Everyone wants things to be simpler – especially when it comes to payments. Karla Freide CEO/Founder of NVoicePay, believes in solutions that start with giving customers control of their payments in a simple workflow process. Karla sat down with MPD CEO Karen Webster to explain why it is so important for the future of B2B payments for the buyer to be in control.
KW: What do you think are the biggest pain points in the enterprise business space and how do you try and solve those problems for the people in that space?
KF: The reality for the enterprise payments space, it’s pretty abysmal. When we look at enterprises that have tried to move to the electronic payments and in the process they’ve ended up with multiple work flows. So let me explain that. For enterprise payments today, the place most people will go is their bank and they will help you do your HCH payments but it will ask you to collect the information on the suppliers you are paying. Your bank will want you to use their keycard program but they are only going to enable a few of those vendors and not this ongoing supplier enablement. When you step back and look at what people are doing in the enterprise space is that they’ve moved partially to electronic payments. They may be sending on average 25% of their payments on HCH through their banks, but the majority of the suppliers they work with today are still paper based. The travesty of that is now the enterprise space is stuck with three different work flows while trying to manage those HCH payments and when that payment fails, those account payables departments have to track that payment down. So that process now happens across three different volumes none of which are connected. By having partial solutions in a partial way has led to more work for the enterprise then less. Everyone wants to automate and moving to increased efficiency is something everyone wants. But payments have really failed to deliver on the efficiency for enterprise businesses. I think they’ve done just the opposite.
KW: Is this a complicated fix?
KF: I think there is some really heavy lifting that needs to be done here. In fairness to the banks, it requires the combination of technology and the willingness to deliver service. The complication comes in with information that changes over time and payments fail over time. For whatever reason the customer has the wrong information – something happens. Somebody has to resolve that. Bu not having that ongoing information feed it’s a hard job to solve. What a tough job account payable departments in large enterprises have. It’s unbelievable.
KW: So, what’s the first step on the road to recovery?
KF: I think the first step is stand back and look at what you’ve got and say is this really working for me? And why is it that I have to maintain the supplier information and tracking down information? I think the first step is to realize it doesn’t have to be like that. There are solutions in the market – NvoicePay is one of those solutions – but it’s important to give the customer a control of their payments in a simple workflow process. On the service side, it’s important that they maintain the vendor information, and not just at one certain point in time, but throughout time. Then having a solution that steps up to payments management and support. Those two pieces are huge and until the solution does those two things it just adds to the inefficiencies.
KW: Where do you see this problem occurring and where is the problem more acute?
KF: I see this happening in the small to medium enterprises. Larger enterprises invested to solving problems. If you’re doing $350,000 of payments a year you’d need to create your own solutions or you wouldn’t survive. So that’s what a lot of them did – the built their own methodologies, they do their own payments management, and so on. We see an acute problem below that level – on 20,000 payments a year business. In that space, those businesses that are small didn’t have the resources to build their own solutions and are now dealing with that issue. We see the biggest problem occurring between 20,000 payments to 250,000 payments. At NVoicePay we’re focused right in that space and our solution is aimed towards those mid-market enterprise customers.
KW: How did you think about putting everything together in order to deliver a return as well as servicing the needs of these enterprise companies?
KF: I knew it had to be incredibly simple and give a great customer experience. As we think about how to do that, cloud technology really adds more flexibility for how you can build an application. It’s easier to understand and it doesn’t require a lot of training. When we looked at the problem we built a solution that could be dropped into any process and it doesn’t bind anyone long term. The last thing mid-market companies want is a new technology project – that stops it right there. And it doesn’t need to be like that, we built our solutions so that they’re an easy win. One of the reasons it hadn’t been done before is the cost – but automation and the cloud allow for some of the cost burden to be taken off us.
KW: What got you interested in this space?
KF: I think it was the idea that this is so backwards and it doesn’t need to be this way! The idea of why when you’re making a card payment for business shouldn’t the buyer have complete control when they make a payment seemed obvious to me. It’s not consumer based where you have walking plastic, in the B2B space the buyer needs to have the control of their payments. The simple understanding that the industry was so backwards from what it needed to be is what originally inspired me.
KW: From a supplier perspective, what gives them an incentive to come on board?
KF: We don’t try to charge suppliers to receive payments – just as it’s important for the buyer to have control of their payments it’s equally important for the supplier to have a choice of the payments they want to accept. It’s important not to push the supplier down a specific payment path. When you’re moving suppliers off paper to electronic the same cost free incentive needs to apply. In a lot of ways, it mirrors the values that the suppliers have. We need to change with the time of payments. It’s ok if it changes through time it doesn’t need to be a constant.
To hear Karla’s perspective on technology innovation at work and to give your two cents on the future of B2B payments, register to attend our “What’s Next in B2B Payments” event in NYC on October 15th. Register today!