accounts payable – Product Management Confabulation

August 2, 2023

As spend management space heats up, Brex and Rho turn to AI startups to help power new products

The competition in the spend management space continues to intensify.

Brex and Rho today each announced AI-powered/enabled accounts payables offerings.

Their announcements coincidentally came out the same day competitor Ramp announced it had expanded into procurement — further evidence that the companies in the space are clamoring to not only meet customer demand but presumably attempt to outdo each other in terms of what they can offer their customers to help control spend.

Specifically, Brex today revealed Payables, its AI-enabled Accounts Payable (AP) offering, while Rho announced new AI-powered Accounts Payable automation capabilities. Brex’s offering is live today while Rho said its new capabilities will be live later this month.

Via email, Brex co-CEO and co-founder Henrique Dubugras told TechCrunch that launching the new product had been “in the works” since the startup started building Empower, its spend management platform, over a year ago.

He noted that while Brex has used artificial intelligence for years in various capacities such as customer support and underwriting, what is new now is that it partnered with “multiple” machine learning companies such as Scale AI and Photon “to drive the highest accuracy of information extracted from invoices.”

Prior to this launch, Dubugras said that Brex offered a lighter version of bill pay that gave customers the ability to send scheduled and recurring payments. Now, he said they will “have even more advanced spend controls with multi-level approvals.”

For its part, Rho said it is offering AI-powered invoice and bill processing to its clients. Specifically, invoices sent to a designated AP inbox will “undergo automatic digitization” powered by generative AI technology.

In a statement, the company said the process “transforms the invoice into a bill and creates a corresponding liability in the client’s integrated ERP system. Clients can then authorize bill payments through Rho one by one or in bulk, with liabilities automatically marked as paid in the ERP.”

Rho CEO Everett Cook told TechCrunch via email that the new capabilities had been in the works for nearly a year, building on the company’s initial accounts payable release in 2021. Rho has partnered with OpenAI — a portfolio company of Rho investor DFJ Growth.

With the new product, he claims, customers will be able to “configure one-click workflows that help finance teams process thousands of payables in seconds.”

“Our position on generative AI is that it is only useful if it is grounded in tangible business value,” said Rishav Chopra, SVP of product & design at Rho.

Large opportunity

Besides wanting to better compete, both Brex and Rho expect their new offerings to increase revenue for their respective companies.

Dubugras said the new payables product should increase the percentage of customers’ spend processed via Brex.

“As a result, some of that spend will be on their Brex card, one way in which Brex earns revenue,” he told TechCrunch. “Plus, using a Brex business account for bill pay, another way in which Brex earns revenue, allows customers to send payments faster, eliminating ACH delays while also earning passive yield.”

Brex claims that it is unique relative to other companies in the market in that it is “the only player” with its own business account that can earn revenue in this way, allowing the company to offer payables for free. (TechCrunch has not independently verified this claim.)

Meanwhile, Rho’s Cook believes that while the “timing is pretty coincidental” with Brex’s announcement, he supposes each of their customers were telling them “the same things” — that “they’re fed up with their legacy AP providers and want a modern solution that’s directly integrated with the rest of their finance stack.”

Legacy providers include the likes of Bill.com and Concur.

Dubugras believes there is a lot of competition in the space for a very good reason, telling TechCrunch: “The spend management space is very dynamic and that is because the opportunity is so large across SaaS and payments. Beyond the noise there is still a lot of differentiation between the players.”

Rho’s Chopra also believes that the current macro environment has led to increased pressures on the part of CFOs and finance teams “to move faster than ever and operate leaner.” This in turn has — for obvious reasons — created more demand for spend management products.

Want more fintech news in your inbox? Sign up for The Interchange here.

March 8, 2022

Ex-Better.com CFO raises $10.8M to build Glean AI, or ‘accounts payable with a brain’

Having held the positions of CFO at digital lenders OnDeck and Better.com, Howard Katzenberg experienced firsthand just what a lack of visibility into company spend could cost an organization.

After spending three weeks analyzing spreadsheets at one point, Katzenberg and his team were able to identify $1.5 million in potential savings on about $12 million to $15 million of revenue run rate. That was money, he said, that could have gone toward one or two months of marketing to grow the business or hiring several engineers.

“After 10 years of being a CFO, I got fed up with my constant lack of visibility into vendor spend,” he told TechCrunch, “and recurring challenges my finance teams had in identifying where we were overspending.”

“Most of my time as a CFO was spent on the growth and revenue side of business, but once a year, I’d gather my finance team to do a manual audit of our vendor spend,” Katzenberg recalls. “We’d print out several months of invoices, and go vendor by vendor, and invoice by invoice to identify line items. Inevitably, we would find lots of what I call spend leakage. And that is just cash that is silently walking out the door that no one realizes.”

So, months after leaving his role at Better.com in 2019, Katzenberg set about coming up with automation technology that would help address those challenges for CFOs everywhere. In early 2020, he launched Glean AI, a startup which aims to help businesses save money by using machine learning to analyze things like deal terms, line-item data, redundant offerings and negotiation opportunities.

And today the startup is emerging from stealth with $10.8 million in pre-seed and seed financing from Contour Venture Partners, Infinity Ventures (from the team that led PayPal Ventures), B Capital, Portage Ventures, Amex Ventures and other prominent venture funds and fintech angels, it tells TechCrunch exclusively. About $3 million of those funds were raised in February of 2020, according to Katzenberg, with “just a team and a PowerPoint presentation.” Contour led both its rounds.

Corporate spend has been an increasingly crowded space as of late, with players such as Brex and Ramp introducing cards to help companies keep up with expenses. Also, Bill.com exists to help companies well, pay bills. Glean AI says it wants to take things a step further with automation that it says will give companies a way to pay invoices faster and reduce manual work while also analyzing line-item data. That analysis, according to Katzenberg, can provide companies with valuable insights and provide more context around their spend.

For example, he said, it can uncover when a company is subscribing to a service it no longer uses or was provided a trial subscription for but doesn’t need and identify missed opportunities to cancel a relationship or negotiate a renewal to get better pricing. It also picks up on redundant vendors or incorrect pricing on bills.

“By breaking invoices down by what was purchased and how much it cost – rather than just the total amount spent – we can understand trends, purchasing behavior and the opportunity for savings,” Katzenberg added. “With this information, we use algorithms to proactively identify areas where money is being misspent – such as excess licenses or incorrect pricing – as well as opportunities to help negotiate better deals with vendors based on our aggregated benchmarking data.”

As such, he describes Glean AI as a “strategic Accounts Payable (AP) platform.”

“We’re building not just a front end product to support these finance teams, but also an accounts payable product that can manage payments,” Katzenberg told TechCrunch. And as part of its emerging from stealth, the company is also launching international payments.

Image Credits: Glean AI

So far, Glean has customers such as Orum and Alloy, among others.

Its typical client is a Series B and Series C company that is growing 100% year over year, with a small finance team, Katzenberg noted.

“They are maybe getting increasing pressure from their board to put better financial controls in place for more visibility and performance,” he said. “And now especially, I think there’s a lot of scrutiny just around burn rates and extending runway given market volatility.”

While some of Glean’s first customers are in the fintech community, largely because of Katzenberg’s network, he believes that “any business can benefit from Glean, especially those focused on cash flow rather than driving top line growth.”

Early in the company’s life, Katzenberg enlisted Ankur Patel to serve as its co-founder and head of data science and Alexander Jia as a co-founder and head of product. Presently, the company has about 30 employees located in eight countries. It does have an office in New York City.

Glean plans to use its new capital to continue to focus on product and engineering as well as build out its go-to-market strategy.

Investors are naturally bullish.

“”We invested in Glean because they make it easy for businesses to dig into their invoiced spend and uncover potentially wasteful spend,” said Amex Ventures Managing Director Margaret Lim. “Using Glean, businesses can optimize their vendor spending in a way that has not been possible before.”

Matt Gorin of Contour Venture Partners said he worked closely with Katzenberg when he was CFO at OnDeck, which he helped take public in 2014 and thus, his confidence in the founding team is “extremely strong.”

“There are many businesses in the accounts payable space, and they are largely focused on making payments faster and easier, but not intelligent,” he told TechCrunch. “Glean AI considers fast and easy table stakes. The magic is that they are able to surface insights through their technology that actually saves customers money and the platform enables finance teams to play a more strategic role within their businesses.”

My weekly fintech newsletter is launching soon! Sign up here to get it in your inbox.

December 8, 2021

Accounts payable automation startup Tipalti raises $270M, quadruples valuation to $8.3B

Tipalti, once a fintech unicorn, is now nearing decacorn status.

The company, which automates accounts payables for mid-market companies, announced today that it has raised $270 million in a Series F funding round that values the company at $8.3 billion. That’s up from a $2 billion valuation at the time of its $150 million Series E round in October of 2020.

In a nutshell, Tipalti uses artificial intelligence to help businesses manage suppliers, invoices, purchase orders, tax compliance, payments and billing and other accounting services from a single cloud platform. It claims to reduce companies’ operational workload by 80% by giving them the ability to pay partners and vendors in “within minutes.”

As mentioned above, the company is focused on mid-market businesses, which are defined as those with revenues between $10 million and $1 billion. In the U.S. alone, mid-market companies account for more than a third of employment and about 40 percent of GDP. Another large player in the space, Bill.com, is focused more on SMBs. That company went public in December 2019 and is currently trading at $254.76, significantly higher than the $22 a share it priced its shares at the time of its IPO.

“I think the market has a proper appreciation for the size of market opportunity we’re facing,” CEO and co-founder Chen Amit. “Our multiples over the last 12 months have increased because of that new appreciation.”

G-Squared led Tipalti’s latest round, which also included “significant” investments from new backers Marshall Wace as well as funds and accounts managed by Counterpoint Global (Morgan Stanley), in addition to current investors Zeev Ventures, Durable Capital Partners, 01 Advisors and others. The financing brings the company’s total raised since its 2010 inception to $550 million.

Tipalti’s new valuation — more than quadruple that of its last — catapults the San Mateo, California-based startup to among the most valuable private fintech companies in the world, according to CB Insights.

So what has it done to warrant such a jump? A few things, according to Amit.

For one, it currently processes over $30 billion in total annual payments volume — growing 120% year over year. It also recently passed the 2,000 customer mark. Those customers include Roblox, Amazon Twitch, GoDaddy, Roku, WordPress.com and ZipRecruiter, among others.

For some context, at the time of its Series E raise in October 2020, Tipalti said it had seen transaction volume on its platform balloon to $12 billion, up 80% from the year prior. It then had some 1,000 customers on its books.

Also this year, Tipalti opened new offices in London, Plano, Texas, and Toronto Ontario, and has grown to 720 employees worldwide compared to 350 last year. It also launched “enhanced capabilities,” including the acquisition and integration of cloud procurement solutions provider Approve.com, enhanced multi-entity AP capabilities, virtual cards, mobile and added new integrations with complementary financial tech stack providers such as expense management companies.

But that’s just the beginning, according to Amit.

“This latest investment will enable Tipalti to add more to our product lines and capabilities in the next 18 months than we have over the past 10 years combined,” he said. “The broader challenge of financial operations for high growth and mid-market companies encompasses many problems and challenges they have and that creates more opportunity for us to monetize.”

Tipalti will also use its new capital in part on customer operations, as well as toward a global expansion. It also plans to hire across its product, engineer and sales and marketing teams.

“We expect to double our go-to-market team next year,” Amit told TechCrunch. “The addressable market we have today is around 700,000 companies with very little penetration between us and the few other players in the market. So we want to reachout to more of these prospects.”

Larry Aschebrook, founder & managing partner of G Squared, said in a written statement that his firm believes that “Tipalti is reshaping how businesses manage their financial operations.”

“Their growth and industry-leading retention rates are evidence that they are on a mission to solve important challenges for their customers,” Aschebrook added. “We see a huge opportunity in the target market that is largely underserved currently.”

In his view, Tipalti has approached a complex and often low-tech set of essential business processes and “meticulously crafted a solution with simplicity at its core.”

Tipalti receives $150M at a $2B+ valuation after its accounts payable platform sees a surge in use

November 11, 2021

Flexbase unveils construction industry’s first credit card

Flexbase is turning construction financing on its head with a new credit card — the industry’s first, according to the founders — that offers up to 60 days interest-free financing.

The company, which develops automated payments tools for contractors and the construction industry, was started by Zaid Rahman and Hadi Solh to target small- and mid-sized businesses.

Rahman, a Theil Fellow, and Solh grew up in construction families, hearing stories around the dinner table of cash flow pain points. When Rahman’s father, who ran a construction company in Dubai, had a customer not pay a multimillion-dollar invoice, he suffered a heart attack. Rahman and Solh joined to form Flexbase so companies would have easier access to capital so that cash flow problems could be avoided.

“Most construction companies are either broke or one degree away,” Rahman told TechCrunch. “One of those reasons is that most clients don’t like to pay on time. Another is that banks don’t like construction companies because of that cash flow problem, so the company is less likely to get short-term capital. That is also why they go bankrupt so often.”

Any construction company can apply for Flexbase Card, which is launching in Houston first, but the co-founders said those who use the card with the other Flexbase tools will be able to gain deeper insight into the company’s financial data and be eligible to borrow larger credit amounts.

Solh referred to the 60 days of financing as “a game-changer” for an industry where it typically takes more than 100 days to get paid. One of the drivers for that is that while the typical invoice can be one or two pages, construction invoices can easily be 50 to 100 pages, which includes state and county compliance documents. If even one piece is missing, the entire invoice can be rejected, Rahman said.

By automating expense management, Flexbase can reduce the time it takes for invoices to flow between accounts receivables and accounts payable and decrease the time to payment by 50 days.

“You can’t evaluate construction companies like other businesses when it comes to capital, but by doing the underwriting, we provide companies with enough credit to grow their businesses,” Rahman added. “We are providing you enough credit in two minutes to grow the kinds of projects and the client base.”

Despite the hype, construction tech will be hard to disrupt

August 30, 2021

Square to launch a new paid subscription, Invoices Plus

Square’s popular free invoicing software is becoming the company’s next big subscription service. The company is poised to announced a paid subscription offering called Invoices Plus, which will offer sellers a set of advanced features, including some that had previously been available with the free service. The service itself had been quietly introduced to individual sellers, but has not yet been publicly announced.

Some sellers who were already using Square Invoices were recently alerted to the upcoming changes via email.

In the announcement shared with some sellers (the details of which can also be viewed here on a Square Seller Community forum), the new subscription will include a series of features that were released in the past year as part of a limited trial.

This includes multi-page estimates, custom invoice templates, and custom invoice fields. These will now become a part of Invoices Plus, as will two other features: the ability to automatically convert accepted estimates to invoices and the ability to build milestone-based schedules (three-plus installment invoices). Square’s announcement said it will introduce a “trial” button next to these features in the Square Invoices software to alert customers to the upcoming capabilities. (see below)

Image Credits: Square website

Square’s free invoicing software will not go away, the announcement noted. Sellers will be able to send unlimited invoices for free, as well as estimates and contracts, with the free plan. Free users will also be able to use invoice tracking, reminders and reporting tools.

The free plan has historically relied on processing fees to generate revenue. At present, this is 2.9% + $0.30 per invoice paid online by check or debit card plus a 1% fee per ACH transaction, per Square’s website. (Fees are slightly lower on in-person transactions and slightly higher for “card on file” transactions.) Pricing for the new, paid subscription has not yet been publicly announced.

A Square employee had explained the reasoning behind the change on the community forum site. They noted that many of Square’s other products — like Square Online, Appointments, Square for Retail, and Square for Restaurants — also offer both a free and paid tier. And although Square charges processing fees for Square Invoices, they aren’t enough to fuel its product development. With Invoices Plus, they said, the company aims to compete more directly with paid invoicing apps and products and the more advanced features those products offer.

Reached for comment, Square confirmed to TechCrunch Invoices Plus is a software subscription the company plans to announce shortly. But the company didn’t want to share more details until the news is official.

References to the new subscription have also already made their way to the Square app’s code, where they were spotted by iOS developer Steve Moser. The code indicates users who previously used some of the paid-only features will be able to still use them for the time being. But as the announcement had also noted, sellers would not be able to use the paid features for free the next time they’re creating new files with Square Invoices.

Image Credits: Steve Moser

The new service arrives shortly after Square announced earnings, where it noted its seller business brought in $1.31 billion in revenue (out of the total of $4.68 billion) and $585 million of gross profit in the second quarter, driven in part by continued strong online growth. The company also announced its plan to acquire the buy now, pay later giant Afterpay in a $29 billion deal, speaking to its interest in chasing the broader payments market. The deal also offers Square a way to connect its different products, by allowing Afterpay customers to pay their monthly installments through Square’s Cash App, the company said.

An integration between Square and Afterpay is something that could be seen further down the road, as well, one could imagine. That’s something Square also hinted towards in a response to another seller on its community forum site, where a rep updated an older answer to share news of the acquisition, adding Square didn’t “have integration timelines to share at the moment.”

August 2, 2021

Yaydoo secures $20M, aims to simplify B2B collections, payments

It’s no secret that the technology for easy business-to-business payments has not yet caught up to its peer-to-peer counterparts, but Yaydoo thinks it has the answer.

The Mexico City-based B2B software and payments company provides three products, VendorPlace , P-Card and PorCobrar, for managing cash flow, optimizing access to smart liquidity, and connecting small, midsize and large businesses to an ecosystem of digital tools.

Sergio Almaguer, Guillermo Treviño and Roberto Flores founded Yaydoo — the name combines “yay” and “do” to show the happiness of doing something — in 2017. Today, the company announced the close of a $20.4 million Series A round co-led by Base10 Partners and monashees.

Joining them in the round were SoftBank’s Latin America Fund and Leap Global Partners. In total, Yaydoo has raised $21.5 million, Almaguer told TechCrunch.

Prior to starting the company, Almaguer was working at another company in Mexico doing point-of-sale. His large enterprise customers wanted automation for their payments, but he noticed that the same tools were too expensive for small businesses.

The co-founders started Yaydoo to provide procurement, accounts payable and accounts receivables, but in a simpler format so that the collection and payment of B2B transactions was affordable for small businesses.

Image Credits: Yaydoo

The idea is taking off, and vendors are adding their own customers so that they are all part of the network to better link invoices to purchase orders and then connect to accounts payable, Almaguer said. Yaydoo estimates that the automation workflows reduced 80% of time wasted paying vendors, on average.

Yaydoo is joining a sector of fintech that is heating up — the global B2B payments market is valued at $120 trillion annually. Last week, B2B payments platform Nium announced a $200 million in Series D funding on a $1 billion valuation. Others attracting funding recently include Paystand, which raised $50 million in Series C funding to make B2B payments cashless, while Dwolla raised $21 million for its API that allows companies to build and facilitate fast payments.

The new funding will enable the company to attract new hires in Mexico and when the company expands into other Latin American countries. Yaydoo is also looking at future opportunities for its working capital business, like understanding how many invoices customers are setting, the access to actual payments, and how money flows out and in so that it can provide insights on working capital funding gaps. The company will also invest in product development.

The company has grown to over 800 customers, up from 200 in the first quarter of 2020. Its headcount also grew to 100 from 30 during the same time. In the last 12 months, over 70,000 companies have transacted on the Yaydoo network, and total payment volume grew to hundreds of millions of dollars.

Yaydoo is a SaaS subscription model, but the new funding will also enable the company to create a pool of potential customers with a “freemium” offering with the goal of converting those customers into the subscription model as they grow, Almaguer said.

Rexhi Dollaku, partner at Base10 Partners, said the firm saw the way B2B payments were becoming modernized and “was impressed” by the Yaydoo team and how it built a complicated infrastructure, but made it easy to use.

He believes Latin America is 10 years behind in terms of B2B payments but will catch up sooner than later because of the digital transformation going on in the region.

“We are starting to see early signs of the network being built out of the payments product, and that is a good indication,” Dollaku said. “With the funding, Yaydoo will be also able to provide more financial services options for businesses to address a working fund gap.”

All B2B startups are in the payments business

March 18, 2021

Homebrew backs Higo’s effort to become the “Venmo for B2B payments” in LatAm

The B2B payments space has been on fire for a while, and the COVID-19 pandemic has only fueled mass adoption of digitizing finances.

In regions like Latin America, the need for innovation in the sector is even more paramount than in the United States with so many people still relying on outdated processes.

One Mexico City-based startup, Higo.io, is out to transform B2B payments for SMBs (small and medium-sized businesses) in Latin America, starting with its home country.

Rodolfo Corcuera, Juan José Fernández and Daniel Tamayo founded the company in January 2020, recognizing that the process of paying vendors for business owners is largely “manual and cumbersome.”

“In Mexico, small businesses mostly handle payables with nothing more than spreadsheets and email and legacy bank accounts,” CEO Corcuera said.

The trio formed Higo to automate processes and provide visibility into cash flow, particularly for small businesses. “Informal” businesses make up about 23% of Mexico’s GDP, according to data from INEGI, the government’s National Institute of Statistics and Geography. Higo launched its SaaS platform last November.

And now the startup has raised $3.3 million from a group of U.S.-based investors including Homebrew (which led the round), Susa Ventures, Haystack and J Ventures. The round is the latest in a string of fintech-related fundings in Mexico that TechCrunch has covered as of late.

Higo wants shake up the payments scene in the region by creating an alternative to traditional banking for businesses to pay each other.

“We want to build the Venmo for B2B payments in Latin America,” Corcuera told TechCrunch.

Ultimately, the goal is to help SMB owners deal less with tedious tasks and more on generate revenues and profits for their businesses. Customers so far include hundreds of small business owners and the company aims to have “thousands” of customers by year’s end.

“E-invoicing is ubiquitous in the States and in the U.S., receiving a PDF invoice is enough,” Corcuera told TechCrunch. “But in Mexico, it has to be electronic to be [tax] deductible by law. With our platform, invoices are automatically populated so businesses can have visibility into what has to be paid, what vendors they owe and when they owe.”

Corcuera is no stranger to running companies, having launched a housecleaning marketplace at the age of 23 in 2013. He also founded Tandem, an office management platform, in 2018, to help office managers streamline their procurement needs. As is often the case for founders, it was during the process of growing that company that Corcuera realized how painful and time consuming it was for businesses to manage their payables and receivables. That led him to come up with the concept behind Higo.io.

Gallardo was previously COO at Swap, a Mexican challenger bank, and also was one of the founding members of Uber’s Mexican operations.

Looking ahead, Higo plans to use its new capital in part to boost its six-person staff, particularly beefing up its engineering team so that it can “scale as fast as possible,” according to Corcuera.

For now, the company’s efforts are focused exclusively on the Mexican market, which in of itself is huge.

“Later we will expand in Latin America. We see a very clear opportunity in similar markets across the region,” Corcuera said.

Homebrew Partner Satya Patel said his San Francisco-based VC firm believes there’s a massive opportunity in Latin America given the move to digital payments. The investment in Higo marks Homebrew’s third in the region in the past 18 months.

“This is an exceptional team focused on a problem that is visceral for businesses in Mexico in particular,” Patel told TechCrunch. “They are able to provide businesses with a real-time view of their cash flow and working capital. Without it, they are at risk. So the opportunity is to tackle this acute pain point being felt by a lot of businesses.”

The region’s payments ecosystem, he said, is still very nascent.

“Being the intermediary for B2B tax information gives Higo an opportunity to provide a real alternative to the traditional way Mexicans are used to doing banking and business,” Patel added.