How to streamline payables for the back-end of business

Accounts payable is a necessary point of improvement for companies wanting to take their business further, yet it’s often the last area to be streamlined. Rob Israch, CMO at Tipalti shares his insight on what companies should be doing to continue growth.

Back in 2010, technology was nowhere near where we are now when it comes to handling payments. Although industry was looking for ways to streamline, many processes were still far from being automated. What many companies were looking for was a way to save time and costs and they needed a system that could help them with both.

“Businesses have not taken accounts payable seriously as a point of improvement. The status quo has been to hire more people to pay more people. And while technology has existed for some pain points, such as invoice workflows, overwhelmingly, the tools have been bandages to treat a larger problem. But now in the age of digital transactions, a global service and supply chain, and remote work companies are scrambling to automate AP as a holistic process. That includes supplier management, tax compliance, financial controls, and auditable electronic payments in addition to invoice and purchase order automation,” said Rob Israch, CMO at Tipalti

Israch’s company knew an automated payables solution could save companies time and costs over the manual supplier payment processes many companies had used for years.

“We wanted to create a platform that automated this complicated problem [of payments] and save digital networks time and help them avoid hiring additional payments staff. We discovered more industries beyond digital networks could benefit from our technology. Whether it has an invoice-based workflow or a digital business model, every growing company needs an intelligent, holistic approach to eliminate payables friction,” Israch said.

The invoice side of payments

In the past, payable solutions generally started from the payments side of things rather than the invoice side. But Israch’s company had a different idea of how to move forward.

“We had to solve the biggest gap in a company’s operating finances: the transaction from business to the bank. It’s a harder problem to solve when dealing with regulators, international bank transfers, currency conversion, and reconciliation,” Israch said.

By solving the payments core problem and developing around it, the company created a more holistic automation solution that covered the variety of aspects of the payables process.

“And it’s designed to do so at scale, allowing for thousands of domestic and global transactions to be executed and managed from a single point and with minimal user intervention,” Israch said.

Israch explained that with the company’s platform large blue-chip banks and payment processors can send funds to 190 countries through 120 local currencies using six payment methods. Companies can remit payment to thousands of partners or suppliers, regardless of the country or the payment method used, through a single portal instead of using multiple banks and payment gateways.

Performance-to-pay models

As the company matured, the industries that needed such a payments system grew as well. One of the industries, gaming, offered a true niche market for a payments system.

“Gaming is a microcosm of the real-world economy. You have earnings, labor, digital goods, advertising, marketing, influencers, athletes, artists, entertainment — you name it. What’s unique is that it’s global, digital, and transactional. These are the core qualities in which payables automation thrives and is a natural fit. More industries, specifically the gig economy and online marketplaces, are becoming very similar to gaming in that they are performance-to-pay models,” said Israch.

The company works with any company that has a sizable payables issue and its client list includes Amazon Twitch, Roku, Seeking Alpha, Twitter, GoDaddy, Zola and Foursquare.

“We launched a monetization app for developers, addressing all phases of app monetization payout from developer registration, tax and regulatory compliance, and payment method selection to developer funds disbursement and payment status communications to its developers,” said Israch. “Platforms like StartApp help facilitate performance-to-pay instructions from in-game advertising. They determine how much to pay someone and when. We use that data to process the payment and manage the communication with developers, alert them of issues, and gather their bank account details and tax forms. We provide payment processing to reward streamers garnering audiences for their content.”

Unicorns in waiting

But like so many companies, once the pandemic hit, Israch and his team had to learn how to navigate for their customers as well as their staff.

“We’re getting used to living on Zoom and Slack without the camaraderie of in-person communications, but business-wise, other than some industries that have been devastated by COVID-19 like travel and tourism, we’ve maintained a moderate growth trajectory across our customer base,” said Israch.

“Our greatest achievements have been our customer wins. We have a 98% retention rate. We’re foundational. Some [clients] are large customers, but most are midsize, high-velocity companies. They are ‘unicorns in waiting'” said Israch.