October 20, 2020- Information gaps. Asynchrony. Paper checks and paper invoices. Suppliers have payment preferences, buyers are reticent to grant them.

But the pandemic is generating the tailwind to bring accounts payable and accounts receivable departments in closer collaboration. Along the way, as those lines of communication improve, the payments experience tied to B2B — an area that has gotten scant attention until now — can be improved too.

To that end, Craig O’Neill, CEO of VersaPay, which focuses on the order-to-cash cycle, told Karen Webster that the digitally-driven transition to accounts receivable and B2B automation is well underway. With a bit of from M&A to help hasten things — and create an end-to-end AR/AP payments network that eliminates the silos that have been a hallmark of transactions between mid-market firms.

VersaPay, which itself was taken over by Great Hill Partners (a private equity firm) in February of this year, said Tuesday (Oct. 20th) that it had completed a merger with payments services provider Solupay in a bid to strengthen and broaden AR automation and integrated payments for middle-market to enterprise class businesses.

Terms of the deal were not disclosed, and the combined companies will operate under the VersaPay name.

“We think we can be the last mile for AP vendors and payment networks,” said O’ Neill of the combined entity.

In terms of mechanics, through cloud-based ERPs adding Solupay will help VersaPay’s roster of more than 8,000 clients simplify payment acceptance and invoice presentment, automate AR processes and embed integrated payments across VersaPay’s estimated $10 billion in annual payments volume.

O’Neill said that the mid market space, as defined by VersaPay, is populated by firms with $20 million in revenues up to roughly $500 million in top lines who are showing an increasing willingness to invest the time and money needed to modernize B2B payments.

In bringing VersaPay and Solupay together, said O’Neill, the overarching theme is to make it easier for suppliers to get paid, and buyers to pay them.

That’s no easy task, said O’Neill, who noted that, from a high level, B2B payments have been slow to move to digital because a significant number of larger suppliers are still grappling with checks. They’re still extracting data from remittance forms that come with checks, digitizing that data and performing a slew of manual tasks in back offices.

But there’s been markedly greater interest, as COVID-19 has disrupted day-to-day operations, on the part of financial executives to have systems talking to one another and streamlining inefficient B2B activities (after all, said O’Neill, where system data flow, dollars flow too).

Issues Around Timing – And Fidelity

Speaking from the suppliers’ perspective (VersaPay’s core audience), O’ Neill said B2B payments fall across several categories: Namely, there are payments that happen as orders are taken, at the point of sale or across eCommerce environments.

Those in-the-moment payments are payments that happen synchronously with the order, said O’Neill, and are relatively simple. To remove friction at the back end, it’s important to have good integration with ERP. Then there are the payments that happen after the order is placed — the orders that are associated with accounts receivables.

But payments that are left to the AR part of the cash cycle are an order of magnitude more complicated, he told Webster. There’s room for confusion, and the “fidelity” of the payments, and the information surrounding them, may be less than transparent.

In closing the information gap inherent in that B2B activity, he said, high fidelity, smarter transactions would come into suppliers with clear, automated information as to what payments are being made, why they’re being made, and where they are going.

“With the collaborative environment, it’s almost like a social network for businesses,” O’Neill maintained.

Technology, he told Webster, acts as an enabler of that collaboration — with a customer-centric focus that has driven more than 80 percent adoption rates across all of VersaPay’s clients’ own customer bases.

The fundamental issue boils down to a lack of connectivity between the buyer and seller. While effort (and strides) have been made on automating AR, and a focus on the supplier side of the equation, now attention is being paid to making the buyers’ payment experience better and more intuitive.

Payments, in other words, become simply another information and data stream, helping to break down silos between buyers and suppliers and intracompany silos as well. Buyers, he noted, can click on links embedded in suppliers’ emails to view checks that the buyers have sent, along with details tied to invoices.

Looking Toward Scale

While VersaPay does not (yet) have the scale to be termed a network, O’Neill maintained, growth is being logged at a healthy, quarterly double-digit percentage rate. And he noted that if a network connects with VersaPay, the firm has distribution to half a million to a million companies, where there can be seamless, collaborative, interaction between those firms.

The ease of collaboration, the social-network flavor of tech-enabled communications between buyers and suppliers fosters a better customer experience that is akin to the app-enabled commerce that marks consumer payments.

O’Neill noted that the workforce is becoming increasingly dominated by millennials who are used to dealing with life lived online, and where there are expectations of a range of payment choices, across early payment and card options.

With the pivot toward digitization, payment choice and automated AR processes, he said paper checks are going to go away, in favor of much more intuitive and embedded transactions.

“As consumers, we've moved online and we expect great online experiences,” he told Webster, adding: “Why would it be any different for business customers?”