If you thought cross-border payments were all about payments, think again. Rob Israch, CMO of the San Mateo startup Tipalti, said organizations that treat this complex and multi-faceted process as a simple international remittance miss the point.
To better serve customers with cross-border needs — and those who may be growing in that direction — Tipalti has added multi-entity capabilities to help them manage disparate accounts payable workflows while locking in consistent financial best practices, controls and reporting across the global enterprise.
“Calling it ‘cross-border payments’ is a gross oversimplification of the challenge,” Israch said. “It’s more of a ‘cross-border payables operation,’ with multiple process steps along the way. The payment is not the end of the process. It’s part of it, but there are pieces before and after.”
Some of those pieces, he said, include onboarding suppliers, reducing payment errors (which Israch says are commonplace in cross-border transactions), submitting reports and tax forms, following local rules and regulations, providing global payments reach (with the ability to remit via PayPal in one instance and by paper check in another, for example) and managing invoice versus non-invoice workflows.
That’s a lot to handle even for organizations that only have a presence in one or two countries, let alone ones with many entities across many nations.
As companies grow, Israch said, they often acquire or get acquired by other companies or branch off into sub-brands serving different functions in different places. Those sub-brands may need to make separate reports and must be able to show entity-specific data during audits to demonstrate that no single entity is encountering disproportionate financial issues or fraud risks.
Or, maybe their accounts payable process for the online marketplace entity pays employees based on analytics of services rendered (think Uber, which pays drivers based on how many miles they drive) — no invoices there. Yet another entity — say, an Uber-based food service — pays based on invoices received.
At the very least, acquired entities will likely want to retain their own sub-brand beneath the larger umbrella, said Israch. The multi-entity capability lets them do that.
Israch said the capability was in hot demand among the startup’s customers, which led Tipalti to develop a solution that could both centralize cross-border payments and give brands local control. The capability was rolled out with the startup’s early payments automation solution and AP Hub in June.