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.


XTRM: Solution Overview (A payments focus on digital wallets, cross-border capabilities)

Over the last year, there has been a huge investment by the payments community to create digital wallets for business customers to enable fast and cost-effective cross-border payment capabilities. These solutions are becoming popular with many money-movement companies. These providers are embedding wallet apps in their products so their customers can make global disbursements.

Wallets enable companies to manage multiple account balances globally and make disbursements to beneficiaries at any time. Having a multi-currency wallet enables disbursements to happen in the local currency of your beneficiaries. There are numerous business applications for the use of wallets. Some examples include:

  • Small- and medium-size businesses that make disbursements to global beneficiaries for rebates, incentive payments, referrals, etc.
  • A lead-generating company that needs to make referral payments globally.
  • A wealth manager that needs to make payouts in multiple currencies to depositors.
  • Independent contractors and sole proprietors who need to pay gig workers globally.

More and more solution providers are looking to provide the banking infrastructure and sub-ledger account management to hold money in wallets to supplant bank account-to-account transfers. B2B payment companies see wallets as a revenue opportunity. When money goes into a wallet, there may be additional foreign exchange (FX) conversions and transfers to beneficiary-owned bank accounts.

The payments provider XTRM has built a model around moving money between wallets and taking away the pain in cross-border B2B payments.

Ebury: Solution Overview (trade finance services for smaller global businesses)

One of the biggest challenges for small- and medium-size enterprises trading globally has been the lack of access to the kind of financial services readily offered by banks to multinationals.

Today, businesses of any size can think and trade globally, but the services to support them may not be offered by their bank. A $100 million or $250 million business may have a few bank relationships. Smaller businesses may only have one bank relationship.

Your banker and other lenders may not be able to support you with the credit you need to conduct foreign exchange (FX), cross-border payments, payables finance and international collections.

This is a real challenge that businesses face.

International Trade Services has been at a very serious crossroad for many banks for several years — as significant staffing and regulatory issues continue to plague the business and technology investments need to be made but do not have a strong business case.

Outside of the large global and super-regional banks that offer trade finance, risk management services, international payments and other international services, many banks don’t have their own dedicated staff, technology or resources to offer a suite of international services to their customer base. While some of the larger banks offer outsourcing services to other banks, there is not a dedicated focus to help companies in the $50 million to $1 billion sales segment. The cost to serve and the capital to dedicate typically outweigh a dedicated effort to build capabilities.

There is a persistent message in the market that a large trade finance gap exists for small businesses. This coincides with surveys done by the Asian Development Bank and the International Chamber of Commerce who look at bank-reported rejection rates for trade finance transactions and estimate that the global trade finance gap remained large and stable at $1.5 trillion. The International Finance Corporation, part of the World Bank, estimates a US$4.7 trillion finance gap for small and medium enterprises (SMEs) in emerging markets.

Ebury was started in 2009 to help small and medium business do cross-border trade. Ebury is able to bundle trade finance and risk management capabilities that are normally available only to larger enterprises of $1 billion+ and provide these kinds of services to smaller businesses. Ebury attempts to offer what large multinational banks offer to smaller companies.

Let’s take a look at the company and its solution.

Tradeshift Pay overview: Connectivity as a bridge to finance

Back in May 2018, Tradeshift announced Tradeshift Pay, and proclaimed it was the industry’s first end-to-end cloud platform for supply chain payments and finance, including blockchain-based financing. At that time, very few source-to-pay vendors had any type of payment offering. What those solutions provided was an approved payment request, which involved matching the invoice with documents (purchase orders, packing slips, etc.) and changing the payment status to approved for payment, or “OK-to-pay.” Once the approved payment reached its scheduled pay date, based on the specified payment terms, it was paid.

Some of the e-procurement vendors were developing payment punchout capabilities for catalog purchases, using a virtual card to pay suppliers. Almost no one had any money transmitter license, bulk payment capabilities, cross-border payments, digital wallets or other payment capabilities.

Now in 2020, the source-to-pay world has recognized that the payment gap needs to be closed. Offering capabilities around sourcing, e-procurement, AP automation, spend analytics and other important modules without providing the payment capabilities was not truly a source-to-pay, invoice-to-pay or procure-to-pay solution.

The question was how to do this. S2P, I2P, P2P and AP automation vendors (like Coupa, Tipalti, SAP Ariba) have taken different roadmaps.

In Tradeshift Pay’s case, the focus is providing a digital solution for buyer payments while providing sellers on the network early finance opportunities. The prime objective of the Tradeshift Cash solution is to help sellers get paid earlier for their invoices to address supply chain liquidity. Tradeshift built a solution that can get its network suppliers paid much faster — from an average of 30 to 45 days in the European Union and U.S. down to a couple of days.

Tradeshift Pay is built around invoice automation to get the invoice ready to be paid. But through the integration with Tradeshift Cash, sellers can now be paid before the invoice has been approved. Tradeshift has built a receivable finance solution that ties in their network transactions with their network and third -party data to provide receivables finance.

Let’s take a closer look at how Tradeshift Pay works.

The state of dynamic discounting in B2B payments

There is no argument that the demand for early payment on invoices is as strong as ever — that is to say, if you have invoices to generate. In the coronavirus era, many businesses have lost significant revenue. For example, businesses serving the U.S. hotel & food-services industry have shed 40% of jobs from January to May, and received only 8% of the government’s small business loans.

Many see early pay via dynamic discounting as a win-win — help suppliers get cash, and buyers manage cash at much better yields than alternatives.

For suppliers, it’s easy to present the advantages to make a yes/no decision — get paid early with a known discount, predictable cash flow and don’t worry about onboarding hurdles that most supply chain finance programs are burdened with.

But let’s explore the supply-side for a second. There are a number of factors at play in a COVID-19 world, some favorable and some not-so-favorable, that make one pause for consideration.

Coupa, BELLIN and Treasury Management Systems: What CPOs and CFOs need to know about TMS and links to procurement technology (S2P, P2P, AP)

market intelligence

Earlier today, Coupa announced its acquisition of BELLIN, a treasury management system (TMS) provider. We covered the announcement on Spend Matters.

And on Spend Matters Nexus, a subscription service that focuses on sector M&A, we provided background insight into BELLIN, treasury (as a function) and the value proposition for procurement and AP in bringing procurement and treasury systems closer together from a systems perspective.

In this Spend Matters PRO analysis, we provide an introduction to treasury management system (TMS) components, describe the rationale for a TMS (over manual or kludged processes) and describe their touch points (foundational and advanced) with procurement technology systems / process architectures — including source-to-pay, procure-to-pay and accounts payable systems.

This research brief is aimed specifically at CPOs and CFOs, as well as source-to-pay process leads/owners and treasurers.*

But before we begin, let us tease out why this move should be perceived as exciting by CFOs. To bastardize one of the most famous statements of all time, this is a small step for Coupa, and a GIANT leap for procurement technology. Think about what “business spend management” is for a minute.

What is “spend”? It's cash flowing out the door.

So in practice, business spend management in Coupa jargon is essentially supplier cash disbursements management — ideally impacting cash before disbursement! But treasury is cash with a big C and therefore it’s spend with a capital "S." In practice, this is Coupa's first real foray — any vendor’s, for that matter — into broadening into "big spend management,” something we wrote about 5 years ago in fact!

Prior to making this more concrete in terms of what comprises a treasury management solution and its touchpoints with a source-to-pay (or procure-to-pay) procurement architecture, let us also keep our eyes on the prize by broadening the focus of business spend management.

If the business itself (i.e., CFO/CEO/board) is focused on return on invested capital (ROIC) and C as a proxy for cash (although in practice it’s always harder to liberate it than it is in theory), then procurement can transcend its role of just improving "R" through “spend”/savings, and take a more strategic role in bringing procurement and treasury together:

  • Freeing up cash through working capital improvement programs
  • Variabilizing costs to reduce invested capital and asset footprints
  • Reducing costs of capital and improving earnings (e.g., rebates) via innovative trade financing programs
  • Aligning spend planning and cash planning to sync up procurement and treasury with each other and the business during the FP&A process
  • Investing cash into innovative suppliers (e.g., digitally disruptive ones) rather than T-bills

OK, enough (attempting) to wax eloquent on the future of finance and procurement for now.

Let’s get down to what we’re here to introduce today: “TMS 101,” BELLIN, Coupa, the enterprise opportunity, and impact on the market.

* For vendor analysis, market and M&A-centric analysis, see our Spend Matters Nexus coverage of the deal.

Bottomline’s Paymode-X: Overview and analysis of the payment automation solution

Before you disrupt B2B payments, you need to start with the legacy payment and AP infrastructure. This is not a world of B2C, where speed and convenience matter the most. It is a messy world, filled with invoices to validate, match, approve, disputes to manage, credit and debit notes to apply, quality and warranty rebates to manage and taxes to account for. It is a world in the U.S. that still clings to check payments as a dominate form of settlement between business partners, and where the concept of real-time payments is only just accelerating.

The inefficiencies in corporate payments include:

  • Low level of automation and high reliance on manual processes to capture invoice data.
  • A lack of straight-through processing and integration options into ERP solutions for payment connectivity.
  • Poor controls and visibility that can lead to payables fraud.
  • Silo approach toward managing different payment streams — cross-border, virtual cards, checks, e-payments, PayPal, etc.
  • Lack of reporting to help treasury assess cash positioning.
  • Challenges for vendors to reconcile and apply cash based on a variety of messaging formats and transmission channels.

Bottomline Technologies saw an opportunity to help enterprises pay their vendors through electronic means and acquired Paymode-X from Bank of America in 2009. At the time, the Paymode-X solution focused on enterprises paying their vendors by ACH (and other electronic means) instead of by check. Today, Paymode-X processes over $200 billion in payments annually for clients ranging from healthcare and education to manufacturing and property management.

Tipalti’s Payment Capability: Solution Overview and Analysis 

Technology has made it easier for workers to find gigs and employers to find workers. The gig economy is estimated to represent about $2.7 trillion in disbursements a year. But getting paid on time is still a challenge. According to one report on gig workers last year, despite gig work being on-demand, only 17% of gig platforms pay in real time. Many gig workers experience expenses in real time, yet it can take weeks to get paid.

A McKinsey report stated that by 2025 online talent platforms connecting people to the right work opportunities could add about another $3 trillion to global GDP. 

The explosive rise of peer-to-peer apps in a slew of markets — ranging from media content, real estate, creative content to business assistance — has helped legitimize the gig worker. 

But as the service and gig economy grows, the complexity of paying a global vendor base of independent contractors and freelance workers increases as well. Companies like Twitter, GoDaddy or Google just couldn’t grow without automating their AP, payments and tax compliance.

Let's take a look at how Tipalti's payment capabilities are addressing these challenges.

B2B payments: Are digital wallets for business here to stay?

Digital wallets have been popular in the consumer world for some time, enabling shopping online (e.g., PayPal), instant money transfer (e.g., Venmo) and payment at retail (e.g., Apple Pay). The aim is to store your credit and debit card numbers in the cloud and access them from your phone or laptop.

Over the last year, there has been a huge investment by the payments community to create digital wallets for business customers. PayPal, of course, has been in this space for some time. But emerging B2B payment companies see wallets as a revenue opportunity. When money goes into a wallet, there may be additional foreign exchange (FX) conversions and transfers to customer-owned bank accounts.

Are intercompany payments the next frontier for B2B payments?

As companies become bigger, they establish legal entities in other jurisdictions, which can include distribution centers, sales offices, buying offices and so forth. Intercompany "due to" and "due from" balances are created through the natural course of business between these entities as they buy and sell to each other. Intercompany invoices must be settled in a timely fashion in accordance with intercompany payment terms and/or service agreements.

While intercompany payment data is not tracked, the U.S. Census Bureau and U.S. Department of Commerce collect information that reveals related-party trade accounts — in 2016, the nation’s international related-party trade accounted for 42.4% ($1,537.4 billion) of total goods.

Some source-to-pay suites have made tremendous strides in adding payment functionality to their toolkit (including digital payments, virtual card payments, cross-border payments, etc.), such as Coupa Pay and Tipalti. Additionally, many B2B payment solutions can manage sending money to subsidiaries to fund their local operations in local currency.

Are treasurers ready for real-time B2B payments?

supplier network

What is the value proposition for a corporate treasurer to make a real-time payment to a supplier in the B2B world? When real-time payments (RTP) began three years ago via The Clearing House organization, the move was considered a disruptor. But let's take a look now.