitive position in the marketplace by building closer relationships with your customers and delivering “interactive” statement inserts electronically.

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• Get more clients registered for recurring automatic payment each month.
• Obtain a valuable solution for non-recurring, one-time billing.
• Improve collections with more timely information, multiple payment options, and the ability to immediately resend invoices, handle disputes electronically, and set view only permissions.
• Meet client expectations of the company image by moving invoice communications to an electronic platform while taking advantage of “interactive” statement messages.
• Leverage a time-to-market solution and maximize the value gained from your accounting system with little implementation cost.
• Speed payment funding and lower mailing cost. When an invoice is delivered and paid electronically, mail lag and processing float are reduced. As clients adopt EBPP as standard procedure, paper and mailing costs are reduced and eliminated.

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• By using NextBill for billing, you avoid the paper chase involved with setting up traditional ACH debits. Rather than having to hassle your customers to submit a copy of a cancelled check or deposit slip with a signed authorization form, NextBill EBPP uses an alternative validation model. The success rate is substantially higher with NextBill EBPP than is achieved with standard ACH because all that the customer needs to do is enter their routing transit number and account number on the secure NextBill payment site to immediately begin to schedule payments electronically. In addition, you may opt to provide multiple payment options beyond ACH and also accept recurring credit card payments.
  
• Unlike normal ACH payment services offered by most commercial banks, NextBill allows payments to be set up as regular recurring payments. On the same date each month, an ACH debit is automatically sent to the payer’s bank account and then an offsetting credit will be sent to your bank account. NextBill’s payment architecture allows the sender to adjust the payment up or down as needed.
  
• Your customers will feel more at ease signing up for recurring billing with NextBill EBPP. Unlike standard ACH auto debit where the payment comes out on a predetermined date, the NextBill service gives your customer the control to modify a scheduled payment if necessary. Obviously you want control of the payment date; however, you don’t want a rejected ACH or unnecessary customer service problems from “good” customers. In this case, the preferred solution is to give your customers the ability to make the required edits to the payment delivery date (this will also increase adoption because customers feel more in control). When they do make changes in the scheduled payment, you will receive an email advising of the new payment date and amount to be deposited. If a client is having cash flow problems, your collections department can be notified immediately so that they can contact the customer. Then, if there is going to be a serious payment problem, the collections department can cut off service sooner and reduce the scope of potential loss. Further, just by being faster off the mark, your collections department can put themselves ahead of other creditors trying to get paid.

  Another benefit of NextBill EBPP over standard ACH is that it is not an all or nothing program. This is good for those clients who refuse to sign up for auto billing for the very fact that they lose control of cash flow. The NextBill EBPP service provides an electronic option that standard ACH does not by giving these “hold-outs” the control of the date and amount but still getting them to accept and pay invoices electronically.

• Business-to-Business transactions require documentation. Payment is only one piece of the transaction – often times the information that goes along with it (PO’s, invoices, remittance information) and the processes around issuing the payment (manager level approvals, double signatures, payment timing, disputes, etc.) are equally important. With standard ACH, this invoice data is not available electronically. NextBill offers interactive billing options. For example, an electronic bill can display multiple line items and allow authorization for each. If a customer chooses not to authorize a line item, NextBill automatically changes the bill’s total. A biller can also provide disputed line item processing routines and link directly to its customer service call center for bills with disputed line items.
  
  Customers receive bills directly in their email boxes not just an email notification that a bill is available. Because NextBill sends bills directly to customers’ email boxes, they can be viewed and paid from a wireless device with Internet access. NextBill maintains a rolling history of past bills, typically for the last 12 months. Customers easily can view, save, and print bills and payment records, which can reduce customer service calls. Your client can print the bill from their email so they can route it through their normal approval and payment processes as they have in the past, or they can forward the email with the bill through the appropriate channels for approval or use the NextBill Automated Approval Processing option.

• While most billing is inherently a batch process, there are times when you need to generate an invoice immediately. For one-time invoices that need to be sent in a timely fashion throughout the month instead of at the end of the billing cycle in batch format, NextBill EBPP handles this too. Send these non-recurring bills immediately and avoid the time consuming manual paper processes. Get these bills to your clients sooner and get paid faster. Also, your clients can schedule payments for up to one year in advance so they will not forget to send a payment on time. This type of billing can’t be done using standard ACH procedures.
  
• There is no need to write complex interface programs to import and export billing and payment information. NextBill accepts billing information in existing print, flat, or XML file formats to generate electronic bills. The system exports payment information in the company’s format.

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Customer Profile Screen on the Biller's Web Site

• Allows customers to self-activate electronic bill presentment and payment service
• Allows customers to select bill presentment options: standard text, HTML
• Allows customers to select payment drafting options: customer-initiated payment, automatic draft, or safety draft
• Allows customers to use any financial institution for bill payment
• Allows customers to change their bill payment profile at any time, e.g., bank and email address
• Reduces errors because the screen is pre-filled with indicative customer information
• Validates financial institution ABA transit routing number input to reduce payment processing errors
• Eliminates customer data entry requirements for biller
• Automatically generates ACH pre-notification transactions to the customers' financial institutions

Bills Sent Directly to Customers

• Eliminates the need for customers to retrieve bills from a third-party; site-bills sent directly to customers via email using the Internet
• Allows the company to totally control the content of the billing message, e.g., graphics, billing information, and advertising messages
• Allows the company to control customer interactions
• Eliminates paper-based billing and payment processing costs: paper, printing, postage, etc.

Payment Entry Hyperlink on the Emailed Bill

• Allows the customer to simultaneously view an email bill and make a payment
• Eliminates errors because the payment screen contains the customer's account number
• Allows the customer to change the payment amount and effective date

Customer-Initiated Bill Requests

• Allows customers to request bills if not received or if they delete the e-mail message
• Minimizes customer-inquiry and service calls

Transaction Warehousing

• Allows customers to make payments immediately after reviewing their bills
• Automatically stores customer payments based upon effective date
• Automatically releases customer payments to the company's Accounts Receivable or billing system on the effective date
• Provides better control of the company's cash position by reporting pending payment totals by effective date

Automatic Payment Generation

• Generates payment transactions in ACH format
• Generates payment ACH payment batches by effective date and transmits them to the company's financial institution for entry into the Federal Reserve system
• Generates payment information in correct format to import into existing Accounts Receivable or billing systems

Customer Payment Profile Database

• Interfaces the company's billing system with bill presentment processing
• Contains all the information needed to generate emailed bills and ACH transactions
• Maintains a rolling 12-month history of bill presentment and billing history, e.g., bill date, amount, payment date, effective date, etc.

Past Due Processing

• Automatically resends bills "x" days past the bills due date
• Eliminates the need to modify existing Accounts Receivable or billing systems to generate past due electronic bills

Comprehensive Security

• Controls access to the Customer Profile by requiring account number and password entry
• Encrypts transmitted information using Secure Socket Layer (SSL) technology
• Functional level security for processing control and customer service

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Even before a bill is initially created, all of the relevant data has usually already been entered into your accounting system. NextBill’s EBPP service allows companies to use that data to create not just the invoice, but it allows the customer to incorporate the data in the original invoice into the payment without needing to re-enter it from scratch. Further, once you receive payment, the original data used to create the invoice is used to post the payment. The result is that it is now possible for a company to send invoices directly out of its accounting system and deliver them electronically. On the other end, a customer can make an electronic payment on that invoice or schedule a payment for a future date and download the transaction data automatically into their accounting system.

In addition to enabling companies to streamline the issuance and receipt of invoices and payments, NextBill’s EBPP service supports routing invoices and payments electronically to the correct approving authorities and mediates disputes, which may arise. The result is a product that companies can use to make the entire payment cycle operate more smoothly with less paper and friction than ever before.

Improve Information Flow
When an invoice is sent via NextBill, the buyer receives it moments after it is sent and can address any problems immediately while the invoice is still fresh in the minds of each side of the transaction. Using the built-in discussion feature, the buyer can work online with the seller to iron out any differences.

Faster Response to Late Payers
When a payment is sent electronically, NextBill generates an email notice immediately with all of the pertinent payment data, including amount and date of payment. Each biller, including those in a “Service Provider” environment, must establish their late payment notification/reminder policies. A biller may choose to remind customers of their payment obligation a certain number of days before the due date, or they may choose to send overdue notices after a time period has elapsed after the due date. A biller may also assess a late charge automatically or simply display a warning message the next time that the customer accesses the web site. Late payments can be addressed before they are even one day late. Being aware of payment problems sooner makes collection efforts easier and actually helps to reduce the number of accounts that actually have to be written off.

Collection Benefits Reviewed
NextBill’s service can make a positive impact on your collection efforts. When payments are made electronically, either in advance or just in time to meet the payment due date, you receive notice of the payment. Further, you have a record of every payment scheduled and the status of those payments. By knowing which accounts already have a payment scheduled, your collections staff can focus on those customers who are late. Not only is it more efficient, but it also avoids irritating those customers who have already paid. Another benefit is that should an electronic payment be dishonored by the paying bank (i.e.: NSF, Account Blocked or other reason), notice is usually received within 3-4 business days of the payment being made. Compare that with the 10-business day delay sometimes seen with dishonored paper check payments. Again, faster notice gives your collections staff the opportunity to address payment problems sooner, which will result in more successful collection efforts.

NextBill allows bills to be resent electronically. Should a customer claim that the invoice was lost, an electronic invoice can be resent immediately. That means the payer can attend to it while still on the phone with your Accounts Receivables staff. Again, the faster the problem can be addressed, the sooner payment can be received.

There are times when the customer has a legitimate concern about a bill. NextBill allows online discussion of invoices to resolve problems as early in the billing cycle as possible. NextBill offers a Java-based chat component as a support option. The Java-based chat program is a proprietary chat component that allows customer to communicate in real-time with administrators or other users to pose questions or seek support. Should there be any questions down the road, there is a clear audit trail showing what was agreed to by each side. Further, the discussion can be routed to appropriate individuals within your organization to determine the best resolution and those internal discussions are not made available to the customer.

NextBill allows companies to set up a wide variety of permissions on our system. This makes it possible for a collections agent, for example, to view payment or invoice history in working out late payments.

Regardless of whether your customers use recurring payments or schedule payments as each bill is received, you benefit by knowing when funds are due to arrive. No more “check is in the mail” excuses. Anyone who has not scheduled a payment on time can be contacted to find out why.

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Your organization can immediately begin to leverage NextBill’s email delivery system for invoices to send marketing related messages to its customers. Digital delivery of marketing messages can be adapted to suit both current as well as future developments. NextBill provides companies with one-to-one marketing opportunities where they can control advertising banners and place conditional links based upon balance or activity thresholds. The NextBill Trigger Mechanism allows a biller to display topical or periodic information or graphics based upon predetermined criteria. For instance, if a customer's bill exceeds a certain amount, the biller may want to place an advertisement. A biller might also want to display seasonal information, advertisements, banners, or graphics. Ultimately, this will end up being far cheaper than U.S. mail-based delivery, more interactive, and more effective. EBPP benefits the image of your company.

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NextBill operates on an SSL-enabled web server to prevent unauthorized access to important customer information. No mission critical operations may be performed through a web interface. All biller-level configuration operations must take place from a work station with direct network access to the NextBill database server. Password fields are encrypted within the database. NextBill also contains its own email encryption plug-in for web browsers.

Internet Security
NextBill provides security using Secure Sockets Layer (SSL) over the Internet. SSL automatically enables end-to-end encryption to prevent hackers from seeing the billing and payment information. Future NextBill Internet security options might incorporate digital certificates, which can authenticate both ends of the conversation.

Bill Formats
EBPP customers (end-users) select from standard bill formats: HTML, PDF, and text. The NextBill Customer Profile database contains each customer’s billing format.

Payment Processing
Customer payment authorization using NextBill is very easy. After viewing an electronic bill, a customer simply clicks a “Schedule Payment” hyperlink at the bottom of the bill. The customer is automatically linked to the biller’s secure payment screen, which contains summary information about the current bill and a pre-filled “Payment Date” field that lists the due date and “Payment Amount” that lists the amount due. The customer can change either the payment’s effective date or the amount to be paid. To authorize payment, the customer simply clicks the “Pay Bill” hyperlink. NextBill then sends a response screen to the customer containing the payment information and a “Confirmation Number” for the transaction.

NextBill warehouses a customer payment until one (1) day before its effective date. On that date, the system generates an ACH debit for transmission to the biller’s bank. The system also generates effective date payment updates for export to the biller's legacy system. The biller’s bank receives the ACH payment and enters into the Federal Reserve’s ACH System. The payment reaches the customer’s financial institution and is posted to the customer’s account on the effective date.

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NextBill is a server-based system resident at your data center through a license agreement, or NextBill can run the service for you through our ASP option. NextBill is fully scalable from a single customer with a small number of periodic transactions to a service bureau managing multiple, large billers.

As a turnkey system, you would install NextBill on hardware at your data center to host its EBPP web site, generate electronic bills, and process electronic payments. Under a service bureau arrangement, NextBill.com, Inc. will provide complete web hosting and EBPP processing services from its data center in Carrollton, Texas.

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This proposal assumes the following: you will continue to use your existing processes for mailing invoices, and as clients begin receiving electronic invoices, you will reduce the number of customers who will need to receive a paper invoice via U.S. mail. If you continue to receive paper checks, you will process these as you do today.

During the introduction of EBPP, there may be a transition period where both emailed (electronic delivery from NextBill EBPP) and mailed (paper delivery from your current provider/process) of invoices will be sent simultaneously. You will want to create an enrollment process to get your existing customers to sign up for EBPP (you may even provide an incentive to get your customers to move away from paper). You will stop mailing invoices and eliminate the expense associated as soon as your customers adopt the electronic delivery method. Given all the benefits to you for moving to EBPP, you will want to promote this service to obtain quick adoption rates.

A team of financial and e-commerce systems professionals will provide customer support throughout implementation and ongoing operations. The entire NextBill EBPP process only requires a few simple steps:

1. Bill Creation and Presentment
NextBill receives customer billing information from the company’s Accounts Receivable or billing system. The system generates billing information in the format selected by each customer (HTML, standard text, or Microsoft Word) and sends each customer an email bill. The email bill can also contain company information and advertising. Optionally, customers can save or print email bills for their records.

2. Bill Payment
To pay the bill, a customer simply clicks on the “Schedule Payment” hyperlink displayed on the email bill, which links the customer directly to a secure payment screen on the company’s web site. The bill payment page displays the customer’s account number, payment amount, and due date. The customer can immediately authorize the bill, or has the option to change the payment amount and effective date.

3. Payment Processing
NextBill receives the customer’s payment transaction and either warehouses or processes it according to the payment’s effective date. One day before the effective date, the system creates an ACH Fed File that contains transactions to debit customers’ accounts at their financial institutions. This file is transmitted (deposited) to the company’s financial institution. The financial institution processes the file. The ACH transactions are transmitted via the Federal Reserve System to the customers’ financial institutions. At the same time, NextBill creates a paid items database for export into the company’s billing system to update their customers’ accounts.

EBPP Customer Enrollment

• Customer Signup: It is easy for customers to sign up for EBPP service. They can self-activate EBPP services by simply accessing the company’s EBPP web site, entering validation information, and creating a customer profile. Optionally, the company can establish customer profiles through a paper application and data entry process. The customer profile contains all the customer information needed to begin sending electronic bills and processing electronic payments.
• Enrollment Charges: Your customers will not incur any direct NextBill charges for EBPP enrollment.
• Enrollment Process: There are two options for customer enrollment - self-activation or enrollment (data entry by your staff) using signup forms.
• Customers could self-activate by accessing your EBPP enrollment web site and completing a Customer Profile screen: email address, financial institution name, ABA/Transit routing number, and financial institution account number. Customers would have to enter validation information, e.g., account number, before reaching their individual Customer Profile screens.
• Use paper enrollment forms where customers would complete these forms and send them in with the payments. You would create customer profiles via a NextBill data entry function. The entry forms would contain customer payment information listed in the previous paragraph.
• Validation and Pre-Notification upon creation (or change) of a Customer Profile, NextBill sends an email to the new or changed email address. The system also creates an ACH Pre-Note transaction to validate account information at the customer’s financial institution.

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If you are making payments electronically today using EFT, ACH, or purchasing cards, sending your invoice electronically is your next move to pairing cost from your operations. Thank you for allowing us to present this proposal for Electronic Bill Presentment and Payment. We look forward to taking the next steps toward roll out with you.

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