Previse – AI Gives Invoicing Insight, Enables “Instant Payment”

We recently met up with co-founder and CEO Paul Christensen of Previse.

He’s a very smart Australian, a lawyer initially, who has worked in start-ups as well as in big investment banks, and also has a terrifying track record in “Quadrathlons”, although he claims his competitive days are over!

Another Previse co-founder is David Brown, who many moons ago was the brains behind Oxygen Finance, which itself has carved out a decent niche in supply chain finance programmes, principally in UK local government.

Previse looks on-track to be a success in that field but in a somewhat different niche, as an innovative provider of technology that enables early payment and supply chain finance programmes. It is based on a concept that is deceptively simple and yet can also somewhat head-spinning – well, for me anyway.  But this is how I think of it.

Most supply chain finance is based on approved invoices. So once the source of finance knows an invoice is approved, the supplier can be offered immediate (or accelerated) payment, in return for a small fee or a discount taken off the invoiced amount. There are different options in terms of who provides the finance (it might be the customer organisation, banks, crowd-funding …) and how the costs and income are allocated and accounted for between the parties.

The basic concept though is that my invoice as a supplier has been approved, so would I like to accept my  £1000 owed in 30 or 60 days’ time, based on my customer’s standard payment terms, or would I like maybe £980 or £990 immediately?  But often, smaller suppliers miss out on the option, because both the on-boarding doesn’t scale to the tail suppliers and the risk assessment for the finance provider is pretty unsophisticated, so tends to favour the larger supplying firms – who ironically often need the cash less than smaller firms.

The “big idea” from Previse is this. Using clever artificial intelligence and machine learning algorithms, Previse can assess as soon as it is issued the likelihood of any given invoice being paid.

So that early payment can be offered to the supplier as soon as the invoice is issued – no need to wait until it is approved. The cost of the finance can also be adjusted based on the likelihood that the invoice will be paid.

This is a risk assessment tool really – if I have issued 100 previous invoices to Ford and they were all approved and paid, then the risk is low and I can be offered instant payment with only a small charge for the financing. If I am a new supplier, or there is a track record of invoice disputes between me and my customer, or indeed the buying organisation has some financial issues, then the risk factor could be very different – maybe the supplier won’t be offered early  payment at all, or it might come with a greater fee attached.

With Previse, the decision for the funder is made very easy too. They can just set an acceptable point on the Previse assessment scale and agree to fund any invoice that scores better than this. The “income” created (i.e. the fee that the supplier pays for instant payment) is then split between the buying organisation, the funder and Previse. Suppliers can opt in (or out) of the scheme.

So Previse enables that early payment decision to be moved from the point of invoice approval to the point of issuing. Now anyone who has been around procurement a while (or indeed has supplied many different organisations) will know that in many cases, this is a big deal.

Most invoice delays and disputes (when they aren’t a deliberate sneaky tactic by the buying organisation simply to improve cash flow, of course) come because the customer “can’t find out who placed the order” or “we sent the invoice to the budget holder for approval and she’s gone on holiday”.  The invoice is eventually paid, but the big gap is between issuing and approval, not between approval and payment.

Previse can be used with different ERP and e-Invoicing systems – as their website says, “Previse sits alongside funders’ existing payment technology. Its frictionless adoption requires no changes to either buyers’ or funders’ existing payment infrastructure or on-boarding of new processes or technologies.”

And the firm has already announced some interesting partnerships, including with Virtualstock. “Buyers can now manage their catalogues, contract pricing, inventory and purchases as well as track deliveries through Virtualstock’s The EdgeTM platform, while also ensuring their suppliers are paid instantly with Previse’s advanced machine learning technology and network of readily available funding”.

It is certainly an interesting addition to the early payments space, and we will watch the progress of Previse with interest. Just don’t challenge Christensen to a foot / cycle / swimming / kayaking race across the Scottish mountains …

 

 

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