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.

Coupa Pay: Solution Overview — 2020 Update

For most companies, supplier payments represent 80% of total payments (internal and external). Payments include intercompany payments and payments to third party vendors. While there is no “typical” company, many larger enterprises operate multiple legal entities (think sales offices, factories, distribution centers located globally), with multiple banks, and hundreds of banks accounts. Tens of thousands of vendors, suppliers, gig workers and employees must be paid globally. It is messy, to say the least!

The payments function is, still, generally, a largely unautomated backwater. Some of the most (comparative) manual processes within finance and procurement still exist around generating supplier payments and handling different payment types. The challenge of doing this with multiple bank relationships and multiple disbursement accounts, while making sure the company has an updated view of its cash position via current payables information further complicates (and slows) activities.

For these reasons, B2B payment has become a very hot topic. So it’s no surprise that Coupa, a source-to-pay suite provider of business spend management solutions, is interested in carving out its share of the opportunity. But Coupa is not alone. Whether it be real-time fraud detection, applying APIs to bank connectivity or facilitating cross-border payments, there is no shortage of investment by numerous fintech vendors to help companies become more efficient with their payments.

But probably nowhere is there a bigger interest than managing payments in a unified single interface, across multiple channels, banks, rails, and to handle both domestic and cross-border payments to suppliers, contractors and employees while performing real-time fraud detection to stop payments before they are made — reducing dependence of after-the-fact payment recovery processes. This is where Coupa’s vision comes into play with its Coupa Pay offering.

From a procurement and AP lens, Spend Matters PRO has covered Coupa Pay before. See:

Today, we'll focus not only on updating our coverage of Coupa Pay to reflect the latest release capabilities as of Q2 2020, but also provide a perspective on the solution from the lens of the finance organization, especially account payables, which is tasked with much of the complex orchestration of B2B payments.

What do banks’ latest B2B commercial payments results mean for fintechs?

A number of top-tier banks recently announced first quarter financial results, and if you glean the comments, the commercial payment news in the coronavirus era was not good.

The results show that no one involved in B2B payments is immune. While painful, these top-tier banks are able to withstand the lost interchange and foreign exchange (FX) revenue.

The frightful thing is that the worst is yet to come in the form of bankruptcies, Chapter 11 filings and slowing global trade. The rapid number of business bankruptcies happening, from Neiman Marcus to J. Crew to Gold’s Gym and many more industries, such as travel-related firms, retailers and restaurant chains, will significantly, and negatively, impact B2B payment volumes.

How B2B payment companies can expand supply chain finance solutions

If we are involved in receiving payable files, then we can certainly add early pay finance. While there is growing interest on the part of B2B payment providers to develop early pay capabilities, the credit and banking world has changed substantially in the surreal reality of the coronavirus crisis. The low-risk reputation of “purchasing” invoices or receivables has changed dramatically with coming credit downgrades, deterioration in balance sheets and income statements, seller and buyer bankruptcies, and many other aspects.

Nvoicepay: Vendor Analysis (Company & Solution Overview)


Every business has to pay its suppliers, contractors, vendors, gig workers. But let’s face it, the payments task is a back-end necessity that’s typically full of manual workflows, manual approval processes and a mixture of payment streams from checks to cards to ACH to the occasional overseas payment.

As companies grow, these processes can become costly, convoluted and unscalable. So companies face a number of decisions related to payments:

* How can I move checks to e-payments to capture both efficiencies and rebates?
* How do I manage the various compliance and fraud aspects of paying suppliers, from collecting 1099s or W-8s etc. to managing fraud (e.g., collusion between subsidiaries, false invoices, etc.)?
* Do I use an outsource provider or work with my existing bank relationships?
* Can I consolidate payment among my enterprises into a shared service?
* Are there early payment initiatives that can help both my supplier base and provide a ROI for my firm?

Nvoicepay is an outsourced B2B payment provider that addresses some of these questions.

Nvoicepay is a financial technology company that outsources supplier payments to U.S. organizations through cloud-based software and managed payment services. Founded in 2009 as a cloud payment hub, Nvoicepay focuses on the payment piece and connects to any AP workflow or scanning system the client has in place and does not attempt to automate the front end invoice-receipt process or change the client’s current flow.

What makes Nvoicepay interesting is the idea that the big hurdle in payments has less to do with technology and more to do with the services surrounding it. This belief leads to three unique points of value for Nvoicepay’s solution.

Will supply chain finance and p-cards collide as B2B payment techniques?

From the banks’ perspective, supply chain finance (SCF) is an uncommitted credit facility to a large company to purchase invoices from their suppliers. There are many issues around this simple statement, from the complexity of onboarding non-customer suppliers to the accounting treatment concerns that are now reeling heads.

With any finance technique, money needs to change hands and a payment is made to some supplier, either domestically or offshore. With SCF, the payment happens to be done early, by a third party that transfers funds electronically to the supplier’s bank account.

Previse: Vendor Analysis — Company Background and Solution Overview

Many new models of non-bank lending have emerged over the last few years that rely on funding buyer-approved invoices with third-party money. Some models have generated respectable volume, but they still pale compared with total B2B transactions.

The problem is that B2B lending is fuzzy, given how difficult it is to assess risk for all counterparties to a trade. That’s why traditional supply chain finance (SCF) starts with the buyer as the central actor. By leveraging the payment approval process to provide early payment on an invoice obligation to the buyer’s supplier, the buyer typically provides a guarantee that helps mitigate the risk of post-confirmation dilution.

But taking this a step further — funding the invoices that have been verified but before they have been approved for payment — adds another layer of risk. Invoices verified (i.e., only receipt confirmed) can suffer from dilution, where some deduction is made off the invoice value.

Dilution, along with fraud, is one of the top reasons pre-approval financing has failed to take off. Most SCF platforms do not play in this space or have failed with their attempts. Some lenders and fintechs have tried to attack this space but realized that, in spite of new data sources, real-time underwriting, and operational processes to manage risk, pre-approval invoice lending is just hard.

Previse, however, thinks it has cracked the pre-approval invoice finance nut. The London-based vendor has developed an AI-based instant invoice payment solution called InstantPay marketed to large enterprises and their supplier relationships. And while it thinks of itself more as a payments play than a trade financing product, Previse’s solution takes aims at the dilution problem in a way few SCF platforms have matched.

This Spend Matters Vendor Introduction provides a company background and an overview of Previse’s solution set.

Can government save the supply chain finance market?

Supply chain finance (SCF) is a relatively small market compared to its more short-term liquidity cousin, commercial paper (CP). Yet, the SCF market is going through turbulent times and may need to be rescued with some form of guarantees. The CP market is extremely important to company liquidity and was frozen before the Fed put together a $1 trillion backstop. Essentially, CP broker-dealers would not buy paper because they were unsure companies would be able to pay it off at maturity within 90 days or less. The Fed announced a special credit facility to purchase corporate paper from issuers that have been having a difficult time finding buyers on the open market.

As such, that leaves us the supply chain finance market, where arguably there are anywhere from $50 billion to $75 billion in outstandings at any one time compared to $1 trillion or more for commercial paper.

Segmenting the $1 trillion B2B payments market: Our graphical take (Version 1.0!)

The B2B payments market has a lot of solution providers, and it's time for Spend Matters to highlight some key players across the market landscape. But first, let's take a look back.

Let's compare Goldman Sachs' 2018 overview of the $1 trillion B2B payments market with Spend Matters' view of the landscape now. We break out more than 40 B2B solution providers by category.

As coronavirus idles service economy, ‘merchant cash advances’ can help e-commerce vendors


The coronavirus outbreak is shutting down our service economy. Besides the usual suspects — restaurants, bars, gyms, etc. — we have a whole host of products and services where demand is collapsing.

It’s tough sledding when demand is vastly reduced or just plain stops.

One area where we won’t see declines is around digital commerce. As widely reported, Amazon announced plans to hire 100,000 warehouse workers. Many of the sellers on these platforms will be in need of cash to survive or to meet demand, and thus keep workers paid, including employees and gig workers.

While merchant cash advances (MCAs) may not be the cheapest form of generating quick cash flow, they are fast and are not a loan, but a sale of future receivables.

Currencycloud: Vendor Analysis (Background and Solution Overview)

Supplier compliance

The era of decoupled procure-to-pay processes and technology — including B2B payments — within finance are coming to an end. But integration is not just happening within the four walls of an organization (e.g., API-based integration between SAP and Kyriba or Oracle and Basware). It’s happening between bank and non-bank providers and their customers, and customer systems. Specifically, areas such as supply chain finance, foreign exchange (FX), cross-border payments, invoicing and related solutions are increasingly moving from independent applications to ones that are integrated into bank and non-bank partner technology environments.

FX and cross-border payments are two prime examples. Most cross-border payments occur primarily through a correspondent banking network. Yet sending payments through the network can be a costly proposition for fintechs, challenger banks, FX brokers and others that must use banks.

Typically, if you want to send money via such a network, a bank has to keep money on deposit at a Nostro account at a correspondent bank in that foreign country. The funds in the account are used to settle the payment, which is directed by a message sent over the SWIFT network. If the bank does not have a Nostro account directly, it must go through correspondent banks.

This model works. But it is antiquated and inefficient, often resulting in high costs and slow payments. There are a number of technology firms that are providing the infrastructure to upend this process, including Currencycloud.

This Spend Matters Vendor Introduction looks at Currencycloud’s capabilities as a cross-border payments provider, offering an overall introduction and summary, along with insight into how it handles foreign exchange transactions across specific use cases. Banks, non-banks and AP/P2P vendors building out global payment capabilities that are looking to OEM solutions in this area will find this analysis most relevant.