Simply put, LEDES is to electronic legal billing what Linux is to operating systems, a best-in-class open source standard. LEDES is managed and run by the LEDES Oversight Committee (LOC), founded in 1995, which is a volunteer-based, non-profit organization, comprised of medium-to-large law firms, corporate legal departments, colleges, vendors and consultants.
There are a number of benefits to a global electronic billing, such as interoperability and usability with software. For example, say a company manages a large volume of invoices from different vendors, that creates a need for a lot of processing of those invoices. At Bilr, we call these clients, “processors,” because they hire a number of Full Time Employees (FTEs) to input invoices into account payable systems and process, or review, these invoices for payment. These invoices tend to look different, tend to come in through email and tend to require case-by-case examination.
It sounds quite simple, and it is to a degree, but there’s a lot people don’t typically think about when working with software. There are plenty of “edge” cases, or situations in which a software could be tweaked to be better for one type of client, but could that reduce utility to another? If you do it right, however, as we believe we are at Bilr, you can unlock tremendous value. We look up to a number of applications as peers in this space, such as Wave, and what better demonstration of this type of product adding value than their being acquired by H&R block for $405 million.
For an example, let's say I run an accounting firm, or a fund administration company; part of what I offer my clients, or even what I do to run my own company’s billings, is invoice management. Let’s say I manage 50 invoices a day, 1,500 a month and 18,000 a year. That means I’ll probably need at least 5 people to handle 10 invoices each per day...keep in mind this is being generous to the average invoice processing time, it’d potentially be up to 10 people. To keep costs low, I outsource this to Wisconsin minimum wage operating staff, who charge me $7.25 an hour. Therefore, I’m paying this outsourcing unit of 5 people, $290 per day, $8,700 per month, and $104,400 per year. That assumes they’re my staff, so I’d probably have to have an office and rent and insurance for them, too. A shared working space would be too expensive, i.e. WeWork, so I am using the first available pricing I found when searching for “Wisconsin Office Lease.” Assuming we chose the smallest office, that’s $1.33 per square foot, for 1,240 square feet, or ~$1,650 per month, $19,790 per year. Let’s call it $20,000 to include utilities and insurance...so we’re looking at $124,400 per annum for this invoice processing unit.
So how could Bilr and LEDES help this issue? First of all, we believe expense management software and expense allocation software are key components of digital transformation for all companies. Secondly, we believe current vendors, such as Concur, would charge as a % of spend, or a high flat monthly rate. In short, we believe we can check both the cost efficiency and and software utility boxes better than the existing system. The software aspect of what we achieve is we reduce average invoice processing time, our last client saw average invoice age (from receipt to payment) drop from 46 days to <1 day. This achievement is based on intra-office in-built communication/delegation tools, having standardized LEDES invoices and ensuring interoperability with our clients’ existing accounts payable systems. The cost efficiency improvement is achieved based on a (hopefully) straightforward, flat and transparent pricing model: $1 per invoice. Rain or shine, complex or simple, what you see is what you get. In the above example, our cost would be $18,000 per year assuming the client doesn’t need custom setup ($5,000) nor custom integrations ($3,000). Let’s also assume this client needs to retain two people from the team to operate the software, that’s $20,880 per year for those two people. If we add back in the custom setup and integrations, the “all in” maximum cost in this case for processors with our ebilling software: $46,880 vs. $124,400 if the process was handled manually. Even if we want to compare with another vendor, such as Concur, we’d assume concur charges at least $5,000 per month, so $60,000 per year. However, this is just speculation and should be treated as such. More importantly, however, is that with just a little “out of the box” thinking, our clients’ costs are cut into ~⅓ and they’ve earned 10x more time.
As mentioned, this improvement is only possible with LEDES-compliant (read: standardized and simple-to-understand) invoices, which we can create with Bilr. All invoices, once input, look the same to our software, all thanks to LEDES. An example format in this case would be LEDES 1998B bills. And that’s just the standardization they enable...their team, led by Jane Bennitt, is unconventionally forward looking in their approach to technology, and helped us create an API that creates LEDES format invoices from scratch, or tests whether a given invoice is compliant. They’re helpful, innovative and more importantly, good people.
That’s why we chose LEDES...they’re an essential component of how we work currently, and they give us a long runway for the future.