The B2B realm is rife with paper, it’s no secret. And any number of firms are looking to aid finance professionals in reducing paper inflows and outflows — a bottleneck where accounts payable is concerned. And where there are inefficiencies in AP, there are inefficiencies in cash flow.
One firm, Nexus Systems, just garnered a $28 million equity investment from Mainsail Partners. Nexus Chief Executive Officer Tom Coolidge told PYMNTS in a phone interview that the capital received through the investment will be slated to help boost scale and also product development. The investment, said the executive, “comes as the market we’re in has grown and is so vast for our business and the problems we solve that there is an opportunity cost of growing at 30 percent a year,” when, with additional capital and scale, the firm could grow at much faster rates.
The market for cloud-based software AP automation, he said, is roughly $5 billion in North America alone and is structured such that it’s “like those old westerns where people ride out with their horses and flags to a spot of land and stake their claims.” Yet, he continued, there are really only a dozen pure play firms in the space, with room for healthy competition.
For Nexus, the main focus is on managing everything from tracking onsite purchases to compliance, and key verticals include real estate and construction, said Coolidge. Key to any efficient management of payables, he said, is “the three-way match” across purchase order, receipt and invoice (important across compliance as well). “The purchase order is a point of liability,” said Coolidge, and variances among those points of matching may raise awareness of inefficiencies, as separate document creation at the points of those three-way match documents, sans automation, means that the same data is akin to entering the same data three separate times.
One way to address the beginning of the process, at the purchase order level, is to use online catalogs (which the firm links to via portals). The catalog availabilities, said Coolidge, can let firms save money, with cross-pricing on and availability of similar items (such as pens) with an eye on margin and expense control.
Tracking invoice history, especially at the payables level, said Coolidge, allows for efficient fund flows, which also lets firms take advantage of discounts for timely payments, an added boost to cash inflows.