Business to Business (B2B) E-commerce is remoulding and reshaping the way business is being done across the globe. Companies must take strident action as new business strategies and new business models are evolving as new technologies drive the way we do business. To optimise the new current economic conditions, the role of the accounting departments will have to change and new accounting systems will have to be incorporated into the overall strategy of the company. Accountants must develop a new system where they can find a balance between traditional prudence, which can still be integrated into modern ways of real time strategic planning to successfully benefit from the partially unknown world of B2B Ecommerce.

According to Troy Barton:

"The role of the CFO has not changed in one critical aspect: governance, business decision support and transaction processing".

It is these areas, which we feel that companies must focus on to maximise joining up with B2B Ecommerce.

For an accounting system to be effective it must have controls and measures in place to realistically judge whether or not certain projects should be invested in, whether the risk factor is too high and whether or not a profit will occur.

Traditionally, companies have used the tried and tested formula called discounted cash flow analysis. This type of analysis was usually accurate for capital intensive projects for which the risks are predictable and manageable and the nature of the venture will not alter to a great degree during its life.

However ecommerce projects have higher discount rates and therefore a lower projected value of the project and thus under old systems would not get past the junior accountants desk. As a result accountants must look at the bigger picture when making assumptions regarding investment as ecommerce success could yield phenomenal success. No CFO should want to remain prudent and pay the price for a lost opportunity especially with new technologies constantly finding ways of creating better work practise, but a middle ground still must be found for analysing risks and investments.

One such way of spreading the risk is by portfolio management. Many companies are unwilling to bury all of their capital in one basket, so they are dipping their feet into many ponds by creating mergers and alliances with varied technology leaders. By having their hand in many pies companies can spot quickly which new areas will develop ahead of others.

As a result accountants will have to be analysing which of their ventures will be most profitable and by better management of the companies’ cash, can reinvest more heavily in their alliances that are most likely to succeed. Hewlett Packard call this ‘patching’ where the finance executives routinely remap capital dependent on changing market opportunities. It is an extremely effective method for B2B ecommerce market where the market is turbulent and dynamic at the best of times.

Another knock on effect of patching is that accountants must be continuously on the lookout for possible partners and analysing how present partners are performing in the market place. In a report carried out by Adams (p.16), it showed that only 28% of companies measured the performance of their alliance partner, a figure which should be increased, if companies want to halt failure before it is too late with an alliance partner.

A major part of governance is that of internal control and with a B2B ecommerce company, this must mean that website transactions and online security of money and data transfers 100% correct and secure. Accountants must know who has access to what on the website, and that the person logged in is only able to access information which is pertinent to that particular person.

Traditionally, the view of the outsider looking in at the accountant in a company is one of a number crunching loner, who comes out of his room at the top of the building once a year for the AGM. Whether this view is correct or not, the modern accountant working for a typical B2B ecommerce firm will have a far more proactive, interactive and multidisciplinary job role. With web-based reporting becoming the norm, the accounting systems will shift from historical reporting to real-time rolling of forecasts where results for today’s trading are available quite literally, today. Ecommerce strategies will be reviewed fortnightly and weekly instead of yearly where presently only 6% of ecommerce companies review their strategies on an annual or quarterly basis. Accountants will be constantly updating and analysing reports, checking trends and tracking customers. In short, their role will involve less number crunching and more analytical work.

As a result the role of the accountant or CFO will dramatically rise in terms of importance to the company. The accountant will be in the uniquely powerful position of knowing exactly what is happening to the company, where its problems are and where its advantages lie. His in-depth knowledge of the individual business units will broaden his role as he will be required to act as a multifunctional and multidisciplinary expert in strategy implementation and shaping the company’s business model. By having all the data analysed, the accountant will be expected to interact with, most especially the I.T. and the Marketing Departments as the accountants vocabulary will begin using the words Customer relationship Management (CRM), Supply Chain Analysis, web page stickiness, conversion rates (i.e. how many visitors to the website actually bought something) and so on. In general if there is a problem, the accountant will be ‘virtually’ the 1^st person to know about it.

Another element of business decision support is the fact that many B2B websites act as central portals of information for employees, customers, outsourcers, suppliers and other stakeholders, mainly using the companies firewall protected intranet. According to Dan Harty, employee at Fidelity in Kent, (UK), this company are currently working on such a system called ‘Aggregation’ where prospective and regular clients can log on and virtually see everything that want in front of their eyes with one screen shot showing e.g. their own bank account, credit details, present stock levels lead times both for production and delivery etc. Each customer/supplier who logs on will receive personalised and direct advertising based on their particular needs. For example, if the B2B firm sees from their clients bank account that they have funds available then this client can be targeted for a possible sale. It will be the role of the now accountant-come-analyst to coordinate the I.T. and Marketing departments so as to optimise the capability of this new transaction model called business to business.

With a huge change in the type of transaction processing about to occur, accounting systems will have to get used to the most important cost saving element to be associated with B2B ecommerce. By buying, selling and dealing online accounting systems will have to electronically re-engineer basic business processes such as ordering and paper invoices into a paperless, automatic and a highly software dependant system. This new process is simply called ‘Electronic Bill presentment and Payment’ (EBPP). It is at this point where the accountant will have to go back to basics and use a costs/benefit analysis. The company will have to decide whether the expertise provided by an outsourced 3^rd party alliance such as a bank would host the EBPP or whether it would be more beneficial keeping the whole system in-house. Whatever the decision is the accountant must look at aspects such as security, confidentiality and trustworthiness of the new system.

Not alone should this method be seen to the end user as efficient and automatic and a major reason for dealing with the his company online, but it will also cut down on paper invoices and the traditional postal delays. Lead times between orders and deliveries will be dramatically cut and according to Troy Barton:

"A large biller with 50 Million annual invoices can save upwards of $30 Million a year by reducing the cost per bill by just 66 cents".

For all of this to work, it is essential that the accounting system is completely au fait and knowledgeable with both the information technology infrastructure and the type of e-accounting package being used by the Company. In effect what this means that the accounts such as the Balance Sheet, the Profit & Loss will be continuously updated in real-time meaning that changes in job roles within the whole accounting department will occur as there will be significantly different receivable and payable departments both in terms of the number of staff and the role these staff members play in the accounting process. This will lead to what is called the ‘virtual close’ where 45% of companies expect to be closing their books virtually by 2005. Traditional yearly reporting will not be seen to be as such a landmark in the company’s calendar as companies can focus on what

is happening on a day-to-day basis and enable them to act more quickly. By automating the ordering process, the cost of human error can also be eliminated.

In summary, accounting systems will have to be more flexible and robust as challenges from cutting edge technology systems constantly mean that accountants will need to be ‘tech-savvy’ as well as being able to interact with other departments, most especially the Marketing and I.T. Departments. Accountants will have more time on their hands to analyse and less time adding up invoices and receipts, as accounts will be refreshed hourly with real time rolling forecasts.

• Barton, Troy B "Financial Performance: Rise of the digital CFO"(2001)

• Adams, C. , Kapashi N, Marr B., Neely A.(2001)

• "E-commerce and the CFO: A framework for finance in the new economy," a study published by The Economist Intelligence Unit Limited and Accenture.(2000)

• Dahlberg K , Porter B.S (2000), "E-commerce: The Investment"

• Harty, Dan – Interview on 31^st of January,2001 at Tonbridge, Kent.
• Eisenhardt K M, Brown S L. ,"Patching: Restitching Business Portfolios in Dynamic Markets". Harvard Business Review, May- June 1999. (pp72-76)