InvoiceSmash Acquisition: Coupa Attempts to Smash Other E-Invoicing and Supplier Networks


Coupa announced Monday it had acquired InvoiceSmash, an upstart vendor from Australia that looks somewhat similar, on the surface, to the type of PDF extraction e-invoicing services offered by providers like Transcepta and Tradeshift, among others, that extract data and metadata from documents and then present them in an easy-to-leverage format from an accounts payable automation.

Spend Matters has not previously seen the InvoiceSmash product, aside from the pictures on the website, but estimates place InvoiceSmash in the low single digit millions (or less), in US dollars, of revenue. More important than size, the provider had built a somewhat novel approach to an area that could significantly improve the capability of Coupa to compete against e-invoicing and supplier network and platform providers. Increasingly, new tech ideas are being incubated or tested in Australia and even New Zealand.

In the announcement, there was no mention of valuation. However, based on
Spend Matters experience with sector M&A, Coupa can be generally viewed as a shrewd acquirer that would never overpay for an asset.

Here are some of the highlights of the announcement:

“InvoiceSmash’s cloud-based technology has innovative closed-loop learning capabilities that will extend Coupa’s Invoicing solution by instantly converting emailed invoices from suppliers into the digital format required for the buyer’s accounts payable process.”

“As Coupa brings these innovations to market, supplier enablement efforts and invoice processing costs will dramatically decrease as buyers and suppliers gain instant connectivity and the freedom to interact using their preferred processes via the Coupa Open Business Network. Finance also gets the added benefit of optimizing cash flow management and additional days to apply early payment discount terms to earn a return on payables.”

“Designed to help enterprises of all sizes digitize and automate the often painful accounts payable and invoicing process, the InvoiceSmash innovations will be embedded into Coupa’s organic cloud-based platform to instantly convert emailed invoice attachments into the field formats required by Accounts Payable.”

“The solution’s closed-loop learning capabilities can also detect supplier invoice format changes, remember those changes, and create learned templates so the Coupa system grows smarter, for the benefit of all Coupa cloud customers, after a new supplier invoice format appears.”

There are a number of things to read into from this:

  • The acquisition is a key puzzle piece that will fit into a set of integrated Coupa offerings both today – invoicing and A/P Automation – and in the future, including discounting and reverse factoring
  • InvoiceSmash addresses the lowest common denominator of supplier types, the long tail of suppliers albeit those not automated by card transactions
  • Coupa is serious about building out a network capability to rival providers like Ariba, Basware, Tungsten, Tradeshift and others

I had a chance to trade notes last night with “Coupa Savings Orchestrator” – I always get a chuckle from that one, but he truly means it – Rob Bernshteyn, Coupa's CEO, and he shared a few items with us. Below is a quick Q&A:

Spend Matters: What requests are you hearing most from customers in the e-invoicing and connectivity area? How does the transaction map to these needs?

Coupa: Invoice processing costs are higher than they need to be and Coupa is going after one of the biggest sources of the problem – supplier emailed invoices. Business and government process over 150 billion invoices annually – most of which are handled manually and inefficiently. This is hundreds of billions of dollars in unnecessary business cost. We’re here to make paperless business a reality.

Customers want compliance, simplicity, automation, limited human intervention, and electronic means of invoice management. If software can do it, and can do it smartly, they want to get out of the way. They also want to increase e-invoicing connectivity with more of their suppliers without the pain and cost of extensive supplier enablement projects or having to use disparate OCR systems every time to manually scan and digitize invoices.

Thousands of supplier accounts receivable systems naturally create and send out invoices via email today. The InvoiceSmash solution can take these emails and instantly convert them into the Coupa A/P format – cutting invoice processing costs significantly while delivering faster invoicing cycles, more accurate data, better cash management and improved B2B relations.

As you know, Coupa’s strategy is to deliver savings as a service to customers through a suite of true cloud applications including procurement, sourcing, inventory, accounts payable, e-invoicing, and travel and expense management, which give enterprises complete visibility and control over all of the spend in their organization. This is another small step toward that broader vision.

Spend Matters: As with other Coupa acquisitions, is the plan to rewrite the technology or let it stand alone in this case, given its very much separate from the suite?

Coupa: No will leverage this code. The InvoiceSmash technology will be a hugely value-added extension to our organic suite of capabilities, leaving the transactional engine fully organic.

Coupa is acquiring all the product and technology assets from InvoiceSmash. The InvoiceSmash innovations will be embedded into Coupa’s organic cloud-based platform. Coupa expects the additional capabilities from the InvoiceSmash technology to be made available to select customers by the end of 2015.

Spend Matters: Will this become a centerpiece of the Coupa supplier network offering? What percentage of a company’s suppliers, typically, will be suited to this type of connectivity model?

Coupa: Core to our business model was the idea of allowing buyers and suppliers to achieve greater e-invoicing adoption rates and faster processing times without needing system and process changes. We will not initially be prescriptive on methods of connectivity (Coupa Supplier Network, Supplier Actionable Notifications, CXML, email, PDF, fax, etc.), but we do expect that for a large portion of invoices coming out of AR systems and converted to PDF, our customers will want to leverage InvoiceSmash. It just makes sense.

Spend Matters: Does Coupa plan to charge suppliers with this new model?

Coupa: Absolutely, positively, NOT.

Spend Matters: Culturally, what are the teams like? Similar DNA?

Coupa:  Absolutely. The full selection team across Products, Marketing, Sales, Technology, and Development were 100% unanimous in selecting InvoiceSmash among over a dozen other vendors reviewed in this particular area. Cultural fit played a huge part, as always.

Spend Matters: Will this be sold separately from the invoice management / AP Automation?

Coupa:  Pricing approach will be communicated in coming weeks. As always, we will attempt to tie it closely to measurable customer value delivered.

Spend Matters will be getting a briefing and demonstration from Coupa this week and will report back additional items that we learn.

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