Settle Says Future of CPG Payables Is Industry Specific and Cash Flow Optimized

Think of the consumer packaged goods industry, and you think of the monoliths.

Procter & Gamble, for example, has been around since 1837 and has 65 brands on its current roster. Colgate-Palmolive has been in business since 1806 and has 32 brands.

What gets lost in the discussion are the startups and mid-sized companies that enter the business and sometimes exit. Each year, 30,000 new CPG brands launch, but only 15% of them get past the first few years of their existence, Alliance reported, citing figures from Nielsen.

But they all have one thing in common: a need for cash flow and cash flow management. With that in mind, FinTech firm Settle combined a working capital solution with accounts payable (AP) automation and other cash flow management tools. It added a new level of detail to those tools Thursday (Aug. 8), further making its case for specialized financial technology solutions.

“It is incredibly difficult for CPG businesses to plan,” Settle CEO Alek Koenig told PYMNTS CEO Karen Webster. “And one of our jobs here should be to give them the tools to be able to plan better and make smarter decisions.”

The Settle platform is designed to provide a comprehensive view of cash flow. The holistic approach ensures that all product lines work better together, ultimately helping businesses grow more efficiently, while the enhanced financial control allows CPG businesses to make informed decisions, optimize working capital and allocate resources more effectively.

The company announced two new features for its CPG suite Thursday: landed costs and Universal Catalog. Both have unique properties in the context of the CPG vertical.

New CPG Suite Features

Landed costs are the total costs of getting a product from the factory to a customer’s door and can be hard to predict at CPG scale. Landed costs include shipping fees, insurance, and any customs and duties due if the goods cross borders.

Universal Catalog is Settle’s product information management solution built for CPG brands that is natively synced to the end-to-end procurement cycle. Universal Catalog integrates with brands’ sales platforms (e.g., Shopify), warehouse management systems and accounting systems to ensure product information is accurate.

Product lines and bills of materials are managed with Universal Catalog, which Koenig said will form the foundation for faster, more efficient and reliable inventory management and forecasting. By automating these calculations, the platform provides businesses with a clear understanding of their variable costs, enabling better pricing and margin management.

At the heart of the Settle CPG suite is AP automation, and as Koenig told PYMNTS, he believes the future of this function lies in vertical-specific solutions. Koenig added that he doesn’t foresee a short lifespan for blanket AP platforms, but at the same time, he anticipates a growing number of vertical players addressing unique requirements of different industries, ultimately diminishing the dominance of non-specialized offerings.

“Over time, these vertical players nibbling at the feet of blanket platforms might lead to their decline unless they branch out into these vertical solutions themselves,” he said.

By addressing the inefficiencies in traditional AP systems and integrating innovative features, innovative AP platforms are already setting new gold standards in the financial operations of leading companies.

“There’s a lot of work financial and operations people are doing over and over and over … automation can make that a lot easier for them and give them time back,” Koenig explained.

In an industry like CPG, where margins are thin and efficiency is paramount, companies are constantly seeking ways to optimize operations and reduce costs, positioning AP transformation as a strategic imperative for firms looking to leave traditionally cumbersome and resource-intensive workflows behind by embracing modernization.

The AP process in CPG companies involves managing a high volume of transactions, from processing invoices to ensuring timely payments to suppliers.

“There’s probably like 10 to 15 types of software [that companies] are using,” Koenig explained, referring to the various Software-as-a-Service (SaaS) systems a typical business might employ. By building components natively that always work together, Settle can save time for businesses, helping them streamline operations and reduce costs.

Traditional manual processes often lead to inefficiencies, such as time-consuming data entry, lost or misplaced invoices and lengthy approval cycles. These inefficiencies can result in late payments, strained supplier relationships and missed opportunities for early payment discounts.

Integrating With ERP Systems

One of the decisions Settle made early on was not to replace existing enterprise resource planning (ERP) systems but to integrate seamlessly with them, Koenig said, highlighting integrations with popular systems like QuickBooks, Xero, NetSuite and others.

This strategy allows the company to focus on making the AP process more enjoyable without the monumental task of building an ERP system from scratch. Instead, the company aims to make processes like paying vendors and creating purchase orders “delightful,” Koenig said, a term rarely associated with such tasks.

Koenig’s own past career showed him how “account payable software was very clunky to use” and “wasn’t really enjoyable.”

“I hated logging into it,” he said.

That’s what inspired him to create Settle.

One of the most intriguing aspects of Settle’s solution is its potential to use data for competitive advantage, Koenig said. He said he is adamant about protecting customer privacy but sees value in providing anonymized benchmarks to help businesses understand how they perform relative to their peers.

“Maybe you want to negotiate better vendor terms, or maybe you’re paying too much for shipping,” Koenig said. “Being close to this information for the brands we work with will hopefully attract other brands to come.”