B2B Payments

The Midsize Enterprise Is Missing From The Cloud


In the small business community, there is rarely a surplus of resources, time and expertise that can be dedicated to mastering a complex, expensive accounts payable system often used by larger businesses. But David Busch, CEO of AP automation firm Nivo1, says that even larger corporations — mid-market firms with between $25 million and $1 billion in revenues — shouldn’t have to be burdened by complexity and cost either.

“What you see in the industry — and it was a little bit of an eye-opener to us — is that there are not a lot of cloud players out there,” Busch said in a recent interview with PYMNTS. “There seem to be a lot out there for small companies that might do a couple hundred invoices a month.”

But in the mid-market, he continued, these firms can be managing thousands of invoices a month going through global ERP systems, like Oracle and SAP.

“That’s where the market seems to have a lack of cloud-based solutions,” the Nivo1 CEO said. “They have a lot of older AP automation solutions that have been in the market for a long time. But they are on-premises software.”

In-house accounts payable tools, like other software, need to be installed, maintained and upgraded. Every time a major ERP system is upgraded, the AP software needs to do the same to remain compatible, he added.

“The ongoing support and maintenance of these systems — it’s expensive to get them up and running, and once you buy the software, there is hardware, consulting, and it’s expensive to maintain.”

A lack of cloud-based tools for mid-market firms is what led to the creation of Nivo1 in the first place.

Nivo1 was only recently born. The company, run by Busch, Rob Guidarelli and Ed Eichler, is a spinoff of IT services firm Tier1, owned by the same executives, and manages its accounts payable offering, AP Express.

But before the spinoff, Tier1 held the AP Express product under its name, something that Busch said could be a bit confusing for potential clients. Spinning off AP Express into a new company called Nivo1 helped to streamline the offerings of each business.

Additionally, though, Busch agreed that the ability to create a standalone entity focusing solely on accounts payable automation says something about the AP technology space as a whole.

“We’ve been working with Tier1 for 14 years, and we have never seen as much interest in what we are doing as we have been seeing with AP Express,” the CEO stated, expressing the recent surge in corporate interest in this kind of service.

The data would seem to support this experience.

A report published earlier this year by Ardent Partners, for example, found that, while only a fraction of businesses consider the AP department to be a strategic and valuable part of the enterprise, the resources provided by AP automation technology are in demand across the corporation.

Analysts surveyed 184 businesses, 26 percent of which were mid-sized firms. Nearly three-quarters of businesses surveyed said they leverage AP data when managing invoices; 67 percent said they use that data to strengthen relationships with suppliers. The majority also stated that they use AP data in their forecasting, budgeting and planning efforts, among other initiatives.

Mid-market firms are beginning to realize that automating AP in the cloud can be a valuable investment. Busch said that spinning off Nivo1 also allows the company to devote more resources to strengthening its product as interest continues to grow.

The company will also target some ongoing challenges of mid-market companies that still have a ways to go to adopting fully automated accounts payable processes — and that doesn’t just mean electronic invoices.

“Some of the challenges we’re seeing are getting companies to use purchase orders, as opposed to non-POs,” Busch explained, adding that purchase orders accelerate the AP process because they don’t have to be routed for approval and can be automatically reviewed and sent for payment.

Like smaller companies, other issues, like a continuing dependence on paper, still plague mid-market firms, said Busch. Even something as simple as putting a paper invoice into a scanner the wrong way can thwart the accounts payable workflow.

Then, there are strategies mid-market firms can take to help suppliers streamline the payment process, too, like having vendors send PDFs of invoices instead of paper ones.

“A lot of companies that we’re seeing, they’re just so used to doing things that way,” Busch explained of the ongoing use of legacy tools, from paper documents to in-house systems.

Change is difficult, but with so many cloud-based AP solutions helping small companies save money, time and frustration, why can’t mid-market firms get the same? According to Busch, the benefits of migrating to the cloud would make enduring the change worth its while.

“That would help them out tremendously,” he said.



The PYMNTS Cross-Border Merchant Friction Index analyzes the key friction points experienced by consumers browsing, shopping and paying for purchases on international eCommerce sites. PYMNTS examined the checkout processes of 266 B2B and B2C eCommerce sites across 12 industries and operating from locations across Europe and the United States to provide a comprehensive overview of their checkout offerings.

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