When it comes to automating payments in the B2B space, sometimes two heads are better than one. Michael Praeger, CEO and Co-founder of AvidXchange, and Clark Khayat, Head of KeyBank Enterprise Commercial Payments, spoke with PYMNTS about the companies’ new partnership, sharing both their motivations behind it and the benefits moving forward — both immediate and long-term.
PYMNTS: AvidXchange has just announced a partnership with KeyBank. How does this partnership benefit both organizations? What are your key customers getting now that they did not get before?
CK: In today's environment, a client can work with a bank, obviously, and they can work with AvidXchange as a standalone company. What we're really excited about is not only the level of collaboration and involvement we have as partners with AvidXchange, but also how that manifests as the ability for us to take a holistic payables automation solution to our clients that is fully integrated into their core bank capabilities.
MP: KeyBank has a phenomenal client footprint; its customers view it as a trusted advisor — not only in banking but also in core back-office processes. AvidXchange is excited to be able to arm the KeyBank team with solutions for middle-market companies.
The traditional bill payment process at banks has been a phenomenal one for individual consumers, but middle-market business/commercial business customers have struggled with it. Their bill payment process really starts with how the invoice gets managed: It has to be initiated from a core accounting system versus a bank portal. To now be able to initiate the payment process from the client’s core accounting system, eliminate their paper invoices and maximize the electronic payments that a customer is able to make is — based on initial feedback — exciting for KeyBank customers.
PYMNTS: Both companies have mentioned the desire to create a great "client experience." Exactly what do you mean by that? How are your clients' experiences going to change?
CK: The "great client experience" covers a handful of things. One is the understanding and ease of use on that platform, and part of that is the installation of the product.
As we all know in the payments world, there's always a big project involved when you add a new capability. Managing that process well from a project standpoint, as well as making the installation as simple and easy as possible, are really important to the client experience. There's lots of data that shows that if you have a bad onboarding experience with a client, then it's very hard to recover from it — even if the capability itself is great.
What's phenomenal about the capability born from the partnership with AvidXchange is the setup, from a technology standpoint, is relatively easy compared to almost any other competitive capability — and clearly much easier than most bank integrations.
MP: Part of the simplified approach in not only getting up and running quickly but also in enabling the ability to make payments with a one-file experience. A customer can generate one payment file from their core accounting system and leverage the software and dynamics of KeyBank to determine the best way for that payment to be settled. It really simplifies things for the customer so they don't have to manage different payment types and different vendor bank accounts themselves, and they can let the platform and KeyBank manage that information on their behalf.
Another piece of it is where the "network effect" helps both existing and future KeyBank customers, as well as other AvidXchange customers — and that's the payment network. Today, we have about 300,000 vendors in the U.S. within the payment network, and each vendor works with over three customers. With additional customers coming in, we can increase that number to six or 10 customers per vendor, which then strengthens the leveraging point created by the network, which in turn makes it even easier to get clients onboarded because their vendors are already on the network.
PYMNTS: How important is this partnership to AvidXchange’s growth? Does it serve as a competitive advantage? And how?
MP: It absolutely serves as a competitive advantage.
In addition to its client footprint and unique approach to payments, what sets KeyBank apart for us is that they entered into the partnership with a focus on having dedicated corporate payment specialists communicating with their customers around this business process — serving as advisors to treasury professionals at the company, rather than leaving that department to deal with it on their own — which provides more value to their customers. It's already starting to play out.
PYMNTS: What about AvidXchange attracted KeyBank to them as a partner? What criteria were used for selection?
CK: In our payments world at KeyBank, our mission is to help our clients run their businesses better every day, because both payment processes and accounts payable processes are an "every day" type of thing. If there's a capability that allows our clients to achieve that, then we want to be a part of it.
We've spent much of the last two years looking around at all the change that's going on in the payments industry, and most of the innovation is coming from non-banks.
We'd been turned on to AvidXchange by others in the industry, as well as our own clients; I had one client tell me specifically that "the most valuable" thing I could do for him was connect his core capabilities into AvidXchange.
In our initial conversations with Mike, we expressed our belief that AvidXchange was really distinctive, and they provided something meaningful to clients — creating an enormous amount of clarity, transparency and efficiency in their operations. And that's exactly the kind of thing we wanted to bring to bear, in a way that was very partner-oriented and very collaborative.
We couldn't be happier about how it's kicked off.
PYMNTS: How did you decide to not only partner with AvidXchange but also serve as an investor?
CK: When you take on an investment, you're adding an element of financial risk to the equation. The reality for us, though, is that we viewed the investment as just one more demonstration of the mutual commitment. We have a great partnership here in delivering the AvidXchange product to key clients and prospects, and that is the core of the relationship.
MP: From the AvidXchange perspective, the KeyBank relationship gives us credibility in the marketplace — even in excess of the 5,200 customers that we already have. That trust is particularly helpful when you're evangelizing a solution that's greenfield: approximately 80 percent of middle-market companies today haven't done anything to automate their invoice or payment processes.
Lastly, it obviously provides us the ability to scale our offerings and take our 5,200 customers and build out the base at a rapid pace, which we're looking forward to doing.