![]() In our conversations with buyers of AP software, we found that the mid-market segment is the most frustrated with existing solutions: nearly all the buyers we spoke to expressed an openness to switching vendors. Small and medium businesses bear the brunt of these challenges, as they have lagged behind large enterprises in adopting automation. As consumers get accustomed to instantaneous, digitized payments in their personal lives, they expect the same from business payments. The lack of automation means that the average invoice takes about 34 days to process! Contrast that with consumer to business payments: despite being a fraction of the size of B2B payments ($4T compared to $25T for B2B), consumer payments are far more advanced when it comes to automation: less than 30% of consumer payments are made by cash or check compared to 50% for B2B payments. However, the majority of these payments are made using paper checks, resulting in inefficient, costly, and fraud-prone Accounts Payable (AP) processes. An integration between the GL (e.g., Quickbooks) and ensures that accounting entries are appropriately reconciled and there are no errors during the close process.Īcross the US, B2B payment volume is estimated to be as high as $25T. The completed payment is then recorded in the company’s general ledger. Once a payment is approved, transfers the appropriate funds from the customer’s bank account to the supplier. The B2B payments provider, say, routes the invoice to the appropriate person(s) within the company for approval. Transactions can take a wide variety of forms - a marketplace assessing how much to pay contractors on its platform to an invoice from a software vendor to an insurance company managing policy payouts. If fintechs can find the right feature set, which we will dive into below, mid-market B2B payments represent a large, underpenetrated market opportunity.Ī typical transaction goes like this: a supplier or business generates a list of payments owed for goods or services rendered. Today, the biggest players in B2B payments are companies like, AvidXchange, Coupa, Tipalti, and others.Īcross the spectrum of buyers from small to large companies, we found the mid-tier segment to be the most attractive: Almost all the buyers we spoke to in this segment expressed frustration with their current solution and a willingness to try something better. Secondly, there is a SaaS component, which includes workflows to help finance teams process payment approvals, reconcile the books and detect anomalies/fraud. Firstly, there is the payment itself: facilitating ACH, check, credit, and virtual card payments between companies and their suppliers, usually charged for on a per transaction basis. It is a large market - projected at ~$125T globally - and is largely manual today but has inherently viral properties (whenever a company pays a bill, it automatically connects their system with their suppliers’, hence creating opportunities for viral growth.) At the most basic level, there are two components to a B2B payments offering. One area of the stack that we believe is ripe for more innovation is B2B payments, i.e., the process through which businesses make payments and get paid. ![]() ![]() At Redpoint, we have been excited about the CFO tech stack for many years now and have written about our point of view on gaps in the market, the current landscape and buyer personas.
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