The collector

Intercarrier compensation can get messy. We're not talking about the politics surrounding this sensitive issue, which get pretty messy in their own right, but the seemingly simple daily invoicing and payment processes involved when carriers buy network capacity from one another, or terminate traffic on one another's networks.

Send bill, receive bill, look at bill, pay bill, rinse and repeat. But, what sounds like it should be a rapid repetitive process often isn't. For one thing, in many cases, it isn't an automated process. Some carriers, and often the smaller independent telcos, handle the invoice and payment process manually in both directions, and paper-based invoices are still in frequent use. Also, invoices are sometimes inaccurate, or perceived to be, so carriers, just like individual consumers, aren't going to pay them without taking a look first.

Then, there's the size of the challenge at hand. AT&T handles about 15,000 invoices per month, and traditionally has had a staff of more than 70 people handle them, and an additional staff of more than 20 to handle disputed invoices. An independent telco won't see nearly as many invoices at AT&T, but it may find it hard to spare the human resources and time necessary to handle its own load.

Charlie Thomas, CEO of Razorsight, a company that automates invoice management for service providers, said, “One of the largest expenses for carriers, even small carriers, is network usage costs. They all buy capacity from each other , or terminate traffic on each other's networks, and they have to manage all that back and forth.”

Because so many invoices for network access fees are still paper-based, Thomas said carriers have to employ people just to manually type the invoices into computer programs, a situation that carries a high risk of error. Even if small telcos could handle this aspect, they still might not find easy access to auditors who can closely analyze the bills.

“RLECs have it tough because there just might not be enough auditors to go around in those areas,” Thomas said. Razorsight's AIM Intelliview analytics software operates as a web-based, on-demand services that handles the auditing as well as the invoice conversion process, invoice tracking and dispute management. “Basically, we focus on invoice-to-pay life cycle management,” Thomas said. “We feed into inventory and provisioning systems, and into financial databases, so we can give CFOs greater visibility into one of their biggest expenses.”

Globalcom is a privately-held, facilities-based CLEC and long-distance carrier in Chicago that faces a large volume of intercarrier invoices, and has been using Razorsight's automated system since 2004. John Shave, president and CEO of Globalcom, said he's concerned about telco giants not playing fair with his smaller firm. “If we do not manage the Bell company relationship properly, they have the resources to crush us,” he said, adding that the carrier used to use an outside firm to manage its invoice life cycle, but that this practice was expensive, and resolutions and payments took too long.

“Carrier bills can be so confusing,” he said. “We need something that limits our reliance on having silo-based program managers for each carrier account that we do business with. This system is a very effective tool for Globalcom to manage what could potentially be a bad situation.”