Eric Wilson is a good person to talk to about the growth of innovative financing solutions.
Mr. Wilson is the vice president of purchase-to-pay solutions at Basware, a company providing e-invoicing and purchase-to-pay solutions. His job includes traveling to visit clients and working on customized solutions with them while watching trends in the purchase-to-pay market.
Mr. Wilson has spent more than a decade in the field, long enough to see it evolve from rudimentary systems that often produced a bad user experience to ones addressing just purchase orders to more holistic e-procurement systems. As invoice processing and accounts payable systems became automated, customers needed more complex systems. Now the challenge is to align procurement and accounts payable systems into a single automated system. That is where customers see the biggest savings.
“The goal is to provide a user experience similar to external companies like Amazon,” Mr. Wilson explained.
He added that some avenues in the purchase-to-pay world are at the point of diminishing returns where the solutions are trying to save more money while squeezing every last drop of efficiency out of the existing solution.
The problem with that approach is you are doing no more than pursuing parity with your competition.
“The competitive advantage is realized not just in spending less but spending it smarter,” Mr. Wilson said.
In many companies, finance, treasury, accounts payable and procurement still operate in silos. There is value in looking for efficiencies not just within single departments, but across multiple ones.
“You have to think about all of it – the purchasing and payables transactions moving electronically within and outside your company. There’s so much paper out there,” Mr. Wilson said.
Companies work with providers like Basware to harness that data in an open commerce network and use it to pursue alternative financing solutions which reflect the unique revenue patterns of that business. Even just five years ago few expected to find value in harnessing accounts payable data to free up working capital.
Fraud is a concern for all businesses, especially those just beginning to learn the pros and cons of electronic finance. The best fraud prevention step in accounts payable is the first one and that is to automate the process, Mr. Wilson said. In addition to human error such as faulty data entry, an electronic system allows companies to instantly look at the whole, not individual invoices.
“All transactional data is harvested centrally,” Mr. Wilson said. “You’re not just watching for fraudulent invoices.”
That one invoice on its own may look fine, but when compared with the entire body of invoices, small anomalies can be detected that point to fraudulent activity.
With more than one million companies using its solutions, Basware has the ability to offer them unique value propositions. One is the Marketplace, a global catalog management tool that creates a consumer-style shopping experience for buying goods and services between businesses on the Basware network, which they say is the largest open B2B network in the world.
“Marketplace allows you to leverage your spend and create a community with other organizations or to pool your spend to get better pricing from suppliers,” Mr. Wilson said.
Say a company has to renew their janitorial supplies contract. In the past their options were to either renew it or go out to bid. Now they can go on to the Basware community and engage with other companies also looking at their janitorial supplies spend.
The next few years should bring further change, Mr. Wilson predicted. The structure of blockchain technology fits perfectly with the purchase-to-pay mindset. Machine learning and artificial intelligence should also become more prominent.
“Good accounts payable processing and procurement must be connected,” Mr. Wilson added. “If you’re capturing data electronically from your supplier network it gives you a future competitive advantage.”