In this episode, Head of Sales at OpenEnvoy, Bill Aston discusses the push-pull relationship between accounts receivable and accounts payable. The idea of bringing AR and AP together in the future requires a holistic approach - especially embracing changes in technology, processes and data with e-invoicing.
In this episode, Head of Sales at OpenEnvoy, Bill Aston discusses the push-pull relationship between accounts receivable and accounts payable. The idea of bringing AR and AP together in the future requires a holistic approach - especially embracing changes in technology, processes and data with e-invoicing.
Welcome to Finance to Futurist, a Sidetrade podcast series on how innovation data and AI are disrupting order-to-cash. cash.
Natalie Silverman:Hi, this is Natalie Silverman for Sidetrade. Welcome to Finance to Futurist. On today's episode, we're discussing the push pull relationship between accounts receivable and accounts payable. The idea of bringing AR and AP together in the future requires a holistic approach embracing changes in technology processes and data, especially with e- invoicing. Please welcome Head of Sales at OpenEnvoy, Bill Aston. Good morning, Bill. And thanks for sitting down for Finance to Futurist.
Bill Aston:Nice to meet you, Natalie, nice to be with you.
Natalie Silverman:Great to meet you, Bill. And thank you so much for joining. We'd love to know more about yourself, your background, and a little bit more about OpenEnvoy as well.
Bill Aston:Great. Yeah, so I started my career at KPMG as a auditor stay there long enough to kind of get my certificate and then immediately moved into various controllership roles and managed some manufacturing facilities and so forth, but then quickly moved into the software space. And I've been in the software space for the last 30 years resulting primarily in working for various software as a service companies in the supply chain space, the financial space in the customer care space.
Natalie Silverman:All right, well, tell me a little bit more about OpenEnvoy, because obviously Sidetrade, we play more on the accounts receivable side of the house, and you guys I think are on the AP side, but would just love to hear more about how you guys got started.
Bill Aston:Sure. So we're a couple of years old, the area that we dive into has been a challenge for companies for decades. And it really comes down to the overwhelming amount of paperwork that's required to review and cross check. In the process of doing an invoice reconciliation. Lots of different technologies have come out the primary one would be OCR, Optical Character Recognition, as a way of automatically machine reading a form. The challenge with that technology is you need to train the OCR to know you know, what field represents what you know, whether it's a part number, or quantity, or a description or what have you. So you need uniformity. In terms of the forms that are coming in. There's just so much paperwork involved, especially in the freight arena, that it becomes humanly impossible to do a proper audit manually. So the introduction of the OCR technology many decades ago was a step in that direction. There has been other kinds of things that have been done in terms of trying to set up vendor portals where you try to get your vendors to either enter data directly into the portal to get uniformity. And that data, the idea of potentially outsourcing these tasks to places where labor is less expensive. But at the end of the day, the state of the art is humans trying to do a process that is very, very complex involves just too much paperwork, and too much cross time. And it becomes impossible for a human to keep in their head. Things like a line item on an invoice showing up on two separate invoices. You know, our customers end up being double billed for that, for example, it's just an over overwhelming task. And when we saw that this problem was still not being addressed. Our founder Matt Tillman working in the industry was managing several billions in spend in that area became frustrated with this and saw that there's got to be a better way. So we have a technology stack that allows us to ingest forms, paperwork, PDFs, Excel spreadsheets, multi page contracts, basically every document that's required to extract the information and provide structure to that information so that we can then perform the reconciliation process using AI and achieve accuracy rates of over 99%. This shortens the amount of time that is required to allow our customers to pay invoices that they know are correct, and then not pay invoices that they know are incorrect and preserving the cash in the first place as opposed to paying the invoice anyway and then trying to call back that cash later. So there's several different benefits and that is the ability to complete coverage of all invoices to do it accurately. And to do it in a in a timely fashion that really eliminates the need for human data entry, human reconciliation, or really humans involved in the process at all, we can really fully automate the AP process or this part of the AP process from end to end.
Natalie Silverman:Bill, I love this and I feel like I'm having a conversation a little bit that's a mirror image, right because again, we're seeing the same challenges the same issues, that idea of manual intervention and the automation and again, moving from analog to digital, all of that but on the AR side. So really excited to have this conversation with you because again, at the end of the day, we're both trying to solve the challenges, the same challenges really that CFOs are facing, I guess I would say on both sides of the fence. I thought maybe a good place to start then is why don't we talk about some of those top challenges that you're seeing from a CFOs perspective right now? And what are they facing? Because we know, you know, there's obviously big issues out there, like inflation that are causing issues on both sides. But what else are you seeing that that really is a top challenge for the CFO?
Bill Aston:Well, so if you kind of look back at the last couple years, I've seen a tremendous increase in the digital transformation and efforts, big systems, projects, things going on, that were happening in an environment where the economy was good, everybody was growing, we had a prolonged period of really healthy economic environments that would allow for the investment in infrastructure and new systems and digitization and digital transformation, etc, etc. But what we're seeing now is a holy smoke moment where the CFOs are saying, Oh, crap, I've got all these projects in flight. But now I'm actually starting to layoff people. And we have a huge amount of uncertainty in the future around, you know, inflation is one of them, supply chain risk is huge, you know, we've got potentially some hotspots from a war perspective, and Ukraine and Taiwan, and you know, the shifting of supply chains out of China potentially into other locations. And, you know, people are basically battening down the hatches right now getting ready for something that you know, many are saying is going to be a really, really big disruptive downturn. So the CFOs now are bracing themselves, they're needing to do more with less, and they need to increase visibility to the business for both planning and execution purposes. So what naturally falls into that, I think, is the need to do automation. And not just automating what they're doing manually today. But in the process of automating, they want to be able to increase things like speed, accuracy, and visibility, they've got to complete these projects that they've they've had that are in flight, you can't just stop in the middle. So they've got to figure out how they can wrap up the projects and choose projects very wisely in the future, over the next say, 12 to 24 months that they know how to have low risk and have a guaranteed ROI that are going to allow them to cut costs at the same time.
Natalie Silverman:Yeah, I want to get into a little bit more about what you mentioned around digital transformation. And even you know, in Sidetrade, we talk about finance transformation, which I think even is beyond just the technology part. But let me take a step back, because I used to work in this AR space and with the CFO, the Office of the CFO years ago. And I feel like you know, things haven't changed all that much, maybe in the last seven to 10 years, you know, and again, let's go back to that idea that there are synergies, right, between AP and AR. And obviously you've mentioned they go hand in hand, they're both very vital to cash flow management, and working capital. But it just seems like even again, when I was in the space years ago, that AR is always playing catch up a little bit to AP, and that you guys on the AP side, were always a bit ahead of the curve in terms of automation technology. So I just wondered, you know, why do you think that is? Why do you think AR why are we still playing catch up to what you guys already started to maybe implemented to think about years ago?
Bill Aston:You know, I think it comes down to that old saying, possession is nine tenths of the law. And I think that with in the AP side, you know, if I already have the cash, and somebody wants my cash, and they're invoicing me for that cash, while I still have that cash, I have control of the situation and have more power to dispute invoices, or make sure that they're accurate before they're sent out. So that's one of the big things about, you know, open invoices, the ability to do that reconciliation so fast that we can stop the payment for it. And then avoid the claw back and the you know, begging to get your money back after the fact. On the AR side, it's kind of the opposite, right? The customer has already in most cases gained possession of whatever you sold them. So they have the product and they have the cash. And now you have to kind of chase them around to try to get paid for something so that I think the automation that exists on the AR side is primarily in the collections area, right? Automating robocalling, and all the things that go on in the contact center and basically trying to get your cash in the first place for things that you've already shipped product for. So it's a very vulnerable place to be because the people you're trying to get the cash back from already have your product. So you have it's a very powerless kind of position. So I think the objective would be similar to what we're doing on the AP side and something that OpenEnvoy could also do on the AR side is make sure that you have a solid evidentiary pack that backs up the transaction that puts people in a are in a position to demand cash. And in some cases, like for a drop ship, for example, make sure that we've received the cash before we pay the bill on the cost of goods side. So I think that what would enable the AR side to catch up more is the speed and accuracy of having a fully supported evidentiary pack on the AR side, that is really the same evidentiary pack that we use for the AP side.
Natalie Silverman:That's a great point, you know, and I think that is absolutely something that we can think about here on the AR side. And, you know, the idea of bringing AR and AP more together, you know, it really does, as you mentioned previously, it requires a holistic approach, and embracing some of those changes that are happening across technology, processes, payments, and you know, in the end really helping to deliver a whole new model of interaction. So I just wondered, you know, in your thoughts, what are some best practices that you've seen to kind of create maybe more of that closed loop system between AR and AP, and I know, you just mentioned a couple examples, but any other best practices that you're seeing?
Bill Aston:Yeah, I think that when you look at the things that create problems with AR collection, obviously, this is a self-serving perspective, but if your invoice to your customer is wrong, and let's say it's wrong over, you know, a small percentage of the dollar value of the invoice, oftentimes that whole invoice gets hung up as the customer debates the details in the invoice because it's wrong, you have the potential to hang up a large dollar amount on an invoice because of a small discrepancy. So I think that the timeliness and accuracy on both sides of the equation can liberate the process from humans arguing about whether something is right or wrong. So I think that the timely submission, the timely reconciliation of both the AP and the AR side, with evidence in hand for resolving disputes quickly, if you think about it, when there's a dispute that occurs on the AP side, or on the AR side, you've got clerks kind of running out there trying to gather evidence and pull this documentation together to support their point of view that something is right or wrong, that creates sometimes, you know, a week or two weeks or more in back and forth and emails, and that this is what I found. And this is what I found that that kind of back and forth, that's just the time sink, while that cash is sitting in somebody else's hands waiting to move to who's supposed to have it, right. So I would say from a best practices perspective, and in the arenas where we can impact is actually having that evidentiary pack available as soon as possible and immediate. For visibility sake, the thing that we can do on the AP side is making sure that the AR has been received in certain transactions. dropships are one that kind of come to mind. But if you have passed through Billings and other types of cash flows where you know, you may be an intermediary, and you're just basically holding the cash on behalf of somebody else, and that's ultimately going to get billed or pass through to another party in the chain. It's very important, I think, to check to make sure that you've received the cash before you send out your cash, if especially if you're in one of those intermediary steps.
Natalie Silverman:You talked a little bit about digital transformation and the way that we talk about finance transformation, and maybe what the office of the CFO is doing, it's more than just technology and automation. You know, it really is about evolving everything right from your people to your process, technology and data, and just helping the finance team overall become more strategic, proactive, almost agile, kind of like a product team. So you know, I'd love to hear your thoughts too on where do you see the future going, especially from an AP perspective. What's next for you guys at OpenEnvoy want to hear a little bit about what's coming, and also to how you're helping again, that CFO with that finance transformation journey overall?
Bill Aston:Well, you know, it's interesting, we were we had a product meeting, kind of talking about these things, and looking at sort of the longer term perspective, there are certain transactions or certain processes in the finance group, where ideally you would have no humans involved in them at all, you know, and I asked the silly question is like, Well, what about the reports and the dashboards that people would want to see and, and be able to make decisions about etc. And the thing that was interesting coming back on that was, the reality is, is that the decisions that need to be made in the flows of AP and so forth, are oftentimes better automated, where with AI and the the abilities that we have now, we can actually make better decisions faster in an automated fashion than actually stopping the process for human intervention, as it goes through, of course reports and you know, informing the business as to what's going on is super important. But it is a very interesting thing that wherever humans are touching the process, they tend to get messed up. And that's not true for all of the financial processes. But certainly in the AP realm, in the areas that we play, we haven't seen any reason why you cannot fully automate the entire process from invoice receipt all the way through the reconciliation process, the credit memo process, the exceptions management process, where you can't build in not just the reporting on what happened, but what are we going to do about the situation, those things can be automated as well. So we believe that we can actually automate the entire process from from start to finish.
Natalie Silverman:So what's next for you guys? What are what are you working on? What would you say are some of the top priorities that you're seeing for yourselves that open envoy in and also to the CFO for 2023 and beyond?
Bill Aston:Well, for us right now, we're experiencing tremendous growth, we've got lots of fantastic customers, where we're actually learning about the impact that we have on on their business in different industries, like we have, you know, lots of shipping and logistics customers, we're also getting into the media space, believe it or not, where there's a lack of visibility and impossible to reconcile invoicing around advertisement and spot placements and things of that nature. So there's new areas of value that we're finding our customers, suppliers, we're changing prices. And those price changes were trickling through too slowly. And the customer actually had a situation where the price that they had on the website was lower than the cost that they were going to be paying for those because of the latency that was involved in the price changes that were occurring flowing through. And because we were reconciling to the the most up to date price sheets that were from the vendor, we already had the right data, and we were catching it on the invoice but they weren't trickling through to the customer's website in time. So that's just an example of a area that we can provide sort of system of truth information, using the data that we naturally collect through the reconciliation process. So we're finding new use cases, new things in the AP space that are exciting, lots of brand new customers that we're onboarding right now. So we do have our our hands full and in bringing all those customers up to go live status, which is exciting.
Natalie Silverman:Thanks, Bill for your insights into the future of finance for citrate. This is Natalie Silverman.
Conclusion:This has been another episode of Finance to Futurist a Sidetrade podcast series. Make sure you catch every episode by subscribing to our podcast on Sidetrade.com or through your podcast platform of choice. Thanks so much for tuning in. This podcast is brought to you by Sidetrade and is for general information purposes only. All rights reserved.