A look at Invapay – a solution to the long spend tail problem?

Invapay are an enigma, but I mean that in a good way....

I’ve met John Vasili, a couple of times now. He’s one of the founders and directors of the privately owned business, founded in 2008. And I’m pretty sure that they’ve got a product that is (as far as I can tell) unique as a useful tool that could help many large organisations manage their purchase to pay (P2P) processes more efficiently.

But it isn’t a simple solution to describe, and the firm is still quite small, despite these apparent positives. Having said that, one leading client is a huge utilities / energy firm, so they’re not exactly a start-up either. So let’s try and explain, but note we’re planning to get into the Invapay solution in more detail once we’ve spoken to a user or two and looked at it more carefully.

Invapay offers a cloud-based solution to the “spend tail” that many organisations have – the suppliers who probably account for just 10% or so of spend by value but by number may well be 80 of 90% of the supply base. The costs of dealing with these suppliers, in terms of onboarding, handling the administration of payments, recording and so on can be very significant for larger organisations who may have many thousands of such suppliers.

Traditional P2P systems – from ERP providers or others – tend to be cumbersome for smaller suppliers (and indeed buyers). And other solutions, such as Purchasing Cards, have benefits but also disadvantages in terms of this part of the supplier population. For a start, many of these smaller firms won’t be approved "merchants" so simply don’t accept cards. Data provision back to the buyer can also be limited.

So Invapay offers a platform that enables easy and rapid communication between buyer and supplier.  Let’s say a buyer wants to use a small supplier for the first time. The buyer creates a basic purchase order on the Invapay system, which then asks the supplier for some simple information – a very stripped down supplier adoption process. Invapay runs a credit check / bank details verification on the supplier.

Throughout the process, buyer or supplier can update the order, and after delivery of the goods or services, the network generates a VAT compliant electronic invoice on behalf of the supplier.  The buyer has a range of options n terms of how they settle, including using their Purchasing Card programme or supply chain finance options and techniques like dynamic discounting.

And here’s one of the clever bits – if the supplier is not a card merchant, Invapay settle with the supplier, but charge the buyer’s P-Card. The Card statement will then also show the supplier’s details (even though Invapay settled).  And because Invapay can negotiate better merchant rates with the Card providers, they can give the supplier better rates than going direct, whilst retaining some margin to support the whole process. Buyers can also pay directly if they choose.

So for suppliers, this provides a simple means for onboarding with big customers and doing business without a major administration overhead. They may also get the benefits of rapid card-type payment without having to be merchants and with lower fees than they might pay, as Invapay act as aggregators in the eyes of the Card firms.

Buyers get the flexibility to choose different payment methods and potential financial advantages – for instance, that this spend counts towards any Card rebate programmes they may have in place. They also get an easy way to work with small suppliers, with rapid PO creation but also good control, including VAT compliance and level 3 spend data.

As we said earlier, not a straightforward concept to explain. but it does look interesting, and we look forward to digging into it more deeply soon!

First Voice

  1. Robert van dongen:

    Did you look at http://www.jaccoo.com?

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