Another Payment Provider Gets Acquired: Fleetcor to Buy Nvoicepay (Rapid Analysis)

invoice mmphoto/Adobe Stock

The intersection between procurement, accounts payable automation, payment technologies and card providers continued to converge today as Fleetcor announced it was acquiring Nvoicepay. The transaction marks yet another example of card-based payment providers getting closer to the world of buyer-driven procure-to-pay — and of course, the vendor corollary, accounts receivable — given the opportunity for supplier-driven payment acceleration.

According to the announcement, Fleetcor, a commercial payment (primarily card) solutions provider, “has signed a definitive agreement to acquire Nvoicepay, Inc., a leader in full AP automation for businesses.” Nvoicepay is described as a provider that “delivers automated accounts payable solutions to over 400 business clients, providing a simple UI that allows customers to electronically pay all of their suppliers.

“The full disbursement capabilities of Nvoicepay along with Fleetcor’s existing card processing solutions, enables businesses to pay their entire accounts payable expenses, including both domestic and international payables.”

In the press release, Ron Clarke, Chairman and Chief Executive Officer of Fleetcor, further notes that “Nvoicepay presents an exciting opportunity to accelerate growth of our Corporate Payments business by offering customers a simple way to pay all their accounts payable with one vendor.”

“Through the combination of Comdata, Cambridge and soon Nvoicepay,” he continued, “we believe Fleetcor will offer one of the most comprehensive domestic and international AP payments solutions available to businesses.”

Backing Up: Procurement and Payments

The world of payments is complex and it is not something most procure-to-pay (P2P) solutions tackle holistically, despite their name! Spend Matters research suggests that solutions that target corporate payments such as Nvoicepay typically aim to address one or more of the following challenges:

  • Many firms have no or limited controls to ensure payments are made based on actual, negotiated terms. In practice, the “pay” part of P2P flows and the “cash” part in order-to-cash (O2C) flows are disconnected from the rest of the transaction. The actual payment execution and settlement is handled separately, ultimately using third parties such as banks, credit cards and payments processors.
  • Payment processes are dynamic. In the course of a standard (net) payment period, business conditions may dictate that a payment be split, combined, rerouted, canceled, executed on condition, put into escrow, become milestone based, paid on delivery, scheduled for a different date, discounted (via a supplier early payment authorization), paid early, partially refunded, factored (by a supplier) or in some other way dynamically altered.
  • Payment runs are batch. They do not mirror the “real-time” digital transformation reshaping procurement and operations (i.e., they pay everything up to the date of the next payment run — and that’s it).
  • Daily payment activities are often managed at a local level. Procurement and finance typically have limited cash forecasting and collaboration ability based on future payment obligations (and even near-term obligations).
  • Payments can be delayed by internal procurement and accounts payable processing errors or a lack of visibility. Adoption of electronic payment methods is limited, and manual payment methods (e.g., checks) are still common, especially in North America.
  • Large volumes of returned payments, duplicate payments and other payment errors are not uncommon.
  • Strategically, there is limited coordination around dynamic discounting. Procurement, accounts payable and treasury have typically not formalized and scaled early payment discount programs at all tiers of suppliers.
  • Tactically, the majority of suppliers do not have the opportunity to accept a discount and receive early payment.

For a deeper primer on the topic, this Spend Matters PRO research series, Everything Procurement Should Know About Payments, is a useful place to start for our subscribers:

Fleetcor and Nvoicepay

Spend Matters quick analysis of the transaction suggests it represents another case example of card companies seeking to build out total payment solutions, getting closer and closer to accounts payable to influence a larger share of payment flows and direct them their way. These moves provide a broader range of revenue opportunities for payment companies, including vendor-based revenue, something procure-to-pay providers such as Tradeshift and Coupa are also keenly aware of as well (approaching the sector from the other side). But there’s more to it than just this.

So why would a corporate card-based payments provider want to get into the deeper world of accounts payable? On hearing about the acquisition today, we traded notes with an old friend of Spend Matters, an industry insider (and curmudgeon) who suggested that “it’s funny when you have usurious interchange that can drive your business and subsidize everything else.”

We’re not quite as cynical (despite the amount we pay in interchange fees every year ourselves). But there’s evidence to support the argument that card companies are in the process of broader payment and accounts payable land grabs, regardless of how they’re funding the moves. To name just a few of the recent transactions/relationships:

  • Visa’s recent acquisition of Earthport
  • Visa buying Fraedom
  • Edenred buying CSI
  • Elavon (U.S. Bank) buying CenPos
  • WEX buying Noventis
  • MasterCard’s large investment in AvidXchange

But back to our earlier question: Why?

We’ll tackle this question on Spend Matters PRO in the coming weeks as we offer our analysis of how the worlds of purchasing, accounts payable, treasury (working capital) and payments are starting to collide — including why, ultimately, we believe the battle for payments will end up going all the way back to procurement, not just accounts payable.

In the meantime, we congratulate the team at Nvoicepay for all their hard work in building out a pioneering solution and having the vision to integrate it further “upstream” in the procure-to-pay process with partners such as Coupa. This is a prescient vision which we believe is suggestive of where the market is headed.

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