Going after Verticals with Supply Chain Finance– Healthcare, Legal, Construction and Freight

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Think about the most difficult and messy invoices there are to finance and you will find opportunities and solutions waiting to happen.

I thought about four verticals that present invoices where there could be some serious dilution due to the nature of their services offered. They are:

  1. Freight and Logistics – Logistics has one of the highest percentages of invoices that are never paid. Financiers and banks like dealing with clean, high quality invoices.
  2. Healthcare - Total health expenditure is huge. In 2012, health-care spending was $2.8 trillion in the United States. If you have ever dealt with billing, payables etc. you know it’s not the strong point of hospitals. Most hospitals do not have a lot of cash on hand.
  3. Legal - law firms are tasked with ensuring the delivery of accurate client billing, which means being able to justify hours on invoices raised and related client expenses. Bottomline Technologies has a solution here called Legal-X.
  4. Construction – this is an industry that is notorious for use of contractors and sub-contractors with hefty delays in payments. It’s the “you don’t get yours till I get mine” philosophy of payment.

 

Developing early pay solutions in these verticals is not easy. There are a number of initiatives I discussed in prior posts.    Hap-X saw an opportunity to service the healthcare sector with an electronic payment system that serves the same function of the P-card without going through the card networks.   There are numerous vendors providing freight audit and payment processing services, but only recently have some of these vendors looked to add early payment capabilities.

The point is that these solutions tend to be very specific and require strong domain knowledge. Take construction as an example. General Contractors are not normally known for being tech savvy when it comes to managing projects. But source to pay solutions exist (at least partially) to help in the search for subcontractors and suppliers, sending bid invitations, distributing project documents as well as tracking bid responses and issuing project change information. Adding invoicing claims management, and early pay solutions is the evolutionary step.

I believe we will continue to see vertical solutions that solve pain points.

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First Voice

  1. Deborah Seliski:

    PowerTrack, owned and operated by US Bank, has been in the freight payment and early payment space for nearly 15 years. The system was initially developed for making early freight payments to carriers for the US Department of Defense.

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