Earlier this month, I had the chance to interview Traxpay’s John Bruggeman. Traxpay (see coverage here, here and here) is an upstart with the potential to bring significant disruption to the payments sector – and significantly expand the value proposition of a range of trade financing/discounting, e-invoicing, P2P and supplier network providers. John and I have known each other for roughly 15 years – long before either of us got involved at the intersection of P2P, trade financing and payments. Our “sector” reunion has been a long time coming, and what John has in store as he intends to catapult this small venture into something massive in a matter of quarters is fascinating indeed.
In this multi-part interview series, I’ll share the highlights from my conversation with John. Enjoy. And if you work for a bank, put on the payments flak jacket – you might need it!
JASON: We both knew each other in the past, but how did we both end up here? What’s your story on moving from the depths of enterprise applications and IT management to frontline payments?
JOHN: I don’t think that I did get there – if you look at what we’re doing and what we just announced with our funding and partnerships, you could argue that it’s the next natural extension of enterprise applications. As I tell every one of our customers, Traxpay just completes the last mile of the enterprise applications that we target.
The key value we create is for enterprise software companies (and their customers) that have automated the financial transactions taking place in the back office. These are companies that do purchase-to-pay, order-to-cash, ERP or e-invoicing applications. There is a whole class of automation that has happened in the back office.
We’ve spent upwards of two decades perfecting and optimizing these business processes – to the point where we are finally ready to connect buyers and suppliers in meaningful ways. What Traxpay is about is the next natural link between buyer and seller – the actual conclusion of a transaction with the payment itself.
JASON: What do you do exactly? How do you explain it?
JOHN: We work with enterprise software companies that build and sell these applications. We enable them to send core information and transaction information between different parties including the financial aspect that concludes with payment. This is critically important. The reason is simple: In the last decade, we were satisfied by approving an invoice, by creating a payment instruction and then handing it over to the bank system to complete the process.
When it was a “static” traditional payment, that was fine. But what we’re seeing now is a lot of creativity inside the supply chain and all types of new applications are becoming very popular. These are applications like traditional factoring, buy-side application (discounting), approved trade payables financing (supply chain financing), seller-based programs, other early payment programs, extended payments, and many more.
Some of these applications have been around for a long time – but they were limited to the top end of supply chain. These are manual, time-consuming processes. To enable factoring, early payments, dynamic discounting, etc., it takes a lot effort and often lots of paper – or significant, process-driven online initiatives.
Because of this, you would only offer these financial services to the top end of the supply chain. But, what is required now is to enable applications to go downstream and out into the tail of the supply chain – where the people that could really benefit the most finally would gain access to these same powerful applications. Traxpay is working with some of the leading P2P, O2C cash players to extend their solutions to include factoring, discounting, etc. for that tail, as well as the largest of companies out there.
I believe dynamic payments (what we do) is the critical piece that is required to make these applications stick.
Stay tuned as our interview with John continues.