Tipalti and the Accounts Payable Automation Market: Now Officially Hot, Hot, Hot!

procurement

Earlier this week, you may have seen that Tipalti raised $76 million in a Series D funding round. For those who do not know Tipalti, it is one of a variety of accounts payable automation (and payment providers) in the B2B market.

With a primary emphasis on middle market companies, Tipalti’s AP automation competitors include both broader procure-to-pay vendors that also come down market (e.g., Basware, Corcentric, Coupa, SAP Ariba, Tradeshift, etc.) and a diverse set of accounts payable automation specialists, including Accrualify, AvidXChange, Beanworks, SAP Concur, Symbeo, MineralTree, MediusFlow, Yooz and dozens of others.

It’s our view that Tipalti’s funding round is proof positive that the AP automation market is truly hot. While not yet a unicorn so far as we know, Tipalti’s latest round (in size and estimated valuation) has raised some positive eyebrows in the market from investors we’ve spoken with who continue to track the AP sector with growing enthusiasm for various reasons, including the increasing opportunity for AP to intersect with payments and financing.

As we’ve noted before, AP automation technology can encompass the following functional areas on the highest level, which include electronic invoice capture, paper/PDF invoice capture (scan/capture), core invoice processing, invoice validations/matching (e.g., match to a PO or goods receipt), invoice approvals, supplier portal, supplier enablement services, systems integration, pre-onboarded suppliers payment integration and payment. Some solutions have all of these components while others adopt a slimmed-down approach emphasizing core invoicing processing essentials.

These differences matter. Even taken on a stand-alone basis outside of broader invoice-to-pay and even broader procure-to-pay, the AP automation market is not “fungible.” Providers within it have a variety of strengths and weaknesses. Some emphasize simplicity (e.g., get up and running fast); others emphasize integrated payment capabilities; still others emphasize functional depth in areas such as invoice matching and validations; and even a few offer both accounts receivable and accounts payable capability together (functionally, the duo have quite a bit of overlap, but in practice, the two software categories have different masters inside most organizations, with different needs — and customers buy the technologies independent of each other).

Spend Matters will be releasing our first AP automation SolutionMap in early 2020. Our requirements for AP automation will feature what larger middle market and enterprise-level companies value, as well as the streamlined features that small and medium-size customers care most about. In other words, one size for AP automation does not fit all.

For a primer on what components go into AP automation, we encourage PRO subscribers to review our core AP automation requirements:

Defining AP Automation Functional Requirements (Part 1): Core Invoicing (Set-Up, Creation, Submission and Receiving)

 

Defining AP Automation Functional Requirements (Part 2): AP Process, Workflow, Collaboration and Systems (Validations, Approval Processes, Integrations)

 

Defining AP Automation Functional Requirements (Part 3): Invoice Mobility, Compliance, Analytics

 

Defining AP Automation Functional Requirements (Part 4): Payment Systems, Partnerships, Processing, Analytics

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