Naru heads revenue and P&L growth at B2B fintech Global PayEX that focuses on improving working capital efficiency in the order-to-cash & procure-to-pay cycle. A believer in using tech-enabled business models that solve customers’ problems, Naru has enabled many market-leading growth metrics on revenues and profitability over the last 20 years. His specializations include P&L growth, sales organization setup, and scaling, transition/ program management, consulting, change/ transformation, setting up and running large operations. His experience spans countries and continents – the US, UK, Europe, India, Asia, GCC, Africa, and Australia. In a conversation with Digital First Magazine, Naru talks about the status of AR and AP automation in India, company’s strategic plans for the year, growth target and much more.
AR and AP automation is gaining momentum for effective account management. What is its status in India?
From our experience of having interacted with hundreds of large Indian corporates, we can certainly see the awareness and willingness in them to go for AR and AP automation and this is now also extending to their sales & procurement channels. The key areas where we are seeing significant traction are:
- AR (traditional trade) – invoice presentment, dispute & deduction workflows, electronic payment collection and automated reconciliations
- AR (Modern / institutional / e-Commerce) – automation across the O2C (order to cash lifecycle) – starting with payment reconciliation to invoices (cash application), and moving further upstream to PO and GRN data automatic reconciliation and intake.
- AP – end to end automation of AP starting from vendor registration, digitization of contracts, auto reading of vendor invoices, auto matching / reconciliation to PO and GRN / SRN, digital workflows for exceptions (v/s paper and emails now), automatic bank payouts and reconciliation back to ERPs
- Lending both AR & AP – digital lending based on actual cash flow data is gather traction across the ecosystem. This includes AR Channel/ dealer financing and AP invoice financing (discounting, factoring)
Both from a demand and supply perspective, India is coming up the AR and AP automation curve leading to a wider and faster adoption of these solutions.
The increasing share of organized market in Indian trade aided by modern trade channels, e-commerce, GST implementation, E-invoicing, smartphone/tech penetration etc. is acting as a catalyst in adoption of AR & AP automation and discouraging market participants in continuing with manual accounts management processes. However, what may vary is the extent of automation availed by an entity that could depend on its size & nature of business, existing pain points, cost considerations etc.
Given that general trade continues to play a significant role in the Indian ecosystem and comprises of a big chunk of the MSMEs, we now see AR & AP automation solutions addressing this segment as well including that from Global PayEX. There is a mix of top-down approach where such solutions flow from the large corporate to its distributors/vendors and the bottom up approach where solution providers directly focus on the MSMEs.
In the post-pandemic world, what are the accounts payable trends we can expect to see? How will features such as Intelligent Data Capture and advanced machine learning and analytics help companies to eliminate slow and manual processes?
Covid-19 fundamentally changed the way of doing business including accounts payable given people were working from home. Managing vendor processes through physical or scanned documents got even more tedious than it already was, be it requesting for quotations or exchanging POs/invoices or Proof of Delivery(POD) process for goods receipt etc.
So, in the post-pandemic world we can already see trends on digitization / automation of overall vendor management. There will be increased focus on having digital interface between the corporate and its vendors, automation of recon processes like 3 way match of invoice, GRN and PO, digitization of processes like POD, dispute management, exchange of documents etc and last but not the least automation of vendor payments.
Features such as Intelligent Data Capture and advanced machine learning and analytics will help companies improve the efficiency of supply chain management
The biggest and most pressing need is invoice intake/ reading. Today a lot of invoices are still received in paper format, then scanned, barcoded, indexed and manually data entered etc. This can be significantly automated thanks to the government initiatives around eInvoicing, and using machine learning (ML), artificial intelligence coupled with OCR.
Apart from the improved efficiency in procure to pay cycle, the data analytics available with companies will help them better categorize their vendors, incentivize the better performers and take remedial steps for the laggards. This will also help the companies actively monitor any bottlenecks in their AP cycle, enable on time payments, enable before time payments to leverage early payment discounts, and also help prevent frauds.
In the coming decade, can we expect a greater implementation of AI and machine learning in AP solutions?
Yes, certainly and this trend is already visible. Given now the B2B ecosystem is increasingly going down the path of digitization, use of AI and ML will be increasingly relevant to automate more and more processes on AP side as well as provide data analytics for value added insights. AI and ML in AP solutions will help free up bandwidth via rapid automation of basic manual processes and will enable the company’s resources to focus on more critical aspects of working capital optimization such as improving their vendor base, identifying gaps in their processes, better cash flow management, strategic planning etc. Also, with work from home becoming a more common feature of the corporate culture, AI and ML based solutions will play an increasingly important role in enabling a digital workspace environment.
How has 2021 started off for Global PayEX in terms of clients and transactions?
2021 has begun well and we are continuing to see approximately 40% QoQ growth currently in terms of both dealer on boarding and transaction value and volumes. From a customer additional perspective the momentum continues. Since January, we have added one of the largest FMCG players in India, a leading electrical appliances manufacturer, a global auto components manufacturer and a mid-tier Indian pharma company to the list of our clientele.
What are the company’s strategic plans for the year?
We are eyeing great milestones in 2021. We are launching an Accounts Payable (AP) financing product which have capabilities like discounting, dynamic discounting, factoring and reverse factoring. We are also developing Ecosystem specific solutions in certain segments like FMCG (seller) with modern trade retail chains (buyers) which will include enabling “STP” straight through processing across data sets – Purchase order (PO), GRN (Goods receipt notes), Invoices, Payment/ Remittance advice. We focusing on strengthening our relationships with our banking partners both in India and across International markets like US, EMEA, APAC. We will also be expanding internationally which focus on US, Europe and GCC expansion both via partner banks and via direct go to market efforts.
What about the growth target of the company?
In India, we expect to continue our growth trajectory of 30-50% QoQ growth in revenues, and transactions. Currently we have approximately 14k SME’s (dealer/distributors) on our platform and we expect this to keep growing significantly and we expect to continue enabling dealer/channel financing for this segment. We are market leaders on AR automation/reconciliation via our FreePay and AlgoriQ – retain and grow the customer base. From AP automation and Financing point of view, we have closed the initial few deals and we intend to build significant momentum in this space. Internationally, we are targeting multi-million USD revenue in the coming year (FY2021-22). We are in advanced stages of contracting on a few deals and we hope to further increase the pipeline.
As the B2B fintech processed over Rs 100 billion worth of transactions in 2020 for B2B buyers and sellers through multiple banking, what do you see as your next milestone?
We expect to increase transactions processed value and number (invoices/ payments) by thrice compared to what we did in 2020 in India. India and internationally, we intend to have 100+ large corporates on our platform by the end of 2021.
How has the pandemic impacted or supported your business?
The pandemic has accelerated the need for digitizing B2B process flows and payments. This is reflected in the following:
- 40% growth QoQ through the last 3 quarters in transaction numbers and volumes processed digitally through our platforms
- Increased adoption of the electronic payment methods available via our platform like NACH (pull payments) and NEFT / RTGS payments – move away from cheques. Currently we 95%+ payments using these 2 channels with a small percentage via UPI, cards and Open banking initiatives. We offer an end-to-end mandate processing platform to enable our customer’s end clients (e.g. dealer, distributors) to move away from cheques to NACH and this has seen big traction during the pandemic and continues to see significant traction
Institutional customer reconciliation – our AlgoriQ product has seen significant uptake. AlqoriQ automates reconciliation using ML (machine learning) and AI (artificial intelligence) for our customer’s modern trade/ e-commerce /institutional clients. The pandemic has meant faster growth in e-Commerce and hence larger reconciliation challenges – which AlgoriQ helps automate significantly (90%+)
What is the response from Indian firms and companies in terms of an AI powered cloud platform like yours? Do you think more awareness and acceptance is still required?
We have been amazed at acceptance of India Inc – at least the large size private Indian companies, and mid and large MNCs companies. Though we are a small and early-stage company, we have 40+ large corporates on our platform – both MNC and large Indian companies. Given the significant traction and awareness in “consumer” segment digitization and use of AI, there is a lot of interest in Indian firms to explore how AI can be used for B2B automation, reconciliation and financing across Accounts Receivables and Accounts Payable functions.
We believe there is significant opportunity with the other segments of India Inc like public sector companies, certain segments of mid-tier Indian companies. Here we believe some more awareness and acceptance is still required. But, we have already seen some good success in certain segment of Indian mid-tier private companies like Goldmedal Electricals and hence, we are confident that other companies will also be adopters. The need is NOW as old ways of AR / AP processing cause significant missed opportunities for working capital optimization