July 15, 2016
Let’s Talk Payments recently had the pleasure of talking to Karla Friede, Chief Executive Officer, Co-founder, and member of the Board of Directors at Nvoicepay. Friede has 20 years of experience in management, finance, and marketing roles in both large and early stage companies. Along with the founding team, she has grown Nvoicepay into a leading B2B Payment Network. Prior to founding Nvoicepay, Friede was President and CEO of privately held Zevez Corporation; VP of Marketing for GeoTrust (acquired by Verisign in 2006); Co-founder of The Ascent Group, a strategy consulting firm serving technology firms in the bay area; Director of Marketing at Mentor Graphics, and part of the PBAS team at KPMG. Friede received an MBA from Harvard Graduate School of Business and a BS in Accounting from University of Idaho.
Let’s Talk Payments: To start, could you provide a brief about Nvoicepay and its business model?
Karla Friede: Nvoicepay transforms the massive, expensive accounts payable effort that goes into paying suppliers into a single, simple automated solution that allows companies to pay 100% of their suppliers electronically. By most research estimates, US companies are still making at least 50% of their payments by check. We routinely talk to companies that are making as much as 70% of payments by check.
One reason is that electronic payments – as we’ve known them for the past few decades – are only partially electronic. The payment moves electronically, but there’s still a huge amount of manual effort on the front-end to get it ready to go through bank pipes, and on the back-end to reconcile and resolve questions or errors.
The irony is that in moving some of their payments to card and ACH products offered by banks, AP departments have reduced some costs and inefficiencies, but at the same time, they’ve introduced new ones. Banks have historically offered each payment method as a separate, standalone program, so now instead of one process, AP is juggling three separate partially manual processes.
We’re bringing all those processes together through our payment automation software where payments can be initiated using nothing other than the standard reports that come out of the company’s accounting system.
To go along with our payment automation software, we provide comprehensive supplier enablement services through our Payment Command Center to relieve AP of the huge burden of collecting supplier payment data, securing it and keeping it up to date.
By automating all payments, Nvoicepay unlocks AP resources and immediately reduces accounts payable costs by about 75%. Customers see a combined cost reduction and rebate benefit of $5/payment, so a customer making 50,000 payments a year will see benefits of $250,000 a year, every year.
Our business model is transactional so we get paid when our customers make payments, and we succeed when our customers succeed.
LTP: Recently, Nvoicepay unveiled a new cross-border payment offering called Nvoicepay AP Global. Can you please tell us more about this solution?
KF: Cross-border wire payments through a bank require an entirely separate process that sits outside the accounting system—you typically have to hand key the information in your bank portal and then manually key it back into your accounting system.
Companies have told us that although cross-border payments only account for 20 percent of their payments, managing the process takes up to 80% of AP time.We solve this problem by bringing cross-border payments into the same workflow, and provide payment visibility and control from initiation to successful completion.Cross-border payments have been a huge hurdle for many customers and our solution is such a relief. The customer feedback has been overwhelmingly positive.
LTP: In a recent press release, you made an interesting point on the issue of cross-border supplier payment that "it's hard to fathom that FedEx can ship a package around the world with greater visibility, reliability and at a lower cost than companies pay their international suppliers." Can you please elaborate a little more on this comment for our readers?
KF: When you send a package around the world, you enter the destination address, pay a fee, and receive a tracking number and alerts of where the package is and when it arrives. You know it's going to get to its destination and if it doesn't you'll be the first to know. The cost is not hidden. It's clearly communicated up front, and you know what it is when you send the package.
In contrast, once you enter your payment information into the bank portal, you have zero visibility into the progress of that payment until you get confirmation of receipt. If something goes wrong, the only way you’ll know is when the supplier contacts you to ask what happened to their money. That could be days or even weeks later. Since cross-border payments can pass through several correspondent banks on the way to their destination, tracking down a lost payment can be very time-consuming.
And, until the payment lands in the intended account, you don’t really know how much it costs you with fees and currency exchange. Cross-border payments have long been a source of big margins for banks. Unless your company is very large, you’re probably paying an expensive exchange rate. You may not even be able to figure out what it is, because it’s hidden in the transaction.
LTP: Can we say that Nvoicepay’s AP Global solution is unique compared to other solutions in the market?
KF: Absolutely. We don’t know of anyone who can provide a single, simple automated workflow for both domestic and international payments with visibility and control of all payments.
LTP: How do you see competition in this market for Nvoicepay and who are your biggest competitors?
KF: Today, we compete most often with banks, primarily because most corporations don’t realize that FinTechs are offering a much better way to do supplier payments. We’ve seen a lot of innovation in consumer payments over the past few years, but the B2B market is still in the early stages of its evolution.
The B2B payment market is huge—much bigger than consumer payments. The consumer market is $3-4 trillion; the B2B market is about $38 trillion. Because of the size of the market, I believe there will eventually be multiple winners, not just one or two. Customers will have choices, which they have not had in this market for a very long time.
LTP: We do see your customers in many verticals; does Nvoicepay plan to target any new verticals in the future or are there going to be customers across industries?
KF: We got our start in the automotive industry, but expanded into other verticals very quickly. You will continue to see Nvoicepay customers across many verticals because the inefficiencies we see with supplier payments are not unique to any specific industry.
LTP: What are the challenges that Nvoicepay faces currently and how do you see your future?
KF: Our biggest challenge today is managing our growth and customer demand. It’s a fun problem to have! I see Nvoicepay continuing on a path of rapid growth over the next few years, and continuing to innovate around payment technologies and services.