When Max Eliscu started his own factoring company at age 25, he saw first-hand the intense friction experienced by businesses looking to manage their cash flow, especially in the B2B space. As B2B commerce expands, Eliscu launched Viewpost to ease some of that friction. In addition to e-invoicing and e-payments services, Viewpost allows buyers and vendors to see, in real-time, the current status of outstanding invoices and cash flow data. Eliscu spoke with MPD CEO Karen Webster about how Viewpost offers a holistic solution to B2B procurement friction by connecting buyers and suppliers.
KW: B2B payments is really broken – no real news flash here. So, what part of B2B payments are you out to fix, and how are you doing it?
ME: When we think of the payment problem, we think of it much more broadly than just the delivery of the money. That, of course, in and of itself, is an enormous problem that has yet to be solved. There are some interesting opportunities that are on the roadmap – same-day ACH is interesting, but then again, we’re still dealing with batch-based processes that are fundamentally preconditioned on the ability to know how to pay the person you’re intending to pay, gathering their information, and updating that information. And then there is the delivery of the data on what you’re paying, and there is the integration of all that data out of and into accounting platforms.
When we think of B2B payments, we think of it at a holistic level. In order to really solve the problem, you have to be able to connect businesses with one another. You have to be able to deliver information, you have to make the ability to pay your trading partners and receive payment from you trading partners simple, regardless of the payment method. And you have to be able to deliver information along all of those rails. That’s a lot, but that’s really what it takes in order to cure the disease, and that’s what Viewpost has set out to do.
KW: So, how do you do it?
ME: Right now, it starts with connecting businesses with one another, and not having a focus on solving for the benefit of just one segment of the ecosystem or another. If you look at the historical players, you really see companies that have been designed to solve big company payables problems – big, expensive software for big, complex companies, like Ariba or OB10 in Europe.
On top of that, you could have solutions for invoice routing and workflows coming from Basware or MarkView that integrate expensively with SAP and Oracle. They’re all very expensive, and they’re all generally conditioned on the big company have enough power to mandate that their vendors, both big and small, be willing to change their business practices for the benefit of their large customer. Unfortunately for the vendor, if they have lots of customers who all have lots of power, you have distinct processes across all of the people they do business with, and then the processes that they deploy for everyone else. Those solution sets are treating the symptoms of the disease, the fact that vendors send paper or pictures. You do have, on the billing side of the house, other solution providers like Fiserv, FIS and Billtrust, that help big companies send out their invoices and try to get the big companies’ customers to leave their environment of paying bills to login to the big company billers’ environment to pay those bills. And, of course, nobody really wants to do that either.
Our approach is not to solve for a problem on the billing side or the payables side targeted for big companies or small companies. It is to be able to create a fabric that allows big companies and small, across AR and AP, to connect with one another, and to connect into the systems and the procedures and the technologies that they have already deployed. To do what they already do today.
For instance, a company that is small that uses QuickBooks, or nothing at all – they’re a web-only user – can create invoices in their accounting system, but they can also be doing that in their capacity as someone who uses Oracle or SAP. They use their accounting system to produce their invoice, but if they’re connected to Viewpost, those invoices flow as data and also as pictures to their customers. If those customers are on Viewpost, then they’re able to pull that data down into their accounting systems, whether it’s Oracle or QuickBooks or if they’re a web-only user on their mobile device. If they’re not on Viewpost then they get delivered an invitation to connect, no different than someone might send a connection request on LinkedIn or Facebook. We’ve removed the barriers to connectivity by making all of that totally free.
We make it free for companies to send invoices and data from their current systems, and make it free for companies to be able to receive invoice data to their current system no matter whether they are big or small. And we allow the companies on the buying side of the house to be able to communicate the status of those invoices across all of their vendors, so vendors, in a way that’s never really before been available, can track their invoices as easily as they, as consumers, can track a FedEx or UPS package. That can mean the difference between success and failure of their business in terms of cash flow. We similarly deliver remittance data even if somebody isn’t using our payment rails. When a payer makes payment from Oracle or SAP or PeopleSoft or QuickBooks or the Web, it can be an e-payables payment or ACH or wire or checks, we receive that information from the accounting platform, so we know how they pay, on what they pay, when they pay, and we deliver notifications via Viewpost, which can be delivered to mobile devices or email inboxes, always with invitations to connect, which is free. The payers sending that data, and for the recipient, they can pull that info down as the vendor into their accounting system to apply payments with, again, no cost and no data entry. It’s about a fabric that connects invoicing and payables across different systems and different sized companies. We charge nothing for any of that, people don’t have to use a payment rail through Viewpost, they use their conventional rails or their banks.
We are very interested, in addition to solving the remittance data problems for big and small companies, but also for solving the paper check problem in the U.S. We are able to do that because people can outsource the production of their checks to Viewpost, in which case the big or small company who is doing the a check run simply sends a command to us via our integrations. We produce their signature-present actual checks. We’ve worked with some of the biggest banks in the country to be able to have the ability to deposit those checks efficiently and in near real-time into the checking accounts of their customers. And we are able to do that because their customers, when payments are delivered, are able to enroll in Viewpost, and they also engage with us as the vendor to deposit those checks into the checking account. Through our integrated relationships with some of the biggest banks in the country, we are able to recognize who the payments are for, create deposit tickets, and deliver them into the bank – actual signature-present, logo checks that are printed and produced. We’re able to do that in seconds. For the payer who wants to eliminate the paper check, or the production and handling of them, and for the vendor who wants to eliminate waiting for them to arrive and getting them into the bank and applying the payment on the check, we charge for that service. If a paper check is being mailed because the vendor is not yet enrolled in Viewpost, we charge 75 cents for the payer to outsource the production and mailing of that check. But we send invitations electronically and on the paper check to enroll in Viewpost to engage with us to deposit that item so that the four or five or seven other invoices, which may be paid over the coming weeks, can be deposited electronically. As soon as the recipient enrolls, we are then able to begin making electronic deposits into their checking account very quickly, certainly same-day, and we charge the vendor nothing at all for that service. The cost to the payer then goes down from 75 cents to 50 cents.
KW: Wow. That was a lot. You chose a interesting and potentially clever way to attack the problem, because you started on the supplier side and eliminated the friction of the buyer having to decide how the supplier gets paid. And, you’ve done it using an invoice that doesn’t require that the supplier do anything but connect to your software platform.
ME: Right, and that is no different than connecting on Facebook or LinkedIn. I want to clarify one small but important manner, and that is that our design aims to eliminate the chicken-or-the-egg problem. It doesn’t, in fact, have to start with the vendor sending an invoice to the customer. We have many people who start as buyers connecting to their vendors. The concept of a vendor portal, which you’re very familiar with, you spend half a million to $5 million to allow your vendors to see the status of your own invoice so they don’t have to call you and you don’t have to take those phone calls. We really are turning this on its head. The vendor portal concept is to pay for this thing and then your vendors can leave their environment to come to your environment to see what’s going on. If you’re a vendor and you have five different customers each using a different vendor portal, you still go to five different places.
On Viewpost we give that capability away for free to everyone, big companies or small. We’re finding some very big companies using Viewpost. They sign up, we connect into their Basware or PeopleSoft or Oracle system, and they start sending invitations to their vendors to connect with them. So the vendors are sending invoices in the mail, or they’re emailing invoices to them, and then they receive an invitation from their customer saying, ‘’connect with me on Viewpost. It’s free and you’ll be able to see the status of all your open invoices, when they’re scheduled for payment, and that I’ve paid you.” You have vendors signing up because the customers are inviting to share info with them that doesn’t require the vendor to do anything differently. But the vendor can’t see the status of the invoices that haven’t yet gotten into the system. There is a black hole, initially, for the vendor for invoices that are, say, less than 10 days old and have been mailed. But the vendor can eliminate that black hole by connecting QuickBooks to Viewpost, where suddenly the invoices are delivered instantaneously. They can see that they are received, when they’re being routed for approval, and that they’ve been approved. We deliver an ever-increasing set of value propositions to both the buyer and the vendor for deeper utilization. We remove the barriers to utilization by not charging for that and delivering more value. In that instance, those email registration rates are around 51 percent, which is surprisingly high. But for us, we think we can do much better, and we are doing much better nearly on a weekly basis.
KW: You’re eliminating the excuse, ‘It’s lost in our accounting department.”
ME: That’s right!
The Viewpost Business Model
KW: How do you make money?
ME: Our processes are very efficient, so we do make money on 50 cents a transaction, and there are a lot of those transactions. We are agnostic of payment, however, so there are integrations happening with major financial institutions that will allow their customers to be able to leverage bank payment rails through Viewpost. And if that rail is ACH, e-payables, p-card payments or their payment method of choice, we are perfectly OK with that. We are not trying to require or force people to use our payment method, it is simply an option if people find it beneficial. So far, they find it very beneficial. But we are an open platform, and if there is a more efficient payment method, we are happy to allow and support integration with those capabilities, because you really need the fabric of the connection between these companies and the delivery of the data. That is the most valuable proposition that Viewpost delivers.
One of these we didn’t talk about, which relates to our business model, is that on delivering to all size companies a distributed portal capability – which is to say we’re pushing the data into the accounts of the vendor rather than requiring them to come to you – we are bringing the ability to have any size company offer to be able to pay any of their open invoices earlier than the due date through dynamic discounting on demand. Conventionally, dynamic discounting has only been available to very big companies and then only ones that know how to pay their vendors electronically. It was an inefficient process through vendors because even when you ask for payment you had to know, in advance, when you wanted to be paid The payment couldn’t be delivered efficiently in real-time. When you look at even small business segments of banks, what you will find is that the average utilization of credit lines for those that are able to obtain them is about 42 percent, so they have the availability of capital and, of course, banks are sitting on hundreds of billions of dollars in cash in all segments of the bank – small businesses and large.
We give any size company the ability to broadcast to their vendors a willingness to pay any invoice that’s approved on demand and for the benefit of the vendors we give them the ability to see across their connected customers which ones are willing to pay invoices now rather than on the due date. Fees are getting lower and are controlled by the buyer as they get closer to being due. A vendor who previously didn’t have access to untapped liquidity in their receivables, via Viewpost they can turn all of their receivables into an immediate source of cash. We bring the ability to leverage excess cash to the customer or the buyer, and when buyers do that, they share a percentage of the savings with us. It’s just another form of revenue that Viewpost generates by unlocking savings for the buyer and creating new sources of liquidity for the vendor. For us, it’s really all about value creation and value capture.
The Beginning of Viewpost
KW: What gave you the idea to create Viewpost?
ME: The other company that I run, LSQ Funding Group (LSQ) is a factoring company, an asset-based lender, that I started 19 years ago. One of the areas of friction we identified was how our clients produce and deliver invoices, and how their customers communicate the status and ultimately make payments on invoices. We weren’t paperless because we dealt with, like everyone does, the paper and the pictures that are sent to us. We really couldn’t solve the problem on the customer side. So it’s true that of the 100,000 companies that we might do business with a year at LSQ, there are about two-dozen that have online portals. We go to two-dozen different places to find out what is going on, and it’s two dozen different login credentials, different representations of data, and then we have to download forms or take screen shots and manually enter it into our system. And, of course, every one of the other customers we have to call or email.
In late-2010, as we were planning for the kind of growth that we are now experiencing, we realized that the impediment to scale for us were not things that we could control, they were really about how business everywhere in the world is done. We began focusing on why it is done that way. There has to be a solution to that problem, and it was really about a reinvention of how companies are connected and do business with one another that we set about focusing on in terms of the nature of the problem. The things that we had already done to electronify our own business, we really thought of them as crutches and wheelchairs. We deployed technology to help us treat the symptom of the disease, and our focus was, how are we ever going to stop? How are we ever going to be able to stop buying more aspirin? Viewpost became the cure, the vaccine.