Last week, Ardent’s Research Director, Bob Cohen, and I met with Ernest Rolfson, the Founder & CEO of B2B payment network provider, Finexio. During our call we discussed some of the challenges that Accounts Payable (AP)/Finance leaders face today, and some of the things that Finexio is doing to help solve these challenges for its clients. Below is a write-up of that discussion.
Company Background
Finexio was founded three years ago with the mission to eliminate paper check spend in North America. Started by former executives from MasterCard and Change Healthcare, Finexio provides an API used by AP platforms, ERP systems, and organizations directly, to pay its suppliers faster, cheaper, and more effectively than paper-based checks. The company has patent-pending technology that first identifies which suppliers can be paid electronically, and then is able to route those payments to suppliers without needing to acquire their bank account information.
The Supplier Enablement Challenge
Surprisingly, it can be a major challenge to get suppliers to commit to automating how they receive their payments. Many AP/finance teams are forced to do follow-up and reconciliation themselves, which is time-consuming and prevents AP leaders from providing more strategic value in other areas to the organization. But Rolfson stated that through their service, Finexio will negotiate with 100% of suppliers on behalf of its customers. This high level of service to suppliers is an important differentiator for Finexio. Much of the outreach to suppliers is done via email and through a supplier portal, but an area where Finexio separates itself from others in the space is by leveraging its call center operations to improve the reach and effectiveness of onboarding suppliers. Finexio also provides added value to suppliers by advising them on ways to improve their credit card processing, and help save money by driving down transaction costs. The personal touch Finexio leverages helps drive more adoption from suppliers, and takes the responsibility away from the workload of its buyer’s AP and finance teams.
Improving Working Capital Management
Finexio provides ways for both suppliers and buyers to improve their working capital management. They work directly with their clients’ suppliers, and provide them with up to nine different ways to get paid. Systematically there are opportunities for customers to improve how they get paid, and also when they get paid. For many suppliers, having the option to receive payment sooner rather than later is extremely important as this enables them to re-invest the money back into their business and keep growing. On the buyer side, Finexio works hand-in-hand with its’ clients to identify key points such as payment terms, spend levels, supplier segmentation, cash needs, etc., in order to craft the optimal program to suit its clients’ needs. Rolfson felt that moving paper based (check) payments to electronic payments should be an easy process, and there shouldn’t be any additional staff time required to make this happen. To this end, Finexio assumes the responsibility for interacting with suppliers to get them onboarded and serviced going forward.
A Data-Driven Approach
There are many great technologies that already exists in the market with respect to payment options. Finexio is taking a data-driven approach to help buyers and suppliers leverage this existing technology to optimize their payment strategies. Many of Finexio’s clients come to them initially with 100% of their payments being made by paper check. By analyzing clients’ payment data, Finexio is able to identify suppliers that are best candidates for electronic payment options (such as ACH and virtual card), and then utilize their supplier onboarding capabilities to move them to one of these technologies. Rolfson said it is not unusual to quickly transition a clients’ payment ratio from 100% paper checks to 20% card/40% ACH/40% paper check within a matter of months, while saving the client money and improving working capital.
Final Thoughts
For Finexio, the goal has been to help optimize the payment process for its clients, and end the practice of companies sending manual checks. Finexio is able to help its clients reduce spend, improve working capital management, and optimize supplier enablement by taking on the responsibility of converting suppliers from receiving manual payments to ePayments. By taking a data-driven approach Rolfson feels that getting electronic payments should be easy for buyers. They are tackling this issue head on, which is refreshing and something that should be welcomed in the industry.
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