Equipping B2B Accounts Receivable to Thrive in the Digital Age with Nancy Sansom of Versapay
Why have mid-market companies been ignored when it comes to payment and automation transformation? In this episode of PayPod, host Jacob Hollabaugh sits down with Nancy Sansom of Versapay to discuss their company’s focus on B2B fintech and its offerings in payments and automation. Versapay is the first Collaborative Accounts Receivable Network. Watch this episode for a fun and interesting dive into this latest development in payments and fintech.
Payments & Fintech Insights In This Episode
- Mid-market companies with annual revenue between 50 million and a billion have complex invoiced cash processes and are ready for transformation.
- Versapay has three main products: B2B payments technology, collaborative automation, and AI-based cash application.
- Fraud and risk are major concerns in payment processing, with check fraud and ACH fraud being common issues faced by businesses.
- Versapay provides a collaborative portal that automates the handling of virtual card information, application to invoices, and integration with ERPs.
- Versapay aims to build a network that connects buyers, suppliers, and ERP systems to improve relationships and streamline payment processes.
- The goal is to provide more choice to customers, improve their overall experience, and offer real-time visibility into accounts through automation.
Nancy Sansom : Versapay
Versapay is the first Collaborative Accounts Receivable Network. Their AR automation solutions and next-generation B2B payments network make billing and payments easier for enterprises, increasing efficiencies, accelerating cash flow, and dramatically improving the customer experience. They’re based in Toronto with offices in Atlanta, Cleveland, Baltimore, LA, and Las Vegas, Versapay is owned by Great Hill Partners, a Boston-based technology investment firm.
Featured on the Show
PayPod is the leading voice in the payments and fintech industry, covering payments, risk management and new technology. Host Jacob Hollabaugh interviews leaders who are shaping the payments and fintech world, as they discuss the latest developments in the payments and fintech industry.
Jacob: Welcome to PayPod, the Payments Industry podcast. Each week, we’ll bring you in-depth conversations with leaders who are shaping the payments and fintech world from payment processing to risk management and from new technology to entirely new payment types. If you want to know what’s happening in the world of fintech and payments, you’re in the right place. Hello, everyone. Welcome to PayPod. I’m your host, Jacob Hollabaugh. And today on the show, we are diving once again into the world of B2B commerce and taking a specific look at the accounts receivable department while hopefully touching on some different factors that all merchants or all businesses should be considering when dealing with different partners within the payments ecosystem. As always, I need an expert much smarter than myself to help walk me through these topics. And fortunately, I’ve got just that. Joining me today is Nancy Sansom, chief commercial Officer at Versapay, the first collaborative Accounts Receivable Network, helping merchants to accomplish more, get paid faster and deliver better experiences. Nancy, welcome to the show. Thank you so much for joining me.
Nancy: Thanks for having me, Jacob. This is going to be fun.
Jacob: Yes, I’ve been greatly looking forward to this. Let’s kick things off. Talking a little more kind of high level before we actually get to Versapay and what you’re doing there with that company. B2B commerce has become, as I referenced in that intro, a much more frequent topic on the show throughout this year. And I’ve been fascinated to hear different responses from different people to this first question I have for you, and I’m going to be equally fascinated to hear your take on it. Why do you think the B2B world has lagged so far behind the B2C world from a payments and overall digitization standpoint? What do you see as having been the greatest points of friction holding this whole industry back in comparison to the B2C counterparts?
Nancy: I think it makes sense that it’s been lagging. There’s so much complexity in the B2B process that just isn’t there in B2C with paying on terms. For example, you’ve got partial payments. Your suppliers want to offer different types of payment to different clients that present different levels of risk. You’ve got incentives, disputes that are happening, goods arrive and they’re damaged. And now you want a little back and forth there. Also, you’ve got the payments coming in completely separate from remittance information. And now you’ve got to match this process up and do it all of this complexity at huge volumes depending on the industries especially, but also you’ve got integrations with ERP and accounting systems that are imperative and a lot of the ERP or legacy systems that are in place with businesses are a little bit outdated. So I think that holds them back a little bit. And then the card networks have more complex requirements around businesses to optimize interchange and that kind of thing. So when you take all those things together and then throw high volumes at these AR teams using antiquated tools, it makes sense that they would take a little bit longer to catch up and be fully digitized.
Jacob: Yeah, certainly. And that’s definitely been of the consensus that has slowly been building. As I’ve asked a lot of folks that question, that strain of it definitely is the part that’s always there over and over is that it’s very complex over here. And it turns out the B2C world just isn’t all that complex. And for new businesses entering or new products and disruption, it’s easier to first go where things are a little easy and it can be more efficient. And then down the road you fill that market up, you reach its natural end point. And now the only place left to go is I guess we can try to tackle some of this complexity over here and this massive web and within the web that is the B2B world and B2B payments. There is more specifically accounts receivable, which is what you and Versapay deal with directly. What is it that about accounts receivable specifically that makes it so difficult from a payments processing perspective?
Nancy: We did this study last year with this company, Wakefield Research, and basically three and five C-level executives agree that our departments were just left behind. First of all, it’s thought of as a back office process. So it’s like your HR team, it’s like they get the IT resources last. And I think within finance, CFOs started with the AP side and so the AP side is a lot more mature. AR has been the last thing. So whereas in our lives we use tools to collaborate all the time and we’ve got great tools for our engineering teams. For example, at Versapay, the R team tends to be the ones that just get Deprioritized. So here they are using these old tools. They don’t have the ability to collaborate with customers. We call it the AR Disconnect. So it’s like the AP team from their buyers and the AR teams. They don’t have an opportunity to collaborate like everywhere else in the world does. And I think part of the reason is just thinking of them as back office I don’t think is really right, because the invoice to cash process does impact clients. You have disputes that come up. You’ve got miscommunications. In that same study we did, we found that 50% of payment delays are caused to miscommunications, human errors, things that just need to be resolved.
Nancy: And you can’t necessarily automate all of that away. You can automate to improve efficiencies, but if you think of it as back office, you’re going to underestimate what you can really do with the process and how much you can transform it and make it a good experience for clients. And most C-level execs are thinking about customer experience. That’s how we measure our effectiveness. And so if you think, Oh, it’s a back office thing, you can throw some bodies at it until you can’t because maybe you’re too cash constrained or whatever because of Covid or So Covid accelerated a lot of this for AR teams. But as companies move digital and actually made things a little harder for some of those AR people because now the digital payments are actually in some ways harder to accept than a cheque that had the invoice number written on it. Now they’re trying to match all this information. So I think it’s been chaotic for the AR team. They’ve been trying to hold things together in an inflationary environment where cash is everything without these tools. So it’s time, it’s their time to get some tools and some attention and also focus on the customer experience part of what they do as well.
Jacob: Yeah, and it’s fascinating to think like they’re the ones that are literally going out and bringing your cash in and you would think cash flow would be pretty top of mind. And this isn’t the first time or the first part within the financial world or within a company’s operations. Where have the thought of you termed it as thinking of it as back office? But I kind of take that as they think of it as secondary, not prioritized. It’s like within the operations of a business, every aspect of it is very important. I don’t really see anyone. You can’t really put any of them to the back burner or secondary to the rest of them because they all matter in making the entire thing run. And certainly the getting your cash in, if anything, does matter the most. I feel like it would almost be that portion of it. So it’s fascinating to hear that would be put first before AR when again, they both matter. Obviously you want to pay people just like you want them to pay you. But it’s pretty wild to think that it took this huge change we’ve had in the last couple of years to maybe press enough people to have their cash flow dwindle, enough for them to realize, Oh, that’s as important as the rest of it. We should give it the tools that it deserves to.
Nancy: It does really seem to be getting the attention now and most of the market and what we serve is unvented. So there’s a lot of opportunity to automate and make this experience better.
Jacob: Yeah. Which leads us right into then Versapay. So can you give us a quick rundown of who versapay is, what the services are that you offer and maybe what makes you unique or different when operating in this space? Unless it is what you just said of. There isn’t really anyone doing it. So is it just that you’re the first ones, or is there something that makes you unique compared to what other competitors I’m sure are popping up?
Nancy: Yeah, absolutely. So we think about and talk about ourselves as a B2B fintech, and we offer both payments and automation. Our sweet spot is the mid-market. So maybe companies with about 50 million in annual revenue up to a billion. There are some players up market, but the mid-market is a little bit ignored and they’re ready. They’re ready for that transformation because they have really complex invoiced cash processes, but they’ve been ignored. We have three main products, so we have payments technology that’s optimized for B2B. And what’s a little different about our approach is we go to market through partners and we have direct sales as well. But our ERP partnerships are really important to us. So if you think about meeting your customers where they are, our payments technology is embedded in several big ERP systems like NetSuite, Microsoft Dynamics Business, Central Sage. So we want to make it easy for finance teams to use this and keep it all integrated. So we have embedded versions of our payments, but we also have payments that are embedded in ERPs or we have API based connectors and things to other ERPs as well. The other two products are really around automation. So we have this collaborative are and what’s different about that is it’s automation, but we focused on this human connection as well.
Nancy: So AR team’s connecting to the AP teams so that they can get payment resolve disputes. But of course it automates applies cash, all that kind of stuff. The cash application product, we actually got that through an acquisition. We’d had this partner called DadeSystems. We acquired them. We love their technology so much. It’s an AI based cash application tool, super easy ROI to explain to a finance leader, because if you’re using checks, lock boxes, all that kind of stuff, they really need this technology and it also has this mobile tool. So a lot of the industries we focus on have distributed guys in the field taking payment and might sit in their truck until they get back to the office two days later. It’s a major problem. So we’ve got an app where they can process the payment and it can get applied and matched automatically with this AI technology. So that’s pretty cool. And we have customers where that’s their big pain point customers that just want to process payments in their ERP and that’s fine. And as they get more sophisticated AR needs, they might need one of these other processes. So it depends on where they are in that digitization journey.
Jacob: That’s a really good place to be, to be able to help them, whichever part they are, because it is a long transition into this world with as much complexity as there is. And I started laughing at when you mentioned the driver that’s out in the field and might have that invoice sitting there for the last two days, I think I told this story once before on the podcast, but I’ll say it again back I ran a large industrial kitchen. We’ll term it as that. And so we had a lot of suppliers and I had an instance where, you know, all on paper, everything, all the food we were ordering was always on paper and it always drove me crazy. And I had one instance where a supplier came for their weekly visit, and when they went to have me sign the paperwork, you know that you brought everything and we’ll pay for it, sign the invoice. And I realized I was signing the invoice from the previous week and he still had the previous two invoices on the same little board with our current invoice. And I was like, No wonder I haven’t seen any money. Leave my account or no wonder I have to call and make sure you’re just driving around. He’s like, You know, I’m too busy. I haven’t even been back to the office in a week. And it was like, Oh wow, that’s how this all operates. And that was a moment where I was like, There’s a lot of room for improvement. I wish I was a smart enough person to go build some systems to help folks like this find these new benefits and remove these points of friction. But it made me laugh when you referenced that of like, Yeah, I’ve literally witnessed that. I’ve seen my own invoices from weeks just still on his clipboard, still in his van.
Nancy: And there’s a lot of industries where that’s really prevalent, like construction, professional services, where these are small mid sized companies and people are providing some kind of service, collecting the payment, right, their manufacturing distribution. So we’re in all those industries that have those needs, have a lot of transportation and logistics is another kind of sweet spot industry for us. So they’re still doing that stuff?
Jacob: It’ll be fun to see. And it kind of make a question out of this. One of the other things, the more people I’ve talked to about the B2B kind of catching up and why it lagged behind in the first place, and it all does come back to, like we said, there’s so much complexity, so many different players that it made way more sense to just go over to the B2C world where it’s all very direct, a little easier to build the systems. But then when you look through this complex web, like something like being able to just take a payment or an invoice on a phone or an iPad versus on a physical piece of paper, well, that on its own we created that. The ability to do that a while ago. It was just until we looked through the big web that is B2B and saw, oh, that’s one of the many things needed. So do you see a lot of the types of products or changes being ones that mirror things that exist already in the B2C world and just haven’t been brought over and put? In these individual use cases, or do you find yourself having to create from whole cloth new technology or new services to fill the different needs of all the different players in the B2B world?
Nancy: And that’s a great question. I think there’s inspiration to be taken from all the stuff happening in B2C and then in the B2B world, there’s a lot of industry specific variations on it and just additional complexities. But I think that’s where we’re drawing inspiration as things change and evolve. So I think it’ll continue like that and then and we’ll figure it out and the companies out there will figure it out. It’s just taking a little longer, certainly.
Jacob: So to change gears slightly here in preparing for this conversation, had a lot of fun reading some of the great content Versapay puts out on their blog, which I do have to highly recommend. We’ll link to a bunch of the things I’m about to reference in the show notes, but it’s one of the first places I go when preparing for these interviews is the company blogs, and most of them usually have some good info. I will say Versapay was very, very informative, really liked all the reports that you put out, so hats off for that. But one of those that I was reading was a breakdown of payment processors versus payment facilitators, and I thought did a really good job of taping a topic that can be confusing at times and explaining the differences in a pretty succinct manner and kind of the pros and cons of both in just a way that was easy to digest. And again, I’ll link to the full post in the show notes for anyone who’d like to read the whole thing. But could you give us just at a high level what the difference is between a payment processor and a payment facilitator? Which one Versapay is, and maybe a reason or two why someone would work with one of those versus the other?
Nancy: Yeah, absolutely. I’ll take a crack at it. So 10 or 15 years ago, the prevalent model was to have these ISOs as their independent sales organizations, as the front end of these big processing giants like FIS and Pfizer. And those companies, of course, still exist today. But ISOs have fallen a little bit out of favor over the years and favor of PayFac and so versa operates in both models. So originally we were an ISO and now we’ve become a PayFAC and I think the main differences. So even as a pay factor, you’re relying on those big processing platforms and they serve a valuable benefit. But with us now being a PayFac, we can control more of the customer experience so we can have the relationship with the client, they can sign with us, we can make sure we’re solving the problems that that they need. And they might have more than a payments issue. They might also need automation help or whatever it is that they need. And we’re also smaller and more agile just in general. So we can, I think, serve their needs better and especially if they have unique vertical needs like I was mentioning before. So we have client advisory boards for our different verticals that we target. And so the commercial real estate community has specific needs that they need and we’re able to learn those and, and adapt probably a little faster in terms of meeting those needs. But we still have a foot in both camps at Versapay because we’ve grown through acquisition and we have still the ISO model in place, but also the payFAC, which is the future for us and where we want to put our new clients on that moving forward.
Jacob: Yeah, certainly makes sense. And as I said, I’ll link to that full post for those who maybe want more on that topic. And I’ll also link to the other report that I was reading through and found equally as well done, which was Versapay s ultimate guide to credit card processing. And obviously we’re getting into the weeds a little bit here, but as much as merchants and business owners might want to ignore things like credit card processing that might put them to sleep to think of that little part of their business. Like we said earlier, they put some things on the back burner that maybe they shouldn’t. Credit card processing is probably one of those things they shouldn’t be, though. Are there any pros and cons that stand out to you when thinking about credit card processing and what merchants or consumers should be aware of in this part of their business?
Nancy: Yeah, and I’m glad you like the resources. And we work with small and medium businesses that kind of need help sorting through all this stuff. An ideal world. They wouldn’t have to think about any of it, like you said, but credit card processing is just so convenient for their buyer, for their customer. And so it adds this convenience. A lot of them are worried about the fees and they’ll say, can we pass along the fees? And so there’s more business rules and things like that that need to be handled. But there’s really no one size fits all. So there’s all these different types of payments methods that are out there, and card processing isn’t for everyone. So we have suppliers that might have seven figure transactions, so they’re definitely not going to want to pay the fees on that kind of transaction. So they’re going to do more. Ach Well, then we see our clients changing their needs over time as well. So they might start out saying, I’m not going to do credit card and then they have a need that presents itself. And so we’re kind of Switzerland. We want to support all different kind of payments, including virtual card payments, which we’ll talk about in a minute. But we want to be able to support all of it and then let clients do things like say, well, this type of customer I will do credit card with and this type of customer.
Nancy: Or I won’t. Based on their view of that customer’s overall risk to them and an automation tool can help them do that so that they can give their customers choice. And that’s part of creating the better customer experience too. So these clients come to us and they might say, I need a solution for credit card or I need to automate my AR they come to us like that? But they never come and say, I’m trying to improve my customer experience. Well, some of them do, but most of the time that’s not how they present their pain to us. But we always are able to improve their customer’s experience while we’re doing this because they can offer more choice and their customers can have visibility into their account that they lack. Now, either whether it’s coming in the mail or even some PDF and email, they don’t have real time view of their account and the ability to set up payment, auto pay and all those kind of things that they can do with a more sophisticated tool.
Jacob: Yeah, certainly. And it’s always in the financial world. I feel like having the Switzerland model is always the right place to be. The more flexibility, the better, the more agile you can be for your customers, the better. And it would make a lot of sense, too, that accepting credit card payments, just the fees part alone, given the size of orders and just the magnitude of what the B2B world is working with, it makes total sense that there would be this aversion to we can’t add fees to this $10 million supply order or whatever. But then it also makes sense that eventually they might come back and say, you know what? It might cost us X amount more, but we might gain this many more customers because they prefer to use it, or we might be able to do this other thing to offset that or build upon it. So it’s a nice entry point. And then it takes to the next step, which you referenced, which is virtual cards. And we can move into that world here for a minute. Going back to the original topic of B2B being a bit behind the B2C world, this is another one of those areas, but one that is certainly starting to change. We’ve seen a rise in virtual cards use in the B2B world in recent years. What do you think it is? Is it just the natural progression or what do you think is finally attracting B2B buyers to being open to virtual card use? And what potential value does implementing virtual card solutions have for a company like Versapay as a value to add to your customer offerings?
Nancy: Yeah, I think the biggest thing is concern over fraud and just overall risk. So check fraud. 63% of businesses have had in the last year, 30% have had ACH fraud. And then with credit cards, you get all the chargebacks and additional fees. So I think there’s a lot of concern about that. And virtual cards have this additional element of control. And so so I run a marketing team at Versapay. And when our events, people, they are spending all kinds of money on events are they have to use virtual cards now and it’s more comfortable for our finance team for it to be this virtual card that can only be used in these this defined way maybe one time, maybe multi use, but it’s definitely got more controls over it. The problem is the AR team. So that’s on the buy side. But the AR teams are having to deal with all this manually most of the time still. So they haven’t developed processes around this. So they’ll get emails, the virtual card information and they have to rekey it over here. Then they have to figure out what invoice to apply it to and it might be multiple invoices that it’s applying to. And there was a credit. So now it’s complicated. And then of course it all has to integrate with their ERP. So we’ve built something that will take in and ingest those emails with virtual card information, bring it into the same collaborative portal so they can see all their payments, virtual cards and everything else in one place and automate that piece of it and the application to the invoice and all that kind of stuff. So I think it’s here to stay. I think people will start to see it more and more if they have tools to help them on the side.
Jacob: Certainly. And I think the more they also see others using it and using it effectively, it’s just going to continue the domino effect in the industry. And while you were saying that in a few of your answers, it made me think, I feel like you are your company is going to change a lot of relationships and companies because I imagine the AR and the AP people don’t necessarily love each other or the AR don’t necessarily love the AP people. If they have to take out their frustration on anyone, it might be all those people. They have all the tools, all the digital stuff and I feel like you’re changing all these relationships of now they can work together and they can probably like each other instead of being upset that one side deals with things in a completely different way. So that was given me a little laugh as I envisioned someone in companies and all the relationships you might be changing.
Nancy: And a lot of times, Jacob, they blame sales. So AR realizes there’s a problem and it’s like, well, sales told them their discount, but there isn’t a discount. So there’s that tension too. So if you have these ways to collaborate and resolve this stuff, it’s a little better though. People will always, I suppose, blame sales. But but yeah, hopefully building this network is our goal. All this network that has the buyers, the suppliers, the ERP systems, some of the bigger clients have their own portals that you have to use their portals and they’re not going to use yours. So just bringing all that technology together into one network where people can sort all this out should improve relationships. I love how you drew that connection to relationships.
Jacob: Yeah, just actual collaboration and communication and whether they were able to do that before they didn’t have the resources to actually make that collaboration and communication within the business actually function at its best. And now services like yours are going to help them be able to do that. All very interesting. The last pivot and final topic in question. I have to get you out of here then. Nancy is one I have to bring up with pretty much every guest at this point in 2023, and that is AI and machine learning and data analytics and data in general. It’s been one of the biggest stories of the year across every industry, across the world, and certainly been a topic in nearly every single episode of the show that I’ve done this year. Obviously, data plays a big role in the payments world, is a data world at its base in the beginning. But what role, if any, does data and new processing technologies like AI or machine learning play in verse plays offerings currently, if at all? And subsequently, what kind of role do you see those things having in the coming years, not only with your company but across the industry at large?
Nancy: So I’ll just start with what we’re doing now, what we’re looking at and what we see in the future. So our cash application product that I was telling you about earlier gets 90 plus percent match rate right out of the gate and sometimes goes up from there. And so it does three different techniques I methods, I guess you might call it. So with generative AI, without knowing any prior understanding of remittance, it can figure out what goes with what and how to interpret that remittance statement. It has access to the whole open are from that customer and that helps it sort out where’s the invoice number, where’s the check number, where’s all this information? So that’s the first piece. And then the second piece is historical layout decisioning, which basically means it learns from previous correct decisions that were made either by the AI or sometimes the I can’t figure it out presents it to a human. And what’s cool about the network is we can present it to the AR person or the AP person on the other side of the transaction to say what payment does this go to? Because we can’t figure it out then. The AI learns from that. And so the next time it’s even smarter. And that’s how we start to get that match rate even higher.
Nancy: And then third, just combinatorics where it’s looking at all the possibilities that this payment could apply across all invoices in the whole system. And just figuring that out so much faster than a human could. So that’s what we’re doing now, along with our analytics and R&D teams, are looking at how can we get insights that help us provide a better customer experience and help our clients with insights. And we’re looking at cash flow projection, being able to predict when an invoice might have a dispute, predict when a customer is going to pay to help with that, make the cash flow projection smarter or underwriting, which is really a drag on the whole system. You’ve got this underwriting process that’s necessary, but they use just industry classifications and trying to use as much information today as we can. But if we could use AI to look at customer buying behavior and history and the data set can get so much larger to make smarter, faster underwriting decisions. And what we do today, which is I would say the whole industry takes a while and it could be faster to do this whole underwriting process. So all of that we’re working on in in Progress but where another place that we’re thinking a lot about.
Nancy: So we go to market, like I was saying, through ERPs, ERPs are where these finance teams are there. The accounting system basically for the finance team and the switching cost is high. So once someone gets on an ERP, they’re not going anywhere. They’re not taking that decision lightly. It costs a lot of money. So what if the AI is just the layer that that helps you extend the life of that ERP, helps you get insights out of that ERP instead of clicking around looking through reports. Even if you have a data lake and a good tool set looking off of that, you’re seeking out the answers and you’re poking around versus just interacting, using AI. Like you interact with a person and just asking What’s up with this trend that I’m seeing here? Why is this happening? And just that would be the future and that would extend the life of these ERPs and make them more useful to us while we have them as well. So that’s a really exciting area that I think could make meaningful change for businesses. I mean, for small business to have something like that, that would just change everything.
Jacob: Yeah, it’s certainly can help fill in a lot of the gaps that especially with the small businesses where they can’t pay for the time that it takes a human, they can’t pay for that extra staff member to do all of that. But if they could pay for one staff member who knew how to do these 3 or 4 different things to take all this data that’s available to them and sift through it and use these technologies to give them those results, it could help in a massive way. So all fascinating stuff. The future is definitely going to be an interesting place to be, and I’m sure you in Versapay will be right at the forefront of it. Nancy, this has been a real pleasure. For those listening who may want to follow you, learn more about Versapay, keep up with anything you or the company have going on. Where would be the best place for them to go to do so?
Nancy: I guess just versapay.com or follow me on LinkedIn.
Jacob: Wonderful. We’ll link to those in more in the show notes below. Nancy, thank you so much for your time and knowledge today. Have greatly appreciated it and hope to speak to you again sometime soon.
Nancy: Sounds good.
Jacob: If you enjoyed this episode and want to hear more, head on over to SoarPay.com/podcast to subscribe on your podcast listening platform of choice. That’s s o a r p a y .com/podcast.