Author Archives: David Gustin



About David Gustin

David runs a global research and advisory practice centered on helping financial institutions, vendors and corporations understand the intersection of trade services, trade credit, payments and the financial supply chain. His formal education includes an Information Systems and Economics degree from Carnegie-Mellon University, an MBA from Purdue, and a Chartered Financial Analyst designation.


Subscription economy helps drive B2B payments and spend

Subscription spend as a percent of total B2B vendor spend is growing (we know business travel and expense spend had a significant drop with an unknown next few years), although there is no specific industry data. I am sure there are spend analytics firms that can slice and dice the procurement data to prove this.

And because of technology, it’s no longer coffee services, or maintenance contracts, or cloud storage or servers that is on a subscription. Companies have integrated technology into their products, enabling them to gather data and offer as a subscription.

Source-to-Pay, B2B payment valuations in an inflationary world

For those of us that knew inflation — and I believe that is anyone that is 60+ — we can probably recall stories of our parents or grandparents never throwing away anything. My dad never threw away tinsel to put on the annual Christmas tree and my mother never threw away aluminum foil. I mean you never forget lines for gasoline during the OPEC 1970s era.

For most of us in the working world, we have lived in deflationary times — the last 40 years.  David Foster Wallace’s story, “This is Water,” is appropriate for today’s management. The story involves two young fish swimming along and they happen to meet an older fish swimming the other way, who nods at them and says “Morning, boys. How’s the water?” And the two young fish swim on for a bit, and then eventually one of them looks over at the other and goes, “What the hell is water?”

That is us today with inflation. What is inflation? Aren’t CPI metrics just “constructed” realities to support narratives from the Central Bankers but don’t necessarily reflect what we see and feel on the ground? Inflation expectations cannot be controlled. And for the last 40 years, we have experienced deflationary pressure (could have something to do with globalization, but there are many factors).

So how does all this relate to valuations and profitability when it comes to source-to-pay vendors, who predominately sell some form of SaaS solution to help you buy and pay for things better or a payment solution, tying global gateways, settlement, APIs, etc.?

Payable Strategies for the Long Tail Suppliers — Stage 4: Selection Process and Key Issues to Address

Payable strategy options

If the mandate from your C-suite is to find a solution to pay all suppliers early, rest assured that this process comes with a range of options. But before you begin to evaluate options, every company has a baseline of existing solutions, technology, processes and procurement agreements that form the basis of the evaluation.

In the fourth part of this Spend Matters PRO series, we will discuss the pros and cons of each option and key strategic questions for your team to address.

For this series, here are the five stages for tackling your payables strategy:

Let’s jump into the details for Stage 4.

Payable Strategies for the Long Tail Suppliers — Stage 5: Getting to a Decision

Payable strategies decision

Now it is time to get to a payable strategies decision.

In this five-part Spend Matters PRO series, we have provided a way to help companies address how to approach paying suppliers early given a company’s current baseline and legacy situations.

The mandate was simple. The mandate was clear. Find a way to offer ALL suppliers a way to take early payment.

All companies with that mandate start from a different baseline of solutions, technology, processes and agreements. This series has provided a way to think deeper about this journey.

“Payable strategies can be incredibly confusing for companies of all sizes,” said Jason Busch, Managing Director of Azul Partners and Founder of Spend Matters. “This series has struck me as an ideal primer for procurement and finance organizations to not only discover all of the early payment options at their disposal, but to understand that making the worlds of technology and working capital come together requires a set of steps that must come before driving to a solution. In the wake of the Greensill Capital fallout and the continued future of supply chain finance (SCF) as one of many options available for early payment and working capital programs, it is essential that companies take a step back to understand all of the options at their disposal.”

For this series, here are the five stages for tackling your payables strategy:

Let’s jump into the details for Stage 4.

We’ll discuss core RFP components and sample questions, use of a decision matrix for making the call, setting executive management expectations, and the supplier optimization approach once a decision has been made.

Payable Strategies for the Long Tail Suppliers — Stage 3: Addressing Operational Challenges Early

In this Spend Matters PRO series, you have been tasked with a mandate from your CFO to find a way to offer early pay finance to ALL suppliers and create a “win/win” with your supply base. The previous two parts of the series looked at how to assess your current situation, the spend funnel and introduced several techniques.

In the third part of our series, we will look at some of the key operations issues that impact early pay finance offerings.

Today, many large businesses may be running several early pay finance techniques targeted at different supplier segments. Each of these techniques comes complete with their own set of technology and operational components, and can include virtual cards, marketplace auctions, third-party payable finance and dynamic discounting. Companies may be looking to expand programs regionally, or simplify their current offering, or have a mandate from the CFO to find a way to offer early pay finance to ALL suppliers.

For this series, here are the five stages for tackling your payables strategy:

Let’s jump into the details for Stage 3.

In the course of our discussions with treasurers, we found six operational areas that challenge the rollout of any type of early pay program.

Payable Strategies for the Long Tail Suppliers — Stage 2: Understanding Addressable Spend & Early Pay Options

In this five-part Spend Matters PRO series, we will explore how businesses can approach paying suppliers early given the business’s current baseline and legacy situation. Today, we focus on understanding addressable spend and the various early pay options.

For this series, here are the five stages for tackling your payables strategy:

  • Stage 1 — Assessing Your Current Situation
  • Stage 2 — Understanding Addressable Spend & Early Pay Options
  • Stage 3 — Addressing Operational Challenges Early
  • Stage 4 — Selection Process and Key Issues to Address
  • Stage 5 — Getting to a Decision

Let’s jump into the details for Stage 2.

Payable Strategies for the Long Tail Suppliers — Stage 1: Assessing Your Current Situation

Payables strategies

In this five-part Spend Matters PRO series, we will help companies address how to approach paying suppliers early given your current baseline and legacy situation. If you’ve been tasked with a mandate from your CFO to find a way to offer early pay finance to all (or a vast majority) of suppliers and create a “win/win” with your supply base, we’ve designed this series for you.

We also hope this will help with tech selection. It should allow companies in the market for solutions to coordinate internal departments like procurement, AP, shared service centers and treasury to plan for and assess different technology choices and ultimately determine the best option for the company and its supply base.

For this series, here are the five stages for tackling your payables strategy:

  • Stage 1 — Assessing Your Current Situation
  • Stage 2 — Understanding Addressable Spend & Early Pay Options
  • Stage 3 — Addressing Operational Challenges Early
  • Stage 4 — Selection Process and Key Issues to Address
  • Stage 5 — Getting to a Decision

Today, we’ll give a 2021 overview of early pay finance. And before we talk about where and how to begin, we’ll discuss the complexity around the company’s current baseline of technology, spend categories and legacy procurement contracts.

Fleetcor’s corporate B2B payments portfolio

Before Fleetcor starting getting into the world of corporate B2B Payments, their payment solutions primarily focused on cards, and specifically commercial spend categories, including fuel, lodging, tolls and general corporate payments, as well as gift card solutions (stored value cards and e-cards). Fleetcor grew primarily by acquisitions, completing over 80 acquisitions of companies and commercial account portfolios since 2002.

Fuel cards (46% of revenue) are charge cards that customers can distribute to vehicle drivers to purchase fuel and other transportation-related products and services and provides their biggest revenue source. But recently Fleetcor has turned their attention to corporate payments (18% of revenue). They believe that banks’ dominance of B2B cross-border payments, estimated at upwards of 95% transactions, has lots of room for Fintech plays.

Fleetcor has been on an acquisition spree to build up their corporate B2B Payments capabilities.

Making sense of the world of B2B payments and procurement technology: AP automation components (Landscape Overview)

AP automation payments

From an industry analyst perspective, AP automation is a fascinating market. It’s not like other areas of enterprise technology (e-procurement, sourcing, contract management, vendor management systems, customer relationship management, etc.) that typically debut in the Fortune 500 or Global 2000 before making their way into the middle market and smaller businesses. No, the rise of AP automation has largely been a bottoms-up journey. It is one that started with the middle market and small business users and vendors specializing in selling into these markets.

Today, AP automation technologies differ materially based on the breadth and depth of use cases (e.g., invoicing processing requirements — basic vs. advanced), company size, industry and technology systems environment, among other variables. It is challenging to compare head-to-head AvidXChange to Basware to Medius to Tipalti, for example, as we might with e-procurement providers for a particular software selection requirement — they all specialize in specific use cases and have carved out different niches that make them great (or not-so-great) depending on customer priorities!

This Spend Matters PRO series began with a look at the legacy world of B2B payments and how the incumbent/new universes have interplay with each other. Now we can turn our attention to segmenting and defining the modern non-bank world of B2B payments as it relates to procurement and finance technologies.

For the series, we’ll look at this sector’s four categories of providers:

  • Accounts payable automation providers
  • Procure-to-pay (and source-to-pay) providers address AP automation use cases along with deeper support for e-invoicing, ordering functionality and varying degrees of payment capability.
  • Dedicated payment solutions combine technology and services to automate or digitize B2B payments and/or deploy payment infrastructure.
  • Working capital solutions leverage data and bank relationships to enable early payments and optimize working capital.

This PRO landscape overview begins by providing a succinct introduction to AP automation (overall) and highlights our Fall 2020 SolutionMap vendor ranking/scoring (including providing an example of how Basware and Medius perform in our subscriber-only SolutionMap Insider ratings). Finally, it provides insight into the B2B payment capabilities offered by AP automation providers.

The stickiness of cards for B2B payments (or why card companies get 10X valuations)

Virtual card payment growth is booming and many source-to-pay companies are partnering with banks to develop them or investing in capabilities or built a company on the value proposition of converting cheques to cards (see AvidXchange and AvidPay).

But why would any supplier take a card on payment terms? One industry card veteran said this is a classic example of financing the receivable and then allowing a card payment, a lose/lose proposition.

Greensill Capital’s troubles, supply chain finance — and where do we go from here?

The future of the supply chain finance firm Greensill Capital is on shaky ground, and after our initial coverage of its impact on SCF, let’s look ahead.

News about Greensill broke this week when an insurer gave notice of intention not to renew a policy, triggering uncertainty about Greensill’s value. The trade cover insurance provided to Greensill is in the order of US$4.6 billion, in respect to about 40 clients. This forced Credit Suisse Group AG to freeze a client fund that bought the debt — and has rocked the supply chain finance industry.

Greensill's troubles are all playing out in real time, and things are happening fast, but I jotted some notes on where we go from here.

Making sense of the world of B2B payments and procurement technology: Backdrop, market segmentation and vendor mapping

B2B payments vendors

A couple of years ago, I fought a small battle with the management team of Spend Matters’ parent company (Azul Partners) about making the investment to cover what was then a nascent market for B2B payments as a solution extension to categories that we cover in SolutionMap: Procure-to-Pay, Invoice-to-Pay and AP Automation solutions. I was not alone, among my colleagues, in making the case to cover B2B payments, both as a drill-down of SolutionMap within AP Automation and Invoice-to-Pay, but also as a stand-alone area on Spend Matters.

But those who weren’t initially taken with the idea asked the fundamental question: Why?

Why would procurement and AP leaders care about B2B payments in relation to their primary technology decisions? It’s a fair question.

It is clear from a range of M&A activity (e.g., the payments/treasury management services (TMS)/P2P/AP mash-up of Coupa/BELLIN last year) as well as converged solution featuring a combination of internally developed solutions alongside integrated third-party capability (e.g., Coupa Pay, Tipalti), not to mention pure-play solutions (e.g., AvidXchange), that B2B payments are converging with the world of procurement and AP technology.

This Spend Matters PRO series segments and explores the various providers in the non-bank B2B payments market into four distinct market segments while exploring the overlap (think Venn diagram) between the groupings and individual providers. But to get everyone started on the same level, we’ll begin by providing some context and history of B2B payments overall. Still, if you’re from procurement or AP and you're relatively new to world of B2B payments (or brand-new), we recommend starting here:

But where do B2B payment technology vendors (and their procurement and AP counterparts) fit into this world today?

Let’s begin ...