Série de podcasts Medius

Speaker 1

Bienvenue dans Medius Inside. Ici, on parle comptabilité fournisseurs et gestion des dépenses simplement, concrètement et sans détour.

On donne la parole aux experts pour aider les équipes finances à gagner en efficacité et surtout garder le contrôle.

Speaker 2

Pendant longtemps, un reçu était une preuve, une trace tangible d'un achat réel d'un moment vécu. Aujourd'hui cette preuve peut être générée en quelques secondes. Un outil comme chat g p t avec son modèle récent cinquante zéro ou une liasse générative d'image peut produire un reçu qui semble parfaitement authentique sans jamais avoir existé. Et Dans un environnement comme celui des notes de frais où les justificatifs sont au coeur des processus de contrôle, cette évolution technologique pose une question nouvelle. Comment s'adapter sans soupçonner Comment détecter sans déranger et surtout comment continuer à faire confiance quand l'image ne suffit plus Zoom sur ce sujet émergent avec notre expert du jour.

Et pour en parler, je reçois aujourd'hui Sarah Dawish, Marketing Manager chez Expensya by Medius, bonjour Sarah.

Speaker 3

Bonjour Scandod, merci de m'avoir invité sur le podcast, faisant plaisir surtout pour parler d'un sujet aussi passionnant et d'actualité.

Speaker 2

D'actualité c'est le mot, la question de la vérification des justificatifs n'est pas nouvelle dans les directions financières, mais l'arrivée de l'IA générative, elle, bouscule les repères établis.

Sarah selon toi, quel est aujourd'hui l'enjeu principal autour de de la détection d'éléments générés par l'IA dans les justificatifs de dépenses professionnelles et pourquoi est-ce un sujet qui devient stratégique pour les entreprises

Speaker 3

Bon, ça devient stratégique parce que tout simplement ça devient de plus en plus compliqué à gérer.

Pendant un temps, on a un reçu trafiqué et ça se repérait facilement, donc il y a une date qui cloche, un logo qui est un peu flou ou un montant qui n'a pas sens, qui est incohérent.

Mais aujourd'hui avec les modèles comme g p t cinq, on peut générer en quelques secondes un justificatif qui est d'une qualité visuelle irréprochable et avec des détails qui semblent vraiment authentiques.

Et et voilà du coup le problème c'est que dans beaucoup d'entreprises et ça c'est la réalité malheureusement, le contrôle il repose encore sur l'oeil nu ou sur ce, sur des systèmes qui n'ont pas été pensés pour ça.

D'ailleurs on a fait une étude de chez chez Médius dernièrement et on a, on a vu que près d'un tiers le professionnel de la finance, ils avouent qu'ils qu'ils ne sauraient pas reconnaître un un justificatif créé par l'IA. Donc un tiers c'était énorme et en parallèle trente pour cent ils constatent déjà une hausse de faux justificatifs depuis deux-mille-vingt-quatre.

Donc aujourd'hui on n'est plus dans une monnaie qui est hypothétique, mais c'est une réalité qui s'installe et qui fragilise directement la capacité d'une entreprise à faire confiance à ses collaborateurs et à valider des dépenses sereinement. Alors

Speaker 2

justement chez Expensya by Medius, vous avez introduit une fonctionnalité capable de détecter les images générées par par l'IA, par intelligence artificielle dans les justificatifs. Concrètement, comment cette technologie fonctionne-t-elle et comment s'intègre-t-elle dans le parcours utilisateur sans alourdir le processus

Speaker 3

Donc notre approche elle était simple, c'était de se dire comment on détecte d'une manière efficace mais sans pour autant ralentir et sans complexifier leur vie de l'utilisateur.

Donc concrètement ce qu'on a fait c'était d'intégrer dans expense un module d'analyse visuelle qui scanne chaque justificatif au moment où il est soumis. Donc l'intelligence artificielle elle va chercher des signatures propres images générées par d'autres IA et ça peut être des des incohérences dans les métadonnées, des motifs visuels qui ne sont pas typiques ou des micros détails impossibles à repérer à l'oeil nu. Et s'il y a un risque il est détecté, l'information elle remonte directement dans le flux mais de manière non bloquante. Donc le justificatif il est signalé pour vérification mais il n'est pas rejeté d'office.

L'objectif c'est que le collaborateur il ne se sentent pas qu'on le soupçonne et que l'équipe finance puisse décider avec un maximum d'informations, mais sans perdre de temps à enquêter à l'aveugle.

Speaker 2

Justement et pour les équipes finance comme pour les collaborateurs terrain, qu'est-ce que qu'est-ce que ça change En quoi cette approche permet-elle d'installer une forme de confiance sans tomber dans le contrôle excessif

Speaker 3

Alors pour les collaborateurs, ça veut tout simplement dire beaucoup plus de clarté, ils savent que c'est un justificatif, il est signalé, ça ne veut pas dire qu'on les accuse, mais parce qu'un outil neutre, il a relevé un point technique à vérifier.

Et évidemment pour les équipes finances, c'est un vrai gain de temps et de sérénité.

Elles, elles ne vont plus passer du temps et des heures à des à jouer au détective, elles vont se concentrer sur les les cas à risque réel. Et surtout ça ça change le rapport à la confiance. On sort du contrôle policier pour aller vers un contrôle qui est augmenté, intelligent et beaucoup plus transparent.

Speaker 2

Beaucoup plus transparent. Merci beaucoup Sarah pour ces éclaircissements et pour ton expertise sur le sujet.

Et donc face à l'émergence de ces nouvelles technologies, la tentation serait de renforcer les règles, de verrouiller encore plus les flux. Est-ce que cet enjeu met en lumière C'est peut-être autre chose, la nécessité de repenser la transparence.

Non pas comme une suspicion permanente, mais comme une façon d'accompagner, d'outiller et d'équilibrer la relation entre contrôle et autonomie. Et si au fond la bonne question était moins est-ce que ce reçu est vrai, est-ce que notre système est prêt à faire face sereinement à ce nouveau contexte C'était Medius Inside, l'essentiel c'est rarement ce qu'on voit en premier. Merci d'avoir suivi cet épisode, je vous dis à très très bientôt. Merci au revoir.

Speaker 1

Bienvenue dans Medius Inside. Ici, on parle comptabilité fournisseurs et gestion des dépenses simplement, concrètement et sans détour. On donne la parole aux experts pour aider les équipes finances à gagner en efficacité et surtout garder le contrôle.

Speaker 2

La gestion des dépenses d'entreprise reste l'un des paradoxes du monde du travail. On vit dans un univers où les paiements sont instantanés, où les outils digitaux simplifient tout. Et pourtant, lorsqu'il s'agit des frais professionnels, les entreprises engagent encore avec des cartes multiples, des avances de trésorerie, des remboursements ou encore des rapprochements interminables. Mais derrière cette complexité, il y a une réalité, une charge administrative qui pèse sur les collaborateurs comme sur les équipes financières. Alors la question est simple, pourquoi un geste aussi banal que payé reste-t-il compliqué dans le monde professionnel Exploitons cette question avec notre expert du jour.

Et pour en parler, j'ai le plaisir de recevoir Guy Dimain, VP produit chez Medius. Et Guy, merci d'être avec nous aujourd'hui.

Speaker 3

Bonjour, merci pour l'invitation.

Speaker 2

Alors ton expérience te place vraiment à l'intersection des besoins des collaborateurs, des attentes et des actions financières, un regard qui promet des réponses concrètes et et je t'invite vraiment à commencer par le par le point central, pourquoi aujourd'hui la gestion des dépenses reste-t-elle un défi majeur même avec toutes les technologies dont nous disposons aujourd'hui Y a-t-il des causes qu'on ne voit pas toujours à dire

Speaker 3

Je dirais tout d'abord parce que nous vivons aujourd'hui une évolution de nos modes de travail.

Il y bien évidemment d'un côté la généralisation du télétravail, mais aussi je dirais des nouvelles typologies de dépenses. Et en disant ça, je pense notamment à l'achat des logiciels en ligne. À titre d'exemple, c'est une typologie de dépenses qui a explosé chez nos clients.

Par exemple cette année les achats de licences Open a I ont plus que triplé par rapport à l'année dernière.

Ensuite je dirais la fragmentation des outils que les équipes finances utilisent. Donc souvent on voit la tendance de d'adopter une nouvelle solution pour répondre à un besoin spécifique sans vraiment avoir le temps de repenser l'ensemble de processus. Et c'est là où en fait une problématique aujourd'hui puisque ça va nécessiter beaucoup de charges de coordination de l'ensemble de ces outils, mais aussi malheureusement ça représente encore plus de sources d'erreurs dans la gestion manuelle et la réconciliation des données entre les différents outils.

Et enfin il ne faut pas oublier que les dépenses professionnelles impactent l'ensemble des collaborateurs et et notamment en cas de processus de remboursement lent ou encore dans le cas où on va demander aux collaborateurs d'avancer des sommes importantes pour pouvoir payer leurs dépenses professionnelles.

Il y aura bien évidemment malheureusement un impact négatif sur le collaborateur que ce soit sur ce, une pression financière que qu'ils vont qu'ils vont percevoir de la part de leur employeur, mais aussi une baisse de motivation, une insatisfaction par rapport à l'entreprise dans laquelle il travaille.

Speaker 2

Alors tu le disais très très clairement de nombreuses entreprises Angle encore avec des outils des outils fragmentés pour reprendre tes mots, pour gérer leurs dépenses, ce qui peut être très souvent complexe et source d'erreurs. Aujourd'hui, Medius propose une approche différente avec avec ses cartes professionnelles intégrées. Peux nous expliquer un petit peu concrètement ce que cette solution apporte aux équipes sur le terrain, mais aussi à l'équipe finance et comment, dans l'ère de l'intelligence artificielle, comment l'IA intégrée à cet outil aide à sécuriser les paiements et à détecter les fraudes.

Speaker 3

Alors notre gestion des dépenses professionnelles propose une plateforme unique où on va gérer à la fois les cartes, mais aussi les dépenses associées à ces cartes-là, mais pas que, aussi d'autres typologies de dépenses sans effort supplémentaire de mise en place ou de maintenance.

Concrètement cela signifie que chaque paiement qui va être réalisé avec la carte va donner lieu à la création d'une dépense de façon automatique, ce qui va permettre à la fois de faciliter la tâche aux collaborateurs pour la saisie de ces dépenses, mais aussi faciliter énormément le travail des équipes finances pour pouvoir faire la réconciliation entre la dépense et et le paiement. En plus, c'est une solution où la politique de dépenses des entreprises, elle est.

Inclue nativement dans dans notre solution, ce qui va permettre tout à fait de de de faciliter les contrôles et de réduire les charges associées à l'application de la politique de dépenses de l'entreprise par rapport à ces paiements-là.

Et ensuite je dirais aussi le fait que notre solution elle est couplée, notre solution carte elle est couplée avec notre solution de gestion de budget. Ce qui va apporter plus de contrôle et une vision avant qu'une dépense ait lieu plutôt qu'une vision comme c'est le cas des process traditionnels. Cela veut dire qu'un collaborateur pourra dépenser avec sa carte uniquement s'il a été, si cette dépense a été préapprouvée par son manager ou alors les équipes finances. Mais aussi de l'autre côté pour les équipes finances, va leur permettre de pouvoir avoir une meilleure vision sur les dépenses futures et éventuellement faire les ajustements budgétaires en fonction par rapport à ce qui est comme dépenses à venir.

Enfin je dirais notre solution va au-delà de de ces contrôles-là pour pouvoir également aider les équipes finances de pouvoir identifier des habitudes de de dépenses qui peuvent à un moment donné différé de de de l'historique. Donc on va venir justement grâce à l'IA analyser l'ensemble de l'historique des dépenses de d'un collaborateur donné pour pouvoir remonter des alertes ou des indications sans effort supplémentaire de la part des équipes finances sur justement ces dépenses qui peuvent sortir de de ces habitudes des des collaborateurs.

Donc je dirais finalement les clients ce qu'ils cherchent aujourd'hui, c'est pas uniquement des moyens de paiement, c'est plutôt des solutions centralisées qui vont leur permettre à moindre coût leur gestion, leur maintenance mais également une visibilité accrue et plus de moyens de de contrôle tout en facilitant et donnant de l'autonomie aux collaborateurs.

Speaker 2

Alors justement pour pour rebondir là-dessus et ce que ce que tu viens de dire, et quand ce parcours devient donc fluide, dépenses, budgets, justificatifs et reliés automatiquement, qu'est-ce que ça apporte concrètement à l'entreprise finalement

Speaker 3

Alors je dirais tout d'abord de la productivité pour les collaborateurs mais aussi pour les équipes finances, ce qui va leur permettre d'arrêter de courir derrière les justificatifs, de devoir gérer des restitutions d'avance qui n'ont pas été consommées ou encore de mettre en place des processus très lourds, typiquement la gestion des des fournisseurs pour des achats de faible montant qui ne devraient pas générer autant de charges pour le pour les équipes finances.

Je pense aussi, ça apporte de la visibilité de bout en bout. Cela permet bien évidemment une une meilleure gestion proactive des budgets et aussi favorise finalement la prise de décision informée puisqu'en fait on aura une meilleure visibilité de ce qui est en train d'être consommé et éventuellement ce qui va arriver dans le futur, ce qui va permettre du coup aux managers ou à l'équipe finance d'avoir une meilleure gestion budgétaire et pouvoir détecter les différents besoins et faire les arbitrages nécessaires pour pour le futur. Et enfin pourquoi pas aussi une meilleure culture d'entreprise puisqu'on va installer un climat de confiance avec avec les collaborateurs pour permettre leur autonomie et aussi une meilleure un meilleur niveau de satisfaction par rapport à l'entreprise.

Speaker 2

Merci beaucoup Agui pour cette discussion riche qui je suis sûr donnera matière à réflexion à beaucoup de nos auditeurs.

On comprend désormais que la carte professionnelle n'est plus seulement un moyen de paiement, c'est un levier pour simplifier les processus, rendre les dépenses transparentes en temps réel, instaurer une forme d'équilibre entre autonomie et contrôle. Mais au-delà de la technologie, c'est peut-être aussi une invitation à repenser toute la culture de la dépense dans l'entreprise. Comment rendre chaque geste simple et intelligent tout en gardant la maîtrise nécessaire. Réflexion qui pourrait transformer non seulement la finance, mais le quotidien de tous les collaborateurs.

C'était Medius Inside, n'oubliez pas que l'essentiel, c'est rarement ce qu'on voit en premier. Merci d'avoir regardé cet épisode. Je vous dis à très très bientôt. Merci au revoir.

Speaker 1

Futur of finance, le podcast qui nous plonge au coeur de la transformation de la finance d'entreprise.

Dans ce nouvel épisode, retrouvez les experts des solutions les plus en vue. Ils vous partagent leur vision, les grandes tendances qui transforment la fonction finance et vous détaillent leur cas d'usage. Futur of finance, des éditeurs, des experts et une mission, comprendre comment l'innovation redessine la fonction.

Speaker 2

Et le nouvel éditeur qui va rejoindre, c'est Medius en la personne, les personnes de Nicolas Daj, bonjour.

Speaker 3

Bonjour.

Speaker 2

Vous êtes sales, pardon, Exécutive Large International et Michael Aubry, bonjour.

Speaker 4

Bonjour.

Speaker 2

Vous êtes consultant avant vente chez Medius, donc merci à tous les deux d'être là au micro de Futur of finance. On va peut-être déjà commencer avec vous Nicolas et quelques mots sur Medius.

Speaker 3

Bien sûr avec plaisir. Donc le groupe Medius, c'est un groupe qui a vingt-cinq ans d'ancienneté, qui est présent partout dans le monde avec plus de cinq-mille clients. On a été reconnu leader par Gardner en deux-mille-vingt-cinq sur leur Magic Quadrant, sur tout ce qui est optimisation de la compta fournisseur.

Mais Medius c'est plus que ça, c'est aussi l'optimisation de tout le processus source to pay et on va en plus de ça ajouter un module note de frais. Et tout ça, ça va permettre à nos clients d'avoir une vue complète sur l'ensemble de leurs dépenses.

Speaker 2

On va justement rentrer dans tout ce qui est détail avec l'utilisation de cette IA que vous faites à la fois dans le p to p et aussi les notes de frais et votre rôle à tous les deux très complémentaire.

Est-ce que vous avez vu le le monde justement des directions financières évoluer, votre métier aussi évoluer

Speaker 4

Oui, tout à fait, on on est est vraiment témoin de cette évolution à travers les différents clients et les différents appels d'offres qui peuvent nous arriver.

On voit qu'aujourd'hui l'intelligence artificielle joue un rôle clé dans l'ensemble des processus.

Hier, on était plus basé sur des business avec qui généraient de l'automatisation. Aujourd'hui, voit que l'automatisation seule ne suffit plus, que l'intelligence artificielle doit jouer un rôle clé et avec un certain impact sur sur des processus, enfin sur des étapes clés des processus financiers comme la capture des données de factures, comme l'automatisation du rapprochement de factures, bon de commande, comme comme l'aide aux comptables ou l'aide à la communication avec les fournisseurs. Et tout ça peut avoir vraiment un impact tangible au niveau ROI pour pour l'ensemble de nos clients.

Speaker 2

Cette évolution, on la voit aussi avec la version quatre un peu de l'IA argentique et vous le disiez, on n'est plus sur résoudre un problème, on est sur une attente maintenant de presque de proposition de service, de de réflexion et donc le le le le les DAF en fait deviennent presque un écosystème qui qui a une place entière et qui est précurseur un peu au sens vraiment service transactionnel, opérationnel.

Speaker 4

C'est vrai, c'est vrai, je ferai quand même attention dans ma réponse que je peux vous apporter sur le fait qu'on note aussi que dans cette dans ce, dans cette volonté de s'équiper d'intelligence artificielle, on note aussi bon nombre de sociétés qui font un peu cette course à la modernité parce qu'il faut l'IA dans les processus et qui finalement en oublie d'avoir de l'IA de manière intelligente, ça fait un peu redondant pour justement aller cibler des vrais points d'impact qui vont donner un bénéfice net pour les sociétés. Et c'est là un peu où nous, par exemple, Medius, on va se différencier. C'est vraiment pour pouvoir cibler ces points clés pour que notre IA et notre innovation que nous, on commence déjà à générer depuis plus de deux ans, voire trois ans pour aller vraiment apporter ce bénéfice que ça soit en termes de productivité, que ça soit en termes de revenus financiers, et caetera.

Speaker 3

Tout à fait d'accord avec Michael pour compléter, ce qu'on voit, c'est qu'effectivement il y beaucoup cette course à l'IA. Nous, ce qu'on va recommander côté Medius, c'est de prioriser des cas mesurables. Typiquement le temps passé pour gérer une facture fournisseur ou des notes de frais.

Et surtout de bien mesurer ses impacts pour voir comment on fonctionnait avant, quels étaient les kpi's qu'on avait et comment avec l'IA on va pouvoir transformer ces nouvelles fonctions, ces nouvelles activités pour apporter de la valeur. Donc ça c'est deux points vraiment importants et comme le disait Michael, y aussi le fait de partir avec un partenaire spécialisé qui est déjà habitué à mettre en place ce genre de solutions, qui a des années d'expérience et qui a tout un process, c'est un processus d'accompagnement de change management dans la mise en place d'IA.

Speaker 2

Allons alors parler de votre outil, cette fameuse plateforme, Est-ce qu'il y aurait un point différenciant ou en tout cas des des des modules, une fonctionnalité qui est propre à Medius Michael.

Speaker 4

Alors oui, je peux vous en citer plusieurs d'ailleurs. Alors avant de commencer, il faut savoir que Medius, c'est une société qui a fort, un fort focus sur l'innovation. On est à peu près trois cents personnes dans le département produit innovation et ce qui fait qu'on génère vraiment ce dont je vous parlais, cette intelligence artificielle pour vraiment au service de la comptabilité fournisseur. Par rapport à ça, on va avoir des modules qui vont agir vraiment sur les étapes comme la capture de la donnée directement qui va se baser sur une IA générative et non pas sur des templates avec des fournisseurs.

On va avoir aussi la suggestion d'imputation, la suggestion d'imputation par rapport à un comptable qui devrait notamment imputer sa facture avec ses mi-min qui va cette fois-ci avoir un rôle de contrôle ou de ou de complétion sur la la suggestion qui a été apportée par l'intelligence artificielle, mais plus encore. Et là, un peu, va dire nos modules stars derrière vont être la la conversation avec les fournisseurs qui vont améliorer toute la communication avec les fournisseurs et automatiser jusqu'à quatre-vingt-quinze pour cent des réponses aux emails qu'on peut recevoir des fournisseurs, vous savez pour demander le statut des factures, et caetera.

Speaker 2

Des relances aussi peut-être.

Speaker 4

Par exemple aussi. On va avoir l'agent conversationnel qui va agir comme un copilote. Attention, on ne pas confondre avec le copilote de Microsoft, mais un agent conversationnel qui être comme un chat GPT-like intégré directement à la solution qui va permettre aux approbateurs de facture de directement avoir le contexte de la facture, le contexte de fournisseurs, traduire la facture aussi dans leur propre langage. Très utile si on travaille avec des c s p et vont pouvoir prendre des décisions en toute sécurité quant à l'approbation ou le rejet de la facture. Et aussi très important aujourd'hui, notamment parce qu'on parle d'IA, c'est un peu toute la contradiction, c'est la détection des risques de fraude. On sait qu'aujourd'hui les risques de fraude sont de plus en plus importants justement parce qu'on est sur l'ère de l'intelligence artificielle, mais on se sert aussi de cette intelligence artificielle pour les détecter aussi bien sur la facture d'ailleurs que sur une note de frais.

Speaker 3

Je confirme sur les notes de fond, on se rend compte qu'en moyenne cinq pour cent des notes de frais sont frauduleuses. Alors non frauduleuses on va aussi prendre des notes de frais de non conformes, donc des notes de frais qui ne vont pas respecter votre politique interne. Exactement exactement.

Speaker 2

Ça ne veut pas dire qu'elles sont enfin truquées mais juste qu'elles ne rentrent pas et donc du coup ce n'est pas traité et donc ça allonge les délais.

Speaker 3

Soit qu'ils ne sont pas traités, soit même qu'ils peuvent être remboursés parce qu'on n'a pas de visibilité sur le fait qu'elle ne respecte pas la charte alors qu'elle ne devrait pas être remboursée. Y les deux scénarios et sur la fraude en ce moment forcément comme le disait Michael, on a beaucoup les reçus générés par les chat GPT et autres.

On fait la course, est capable de les reconnaître et notre objectif c'est vraiment d'optimiser à la fois le temps et aussi de l'argent pour nos clients grâce en mettant l'intelligence artificielle au service des équipes financières.

Speaker 2

En deux mots, la vision un petit peu pour l'année prochaine pour conclure.

Speaker 4

Alors notre vision pour l'année prochaine et puis puis celles à venir derrière, ça va être de continuer notre innovation intelligence artificielle aussi sur un peu plus au service des c f o, notamment dans l'analytique, dans l'analyse des données et aussi de l'étendre vraiment au niveau suite. C'est-à-dire qu'aujourd'hui, on a vraiment une grosse focalisation sur la comptabilité fournisseurs. Mais vous savez que Medius c'est une suite qui gère l'ensemble de la dépense s to p d'étendre un feu toute cette aide d'intelligence artificielle sur toute notre suite Medius et non pas que sur la comptabilité fournisseurs.

Speaker 2

Nicolas.

Speaker 3

Et bien écoutez, même logique, on est un groupe qui a le même ADN donc Expensya a rejoint le groupe Medius assez facilement intégré donc toujours mettre cette intelligence artificielle comme on le disait au service des équipes. Alors la note de frais ça a cette spécificité de toucher énormément de monde dans l'entreprise parce que vous avez les gens qui les réalisent sur le terrain, les gens qui les contrôlent derrière l'intégration en compta pour comptabilisation et remboursement et notre travail c'est vraiment de voir comment l'IA peut aider la vie de tous les gens qui sont impliqués dans ce dans ce process pardon.

Speaker 2

Merci à tous les deux d'avoir été avec nous aujourd'hui au micro de Futur of Finance.

Speaker 4

Merci à vous.

Speaker 1

Cet épisode est terminé, un grand merci à nos invités pour leur partage. Nous espérons que ces échanges vous ont inspiré, donné de nouvelles clés pour penser la finance de demain. Retrouvez tous nos épisodes sur la chaîne Futur of finance deux-mille-vingt-cinq.

Speaker 1

Hello, and welcome to Medius' new podcast series, Bridging the GAAP. Together with Spend Matters, we've put together a podcast series exploring a wide range of topics from the evolution of technology and finance to tax compliance to sourcing strategies to fraud risk and mitigation. In today's episode all about V cards, Pierre Mitchell, Chief Research Officer at Spend Matters interviews Neal Anderson, Medius' Vice President of Payments Strategy on the advantages and disadvantages of V cards. Take it away, Pierre.

Speaker 2

Hi. This is Pierre Mitchell. I'm a managing director and head of strategic research here at Spend Matters. We are a leading technology advisory research and analyst firm focusing on procurement and the broader area in terms of supply chain and finance and other related areas.

And I'm really excited to be able to do a systematic brain pick with Neal Anderson here. And Neal, thanks for joining me. I know a little bit about procurement to be dangerous, but over on the payment side, I do have, you know, pretty much a walnut sized brain. So I'm going to be looking for you to kind of help me and the audience get a little more educated on the topic.

But anyway, welcome.

Speaker 3

Well, thank you, Pierre. It's great to be here, and thanks for having me. I am Neal Anderson. I'm Vice President of Strategy for Payments here at Medius. I joined Medius back in March 2022. Prior to joining Medius, I was the CEO at OnPay Solutions for the last ten, eleven years or so.

Speaker 2

Well, awesome. Well, listen, hey, I thought kind of where I'd start the discussion is for the, I know most listeners probably know, but just if you can, in thirty seconds or less, no, actually just in a minute or two or less, just talk a little bit about a virtual card. I think folks are familiar generally with procurement cards or travel cards, and there's so many different flavors. I think generally we have the, you know, I kind of have the idea as virtual as no plastic, but maybe if you could just kind of give me a little bit of a rundown of virtual card versus other commercial card flavors that are out there.

Speaker 3

Yeah, absolutely. Pierre, So the key difference between a virtual card and a physical plastic credit card is that a virtual card is a one time use 16 digit credit card number with its own unique expiration date and unique security code, typically tied to an accounts payable payment, paying a vendor for an invoice, and it's typically tied to either an invoice or group of invoices and certainly a dollar amount. And so the uniqueness about this is that when a vendor receives a virtual credit card and processes that credit card for that specific dollar amount, the card number disappears from the credit card network, never to be used again. And so it's a secure, means of making a business to business payment.

Speaker 2

Right. And for that supplier or merchant that is using it, it's just to them, it's going to appear just like any other kind of P Card. It's just going to be, you know, behind the scenes, it's going to be kind of that one time charge it up, you know, use case, right?

Speaker 3

That's exactly right. They'll receive that virtual card, credit card number. They can process that credit card any way that they would normally process any physical piece of plastic. They just hand key the number into their card terminal and process the card. And when they do so, typically within twenty four hours, the money will be deposited into their merchant services bank account.

Speaker 2

Got it. Okay. Well, that makes sense. Well, I think kind of like just virtual versus a physical card. I mean, obviously it seems like that makes the card administration a lot easier for the people who have to run the overall program because you're not chasing plastic and it's just, I would think that the user management and integrating it with, let's say, the controls or just any other user information that you can just do that virtually, right, as well?

Speaker 3

Yeah, that's right. And so, you know, a big part of what we do at Medius, and especially within Medius Pay, is that control aspect of the card. For example, our payer clients can, you know, determine, is this vendor going to be paid by a virtual card? Is there maybe a dollar amount that needs to be approved by a higher authority like a CFO or maybe even the CEO before the card is processed and sent.

Same thing with the vendor who's receiving that card. Maybe they've got some sort of limitation over the dollar amounts that they can process on a single card process. Well, how can that be managed so that we can break that card swipe up so that they can actually process the full dollar amount of the card as well? So yeah, a lot of controls and thought have gone into that process.

Speaker 2

Cool, that makes sense. And just, I mean, one more quick question in terms of just how it works. I assume that this will integrate with both expense reporting systems as well as it can be just a payment vehicle, which I want to talk to you about in a second. But I assume it's going to be able to integrate into those kind of use cases and auto populate into an expense report or whatever for when you need to use an expense report for whatever reason, untethered contractors or business travelers?

Speaker 3

Yeah, absolutely Pierre. And more importantly, you know, how can we provide this integration into a company's accounting system, into their ERP system? You know, accounting systems all support the ability to pay a vendor by paper check and by ACH, electronic ACH direct deposit. What they don't support is a third payment type called a virtual card for the most part. And so being able to provide this payment type as another option to pay your vendors electronically is a real key component to the Medius Pay system, to be able to onboard these vendors to be able to accept and take a virtual card. And then not only that, being able to integrate with the ERP so that we can actually take that payment data and route that as a virtual card versus a paper check, for example.

Speaker 2

Right, and that's kind of like where I always think about kind of on the AP side other than, know, on the, let's say the invoicing side, I always just think about it as, okay, we're moving from paper checks to, you know, ACH, but there's always been this little black sheep stepchild, you know, called P Cards and now here a better form of them with V Cards, you know, so how do those all just dovetail within that payment, you know, streams? So it just kind of it's all visible to on the AP side as well as I guess on the procurement side.

Speaker 3

Yeah, and I think it's important to understand the difference between a pay card or a P card, as well as a virtual card, and because they both have relevant applications, and where one is better used than the other. So for example, a P Card, that's a physical piece of plastic, where if an expense management program, if you've got employees who are traveling or employees that need to, instead of access petty cash, they have a credit card that they can process that on. A great use of a P Card would be if you're at Office Depot and you're buying office supplies and use your company plastic.

Ideal solution for that. A virtual credit card, we're all guilty of this when we've made a payment in our own personal lives, where somebody asks for your credit card number over the phone, or you willingly hand key that credit card number into a website somewhere. Well, soon as you do that, you're now exposing and trusting, you know, the person or a company or entity that you're giving that information to that they're going to protect that data and they're going to do the right thing with that data. Yeah.

But certainly credit card fraud is a huge problem. That's a big reason for that. Well virtual card directly eliminates that issue, because, as I said earlier, once that card has been issued once that card has been processed that card number disappears, you never have to worry about anybody.

Running that card number multiple times

Speaker 2

Yeah, and that seems like it's just a much better solution to than just kind of doing this to say, well, you know, like central pay versus employee pay.

Well, we're just going to push the risk to the employee and then they've got to go and ask for the money. I mean, you're shifting the risk. You're not really mitigating the risk versus the the V card where it's, you know, just gonna be, you know, whatever that amount is that you charge up and and approve. So, it definitely seems kind of optimal in in that way and I guess you you bring up a really good point too around, you know, when you think about ACH and kind of banking details and things like that, you know, they're really heavy controls that are required there, but you know, it's really so much control and so much potential risk for something where you're just using a vendor a couple of times a year or it's a low dollar transaction. Definitely seems like value to kind of keep these vendors out of the ACH channel and out of having to set up banking details. It's like overkill, right?

I mean

Speaker 3

Well, you're right.

And it's really from a vendor standpoint to accept a virtual card is really about a convenience to their customer. And if it helps their customer pay them faster in a more efficient manner, then, you know, companies, as we all know, most companies do accept credit cards now in the form of payment. And so this is just a way for a vendor to be able to extend that to their client to be paid faster ideally in a more efficient manner. And to your point, not have to give up your bank account routing number information and have to worry about managing that data as well.

Speaker 2

So I assume like in terms of V cards, you can still do things like getting the dividends or other kind of card related benefits. Are those all still part of the program, if you will?

Speaker 3

Yeah, absolutely. And so, you know, I think what's key is that a virtual card for us is just another option to our clients, our payer clients, to offer electronic payments to their vendors. Because within Medius Pay, we're all about how do we move to an autonomous, touchless, seamless way to pay your vendors in the manner that the vendors want to be paid in then as well. And so, you know, ACH does play a role in that, but virtual card is a great option as well.

Speaker 2

Yeah. I like your point about kind of the optimizing the choice here to the let's just say the process participants because in the kind of procurement and p to p kind of benchmarking or to think about kind of this this turnaround, optimizing the buy pay channel. So both procurement and the payment side.

So on the procurement and sourcing side, we see a lot of okay, anything below or above a certain amount does procurement, you know, source it and touch it or whatever. But in terms of just like the on the downstream side for the actual purchasing and payable side, there's definitely, you know, ways in which you wanna optimize. Do I do I wanna use a v card or a p card or do I wanna do three way match or two way match or evaluated receipt settlement or what you know, all these different kind of models. But you bring a great point about the vendor choice too, which is, is this a choice that makes sense for them?

Or they may be like, hey, I'm already integrated into Mastercard or, you know, whoever's gonna, work with them. But also maybe they don't mind, they're happy to kind of take the cash upfront right now and in exchange for rebate or whatever. So it seems like that is probably a really valuable flexibility that you can kind of help onboard suppliers as part of a like a P2P project. Have you found that to be the case in the trenches?

Speaker 3

Yeah, absolutely. Yeah. And that's again a big part of the media's pay solution is working directly with the vendors to invite them to be paid electronically. Pierre, and I use that word invitation very strategically because we want that vendor, we want that experience to be something where if they're comfortable taking credit cards, they can select credit card as a method of payment and they're enrolled and ready to go.

Equally as important though, is if they would rather be paid via ACH, well then we can easily collect their bank account routing number and take over the onboarding of a vendor for ACH payments. We even offer if a vendor is routinely being paid via wire transfer, then we can offer a wire transfer into that process as well, both in North America and throughout the world. And so it's all about the efficiency to our payer to be able to onboard their vendors to be paid electronically and ideally eliminate paper checks completely. And certainly the virtual card is a real cornerstone of our electronic payment offering.

Speaker 2

When you guys do implementations, and I probably should know this just a kind of what we do. But, as part of your project implementations and planning, will you take a company's kind of spend history and their vendor master and be able to kind of map that to all of the suppliers that you know can pay in a certain way or whatever and kind of help with the kind of onboarding planning because that always is that sticky wicket around kind of, you know, the vendor onboarding piece.

Speaker 3

Yeah, Pierre, you know, that's really step number one is being able to review our clients' accounts payable vendor file, analyze their spend. Well, one of the first things we'll do is we want to match that up with known card acceptors from Mastercard so we know exactly who already accepts virtual cards as part of this.

That really forms the nucleus for our outreach campaign to invite those vendors to accept the credit card. Certainly, if they're taking a credit card from anybody else, any of their other customers, they'll certainly take a credit card from our payer client as well. And then beyond that, even that ACH enrollment becomes a factor also. So yeah, that's kind of step number one, and being able to match the AP spend up with the known card acceptors and create that onboarding.

Speaker 2

And I assume it's kind of nice too, when you don't have to set up these one time or small dollar payments, you don't have to set up those vendors in the vendor master file, which is AP and and or procurement having to work together. It's actually funny when I used to work in the benchmarking area. It was like the number one popular webcast that we always had was vendor master data file maintenance. It was like the most boring thing.

And you'd be like, why is this so interesting? Because it's such a pain, right, about who controls the vendor master information and how does that work and the choke point and how do we collaborate around that, you know. But that was like such a big thing. So it does seem like reducing the volume in this painful process would be a welcomed chain.

Speaker 3

Well, I'll tell you, Pierre, I mean, this happens all the time. I mean, you imagine if you were a CFO, and you've been reading about electronic payments, you come into your AP department one Monday morning and say, hey gang, I've been reading about electronic payments, I want to start paying our vendors electronically, and let's get this project done within ninety days.

Well, a company almost of any size, especially larger businesses that we tend to work with, have thousands of active vendors. And for an AP department to go out and ask every one of these vendors to be either paid via ACH or be paid by credit card. I mean, they all have their own full time jobs, right? They're already, you know, fully tasked.

And, you know, somebody's looking around now, who's going to stop and make thousands of phone calls? Who's going to collect this information? And when we collect it, who's going to key it into an ERP or a database? And then who's going to secure it now that we've collected this vital information?

There's just a lot of friction in that process.

And so really, that's the number one reason why the paper check-in The United States still makes up 48% or so of the total payment volume, is just because of that friction. For us at Medius Pay, that's an opportunity. That's where we want to step in and be able to take that friction out of this process by providing those vital services to the AP department.

Speaker 2

It's crazy that the number is so high, especially since we're trying to just get beyond paper contracts, paper checks, paper anything. Right? Right. Well, Neal, that's a good place to stop right here in terms of focusing on the downstream side. But maybe in our next episode here, we can shift upstream and talk a little bit more about the procurement side and looking at the overall, end to end, procure through pay process.

Speaker 1

That was part one of all about V cards in our ongoing podcast series, Bridging the GAAP. Be sure to catch part two of Pierre and Neal's discussion. And to take all of your business spend management far beyond basic automation, visit medius.com. Thank you for listening.

Speaker 1

Hello, and welcome to Medius' new podcast series, Bridging the GAAP. Together with Spend Matters, we've put together a podcast series exploring a wide range of topics from the evolution of technology and finance to tax compliance to sourcing strategies to fraud risk and mitigation. In part two of all about V cards, Pierre Mitchell, Chief Research Officer at Spend Matters, and Neal Anderson, Medius' Vice President of Payments Strategy continue their discussion on V cards, this time focusing on the end-to-end procure-to-pay process. If you haven't listened already, go check out part one of the discussion.

Speaker 2

Okay, we're back. So now we're going to talk about the upstream portion of procure-to-pay or procure through pay as our guest Neal Anderson likes to say, which is a very appropriate phrase in terms of managing this end to end process within which virtual cards are a really key element. It seems like so, well, back. Let's let's get right into it.

So maybe the topic around one spend visibility. So I can see all that payments regardless of the channel, whether it's ACH or p card or v card or whatever it is. I want to be able to see that full picture of my spend. So maybe why don't we just start there with kind of the visibility side?

I guess with your solution, will you be able to have that full spend visibility available, you know, not just by vendor, you know, and amounts, but also the level two and level three, you know, being able to get to the, you know, the spend categorization level as well?

Speaker 3

Yeah, it's really critical, that whole payment reconciliation process, because you're absolutely right, Pierre. You know, our payer clients need to be able to understand what's cash, what cash is leaving their bank accounts, how that cash is leaving their bank accounts so that they can relieve that cash and tie off their GL transactions as well. And being able to show them near real time, you know, what payments went as a virtual card, for example, and the dollar amounts and the bank account that that left from. I mean, that's all key information that we're able to provide, you know, right away. And within our online reporting and our online views of transaction.

And that's same thing with ACH and with all the payment types, frankly.

Speaker 2

Yep, that makes sense. And then just given what's happening in the market and the cost of capital these days, it seems like the ability to have some flexibility and to make those invitations and offers to suppliers, you know, to go down different channels depending on the hunger for cash and the cost of capital things like that. I mean that seems like having that flexibility is a good thing to optimize on the payment side and on the cash management side since you brought that piece up. But so let's talk about other pieces kind of on the procurement side.

So when we just think about, you know, the employees who are needing something and let's say they whatever it is, you know, office supplies or just local services or, you know, whatever it is. And over on the e procurement side, maybe they punch out to a vendor, go to their website or whether it's an internal catalog that's set up or for specific categories, whatever. But within that process, there are kind of approval rules and things like that. And, you know, how does the, you know, I'm sure the virtual cards have controls built in it around users and roles and things like that.

And over on the procurement side, there are approval rules around budgets and things. Is there any kind of one way in which those things work together or not? Or is it more like kind of like a palette of options that you can deploy depending on however you want to set up your kind of e procurement slash payment process?

Speaker 3

I like that term palette of options. And that's exactly what we offer. And I'll give you a couple of use cases, Pierre. We've got a great client that is a national emergency towing company that leverages virtual cards, and in their business model, they, you know, if you have an emergency or roadside, you need roadside assistance, and you call these folks, they'll dispatch a service vehicle, but that service vehicle isn't necessarily under, you know, owned or operated by this company, it's a third party.

Well, third party driver, that third party provider wants to be paid, you know, at point of service. And so instead of having the stranded motorists have to pay for that, this company leverages the on demand virtual card capabilities of Medius Pay, generates the one time use card number, and delivers that right to the provider as well, with lots of controls around that, lots of higher authorities that have to be involved with that whole process, but it's a very quick and efficient manner to be paid. Another use case for a virtual card is a utility or various insurance companies, you know, large companies that are willing to take a credit card as a means of payment, but maybe not necessarily are set up to receive an email with credit card details in an email to be able to process.

Well, that case, you know, we can generate the virtual card and we've got a team of folks that'll actually make that phone call and pay that invoice over the phone or actually log into a website and process that payment as well.

So like you said, a palette of options, and we try to accommodate any of the use cases that our clients can either currently use or could foresee.

Speaker 2

Yeah, I like that. And I like that latter option around kind of, in terms of recurring invoices being able to use this for a channel if the utility company is okay with that based on your spend volume or whatever. But I think that's a really cool example on the first case which, you know, we think about multi tier supply chains and things like that, you know, but there's these multi-tier service chains and this is like in auto insurance companies or whatever. And then they sub out to a company who then subs out to the drivers who and that, you know, that's really hard to administer with kind of more traditional methods.

If you can just kind of automate that whole thing and be able to delegate In

Speaker 3

a traditional way, somebody would provide that service, generate an invoice, send the invoice in probably by mail or a PDF invoice attachment in an email.

And then that has to get routed around for payment.

Speaker 2

And then a charge back, and then there's errors, and then, you know, the driver's unhappy, you know, then the driver probably doesn't have great cash flow, you know, it's.

Speaker 3

Exactly right. So right at point of service, being able to pay that service providers really.

Speaker 2

All right. Well, we've been kind of getting into the weeds here on kind of the use cases. So, why don't maybe just tell me a little bit about for some of the listeners about kind of Medius and kind of the bigger picture. And I think we've jumped around a little bit here to different stakeholders and process areas. But just in terms of, you come from kind of the payment side and I think in the procurement world, the market is very much typified by the, it's not P2P, but the P2O2P, or you know, the procure to approve, ready to pay, you know, but not quite doing the actual payment. But so maybe just talk a little bit about a little more broadly about Medius, but also kind of, you know, the what you're seeing around kind of this real end-to-end process on P2P and even source to pay if you want to bring that piece.

Speaker 3

You're absolutely right. And what we say instead of P2P here, procure-to-pay is procure through pay is what Medius is all about. And here at Medius, we are really driving to provide an autonomous user experience to our clients for both invoice processing all the way through the payment. And what I mean by that is that, you know, as artificial intelligence and machine learning has improved over time, data capture off of scanned images has improved to be able to learn, you know, that the computers can learn a particular invoice, for example, that is from a specific vendor.

And we know what it looks like every time, what we know where the data is on that invoice, that we can extract that data and then be able to route that around for approval in an automated fashion. We can do the GL coding in an automated fashion, and then ultimately approve that invoice and have that added to the ERP. And then from a payment standpoint, once the bills are selected to be paid for that week, you know, being able to pass that payment data to the Medius Pay application. And again, that autonomous process, we've invited every one of your vendors to be paid electronically.

They're set up to either be paid by virtual card, ACH, wire transfer, and worst case, worst case still a paper check, because we do still understand that there are still some folks out there who aren't quite comfortable being paid electronically. But all that then is just kicked off, and we know how to pay them, and the payment moves, and the money moves, and the remittance data moves to the vendor, and they can, from an accounts receivable standpoint, receive that money, know exactly what invoices to apply that money to, and close those invoices out on the receivable side. And so it's this virtuous cycle that we're enabling so that our users go from having to touch 70% of their invoices manually to now just a handful.

It's anomalies. We've detected things like, well hold on this vendor normally gets paid. $500 a month now there's a $5,000 a month invoice well let's let's look at that right stop and. And have a look at that or or maybe a bank account routing number has changed hold on let's stop and look at that, You know, as opposed to having to look at every piece of paper that's coming through the organization.

Speaker 2

It's really cool. I mean, it's, I'm an old supply chain guy, I just see the equivalence here and the similarities within this white collar process, let's say white collar manufacturing of P2P. Just think about all of the waste of when you have goods not yet received or received not yet invoiced and the poor accountants that got to close the books, you know, they've got all this reconciliation stuff that they need to do. So, that ability to make it virtual, make it fail safe, to kind of make it much faster, you know, and much more transparent, As well as then kind of getting ahead of it and optimizing it, you know, upfront and giving choice, you know, like the win win between the suppliers and also just internally between like procurement and payables. It just seems like it's there's a lot of these kind of side benefits around kind of just elimination of error and waste and things like that, that don't necessarily bubble up in the business case, you know, but certainly are important.

Speaker 3

You're absolutely right. And from our standpoint, the value proposition that we really bring, certainly on the invoice automation side, but on the payment side, really there's, to your point you just were making, there's lots of different areas of value that a solution like this brings. But from our standpoint, we really focus on three key value points. One, you know, when we move a paper payment to an electronic payment, there's a tremendous cost savings associated with that.

We're easily able to take 80% of the cost out of that process alone. So the tremendous cost savings. The next is that we're improving just the efficiency of the AP department. You know, we don't have people having to sit with laser printers and babysit laser printers as the checks are being printed and make sure they're all signed and folded and inserted into envelopes and metered with postage and delivered to the US Postal Service.

I mean, all that takes And time and so, we're eliminating that process. So now AP staff can focus on their real accounting jobs, not worrying about the payments. And then a key component from the virtual card when deploying our virtual card solution is that we actually pay a guaranteed dividend back to our payer client for processing their payments over the credit card network. And that value right there generates a revenue stream back into the company that certainly offsets a lot of expenses.

And you know, from a CFO standpoint, who has a responsibility for the EBITDA number of the company, but really doesn't have a whole lot of control on the revenue side, but they certainly have control on the cost and the expense side, and being able to offer that cost reduction and then offer them ability to contribute with a revenue stream is a real key value piece to what we bring to our clients.

Speaker 2

It seems like kind of the, I was going to use the term, the balanced scorecard, right? Take that from the enterprise level and just apply it here. And it seems like you've got the process efficiency savings. You got, as you said, the spend kind of related things in terms of, you know, what once were rebates are, you know, now taking different forms.

But, you know, there's the cash side of the equation from working capital standpoint. There's kind of the risk side that we talked about and also just the cost sat side for, you know, the employees who just wants to buy something or they're broken down in their car or whatever the use cases. Right? They just want the process to be easier. Right?

Speaker 3

So, you know, if your car is broken down, you want help and you don't want to have to pay for it, and to be able to, you know, have that solution at hand, that's very helpful.

Speaker 2

Well, awesome. I think we've kind of, we've lit up a bunch of areas here, but anything that I haven't asked you about that you wanted to mention or, you know, anything else that you want to kind of close out with?

Speaker 3

Well, I just, just again, stress that Medius, the accounts payable automation, invoice processing through to Medius Pay is really a unique offering in the marketplace because we are procurement through payment, all the way through, end to end, one company, one solution. And that really is resonating in the marketplace and couldn't be excited, more excited to be part of the Medius team and helping lead this charge forward.

Speaker 2

Well, I'll tell you, I am officially going to announce to the world that I am going to steal that because usually it's P2P with it with the, the number two in the middle, but with the with the T in the middle, it lets you actually go to the through payment and that's a lot easier than procure to approve to pay this is that that's much easier. So it's easier for that walnut sized brain to retain that. So I'm gonna steal that. So thank you for that.

That was my

Speaker 3

Well, footnote me Pierre, just footnote me.

Speaker 2

I will. I will.

Speaker 3

I'll be fine with that.

Speaker 2

I'll try where I can. If it's maybe in written form, sure. It may be in conversationally, you know, maybe not.

Speaker 3

I'm kidding. I'd love nothing more to hear folks refer to this as procure through pay, especially when they're talking about Medius.

Speaker 2

Yeah, that's great. Good stuff. All right, Neal. Well, thank you so much. And Shannon, I'm going to go ahead and pass it back to you.

Thanks for letting us talk shop here for a while. I really enjoyed discussion. Hopefully, listeners have found some value in this as well. So thanks again, Neal.

Speaker 3

Thank you, Pierre.

Speaker 1

That was part two of all about V cards. Special thanks to Pierre and Neal for their time. If you like this podcast, please be sure to tune in on our next installment of Bridging the GAAP. And to take all of your business spend management far beyond basic automation, visit medius.com. Thank you for listening.

Speaker 1

Hello, and welcome to Medius' new podcast series, Bridging the GAAP. Together with Spend Matters, we've put together a podcast series exploring a wide range of topics from the evolution of technology and finance to tax compliance to sourcing strategies to fraud risk and mitigation. In today's episode behind the green curtain with Capture, Pierre Mitchell, Chief Research Officer at Spend Matters, talks to Katarina Andersson, VP of Capture and AI at Medius, about automated invoice capture, how it works, the history of Capture, and where Katarina sees Capture going in the future. Take it away, Pierre.

Speaker 2

Well, hi. This is Pierre Mitchell. I am the chief research officer at Spend Matters, and I lead our strategic research for our coverage of all things source-to-pay technology related. And I am very happy to be here to interview Katarina Andersson to get her insights.

She's a real expert within P2P and particularly on the invoice automation side. So I have just a ton of questions for her about getting under the hood or behind the green curtain, if you're familiar with The Wizard of Oz. So Katarina, welcome. Maybe just do a quick introduction of yourself and then we can get into the discussion.

Speaker 3

Thank you for having me. I'm so happy. And wow, what an introduction.

Yeah, my name is Katarina. My nickname is Katta. Actually, my mom is the only one in the world that calls me Katarina. But it doesn't matter.

I respond to all the different names that that's in the book. But that's so interesting, because I've been working with Capture since the beginning of 2000. And been in different positions doing it. So my husband actually tells me that the only thing I can do is talk about capture.

My daughter, she rolls her eyes at the dinner table, say the only thing you can talk about capture mom, so please leave the subject and learn something new.

Yeah, so that's me. And right now I'm working at Medius as the Vice President of our Capture Solution at Medius and responsible of that.

Speaker 2

You're the queen of capture at Medius.

Speaker 3

Yep. Or what some colleagues call me, Miss Capture, but that could actually be interpreted in the wrong way.

Speaker 2

Well, that's great. I mean I, you know, and I think the listeners will be really interested in learning a little bit about Capture. And I mean, let's just kind of not to spend too much time going through the time capsule of history, but maybe just talk a little bit about where we've been in terms of, we started with OCR and then we kind of moved towards extracting more intelligence in an automated way out of the documents to help the process. But maybe just tell us just a little bit about, you know, kind of how we got from OCR to kind of where we are today in two minutes or less.

Speaker 3

Yeah. Yeah. It has indeed been a really interesting trip since I've been working with this for more than 23 years. In the beginning, I was, like you mentioned, the queen of capture.

I was out there removing the tedious manual work of manually capturing the data from the invoices with your keyboard. So it's no OCR at all. But at that time, we were introducing templates, you know, what everybody hates today, you need to maintain them, you need to work with them to really get a good extraction rate, meaning capture from the invoices. And then we moved into some more like when you looked at the titles and the position based data capture.

But today it's totally different. We're doing AI machine learning. Actually, we're trying to understand the content of the invoice. So to remove the tedious work of maintaining templates, to configure the system and so on.

So it has really been a really interesting trip, a technology trip, so to say, don't you think, Pierre?

Speaker 2

Well, I do like the Grateful Dead, and I will say what a long strange trip it's been. But in terms of that trip of moving from kind of OCR, this evolution, in terms of OCR and then being able to, as you said, use AI to understand the data that's in there to train the AI to understand supplier invoices and to really ultimately help us get to what we're hoping for which is that 100% touchless match rate, etcetera. Let's kind of pull out a little bit and kind of just take that bigger view in terms of when you're actually trying to do, let's say a P2P implementation and you're actually trying to go all the way through to actually not just get it to P2, ready to pay and approved and ready to pay, but actually taking it all the way through.

That ability to do that onboarding is really challenging because suppliers might not just like the onesie twosie portal and they might not necessarily be EDI-enabled, There's a lot of stuff in the middle. So maybe just, you know, tell us a little bit about how you guys solve that problem of get the suppliers digitized and be able to get that 100% automated no touch match rate, know, eventually. Right? How do you do that just from a project standpoint in terms of onboarding the suppliers?

How does that process generally work for you guys with your clients?

Speaker 3

That's a very good question. Because just like you say, it's a maturity of the supplier, because not all the suppliers, some suppliers still sends paper invoices.

I meet customers every day that still have a certain percentage of the incoming invoices in paper. I cannot believe that. But the majority receives the PDF documents. But now with the E regulations and COVID, of course, has pushed our invoicing to the future to be the preferred way, because it's not that the suppliers want to send invoices, it's the countries or the tax authorities that wants the buyer and the supplier to send invoices because they want to collect taxes to ensure they get the taxes so they can start build up the countries again after COVID.

So what we at Medius really think it's important just because of this that you can see all these different formats is that we accept any type of format, because our customers or you as a buyer, you don't want to say no to a customer or to a supplier that can deliver what you really want because of the they send in paper invoices. So that's what Medius's vision and goal is to accept any type of invoice and our customers and the buyers do not need to worry about the format. We just take care of it.

Speaker 2

Yeah, it reminds me of kind of like the term like omni channel retail. This is kind of like omni channel inbound invoices, whatever the supplier, however they can do it, just to be able to accept that. And let's say the email with the PDF. Right?

And there's that workflow piece of taking that in, getting the PDF, unpacking it, going to the OCR and the extraction and all the AI and all that. And that that you really bring a really good point is there's the plumbing piece to the workflow automation, but it's also this knowledge piece about how do you understand the tax information that's showing up on those line items? How do you understand contract information that you might need to refer to and pricing discounts and things like that? I mean, there's a lot of information that kind of is behind the numbers, you know, and text that shows up, you know, on the invoice.

So maybe just that knowledge, I think about expert systems or whatever, you know, I mean, just tell us a little bit about how does that AI actually work, in terms of, I think people generally kind of understand it, but just maybe in your own words, say, you know, how do you think about making that automation actually autonomous and using the AI for that?

Speaker 3

Yeah, this is a very technical term. When I talk to my friends and my family, they feel like AI is like the Terminator word, know, on a Schwarzenegger.

But we are not in that world yet. And in that sense, it makes it scary for some people. But I actually believe it can be one of our best friends. What it really does, it collects the data or when you as a user extract the data from the invoices, or correct the data because the technology extracts the data and you verify the data, of course, it learns from your changes.

So you can, in that sense, that AI machine learning is our best friend in the background, that actually takes that knowledge that you're sharing with our AI friend and applies the same thing next time an invoice from that supplier comes in. So that means that you do not need to work on templates and maintain those and configure. It's just this fantastic person in the background, a digital person, of course, that actually learns from your actions without you knowing it and just applies that again and again and make intelligent decisions and adapts over time. So that's simply how I usually try to simply explain it.

But how would you explain it, Pierre?

Speaker 2

Well, I mean, I think you did it well. I mean, I do like the term augmented intelligence where you're just using the technology to basically extend yourself and get yourself out of the repetitive low level tasks. And if you can let the digital bot, which is a software robot and not a scary Terminator robot to actually help do that, that then frees you up to actually do higher level tasks because let's face it, mean, what extent do folks in AP really just love, you know, typing in invoice data? You know, there's a short time that we're on this earth and I think they probably would like to spend their time maybe doing a little bit more and it's just not good job security to do that if that's your only task.

And so maybe let's just talk a little bit about that higher value add in terms of when you have better this automated capture, it then kind of frees you up to now start doing analytics and you can start really attacking the data that's in the invoice as part of the spend itself, And the risk and all these other things that have to do with the business versus just pushing documents and information around. So I will turn it back to you and say, all right, if you think about kind of the next value add, I mean, certainly there's a piece about spend management having good, better data to support what's happening upstream and, you know, the sourcing process and also just in the PO process and making sure you have something to match to and all that kind of stuff.

But, you know, I guess tell me a little bit on the compliance side. Compliance means a lot of things to folks. It's like compliance to what? Compliance to regulation, compliance to internal policy, compliance to our auditors that wanna make sure that we're not there's no fraud that's, you know, happening here.

So just the compliance piece, right? It seems like a big thing where you could get fines and regulations and late fees. And it seems like there's some real money associated with this beyond the labor efficiency of some AP folks. But tell me, I mean, how do you see the invoice capturing helping with compliance or other just pieces of value in the broader process?

Speaker 3

It's also a very good question. What's really on everybody's mind today is fraud to help you protect yourself from fraud. If that is compliance, in some sense it is, I would say that. But with the AI machine learning, we can really help with that as well. Can identify anomalies and we can really see changes in behavior from the suppliers and also see that it's been received differently from different IP addresses or from different email addresses and so on. So we can help on that. And of course, we mentioned e invoicing before the regulations that is happening in the world now because COVID, that is definitely compliance.

You need to ensure that you're following the rules and regulations and how the invoices are received and sent and registered and paid, of course. But what is your experience with this, Pierre?

Speaker 2

Well, I mean, I'm just the facilitator in this conversation, but I will share my two cents on it. Yeah, no, I think this is one of the, I think you hit two of the big things certainly is around kind of the regulatory aspect, and certainly there's the fraud piece of it. And this is just a great place where AI is. Think about our consumer spending and you think about the credit card companies and the level of AI deployment they have around on the consumer side.

It's just like many things, just bringing that over to the B2B aspect, right? So that we can have the good bots watching out on our behalf, you know, in terms of identifying these things. But I will just add kind of the broader piece around source-to-pay and the spend management and the piece around working capital too, right? Where efficiency really unlocks the door to kind of effectiveness.

So if you can get that invoice in really quickly, now you have that ability to maybe offer early payment discounts to do supply chain financing, to start to maybe go after these opportunities where suppliers with interest rates are going through the roof right now. And people are crunched for cash. Great time to do a working capital program for a supply chain finance program potentially with some of your suppliers. So if you're gonna unlock that value, you got to get the plumbing really done well.

Got to get have the clean water if you're going to make some nice drinks out of it. Right? And I think the other piece is the spend management piece around the P2P process to make sure that invoices are coming in and really as part of the design of how you want things to happen, three way match, assumed receipts, recurring invoice, whatever that design is around that spend category should ultimately carry through into execution process and being able to tie the contracts and be able to generate all the detail that you need from a spend visibility standpoint so that the savings that you, you know, maybe negotiated upfront are actually gonna get realized, you know, on the back end.

So I do think there is that big spend kind of impact aspect of it. So you asked me a short question. Gave you a long, long answers.

Speaker 3

But I loved your answer.

I fully agree to everything you say. So it's a really interesting area that we can help our customers.

Speaker 2

Yeah, and It's the choke point, right?

I mean, if you're a lot where does it all come together? It comes together at the point in which you actually set up vendors, you know, and in your systems and actually, you know, paying them when the moment of truth is when that invoice comes in. And if you actually think about the definition of what does a perfect order, a perfect supplier order mean, it means on time in full excellent quality and the invoice information that you need to be able to match to and get that thing paid flawlessly. That's a little bit of an Achilles heel, right?

That is an important piece to solve that. So anyway, that's I'll get off my little high horse and let me send it back to you. All right. So tell us just a little bit about Medius around your differentiation as a provider, you know, it's a, you've got some patent pending stuff, but just maybe talk a little bit about, you know, the differentiators and what, you know, what helps you win in the field against more, let's say traditional scanning doc management workflow kind of oriented solutions that are out there or whatever other options are.

Speaker 3

Yeah, I'm particularly proud of two things we're doing at Medius. And one thing I'm really, really proud of is our vision that our solution should be easy to use and require almost no configuration. Would actually say that we're trying to automate automation and that result in autonomous. And autonomous to me is that you do not need to configure your solution.

It's actually learning from your daily work and adapt to it. So you don't need to maintain it. It's just there. And it's improved.

And it helps you improve. And it is improving over time. So it makes you more automated. And usually when I say this at the dinner table, I mentioned this in the beginning, My daughter says she just rolls her eyes and says, Oh, configuration is so 2000, mommy.

And I would actually say so because if you look at our kids today, they are not configuring their iPhone. It's like, right, plug and play and it's done. Right. And it's same thing when you Google something, it actually learns what ads you're looking for.

So I think that is the vision and really good vision and goal that it should just work. Yeah. And the other thing that I'm really proud of is our invoicing solution. Because for once, and I think you can agree Pierre, even though invoices or EDI invoices, it's claimed to be 100% touchless, It never is.

Usually, your vendors or your suppliers to put the PO number. This is a typical example that we can see the PO number can actually be put in like, I think it's up to six different places in the invoicing file in the XML file. And how would you as a buyer be able to adapt to that change if you have a thousand or more than thousands of different suppliers send the invoices to? And this is where our invoicing and our patent pending solution comes in.

First, it's included in Omnichannel we'll be talking about previously. We just take any format, we adapt to it and you teach the system as a user. If something has not been captured correctly from the XML, you can actually teach the system where the reference or the PO number is, if it's put in the wrong tag. So in that sense, we can make the invoices 100% touchless.

And we can really ensure it's touchless all through the system, making it more autonomous, all the different invoices. So I'm really, really proud of the invoicing solution as well. I think we are making the invoices autonomous or really automated.

Speaker 2

Yeah, no, it's true. I mean, it's easy to kind of say, hey, like with analytics, we go from descriptive and diagnostic to prescriptive, and then you like make this leap to autonomous, but to actually do that, having the solution be able to learn from you and learn from the suppliers and to really help guide them to just make sure the process is actually working, but also, you know, to just have that the AI have learning and empathy, if you will, actually just help you make that process get to near 100% versus, here's a big dashboard and portal and it's still up to the human in the loop to actually figure out how to keep the things running, the AI should be kind of guiding you as to where you need to focus and also asking you questions of where it can help.

Speaker 3

Yeah, I fully agree. And I came across a really interesting example yesterday when I was visiting a customer. And they were processing a lot of invoices, and they had some issues with the invoices. And they came with a request and said, When can you have this done for me?

And I was like, well, it was delivered six months ago. And they were like, okay, but why haven't you told me? And then and I'm like, yeah, but it's in the help file. And it's, we posted it on the internet and everything in our blog.

And they were like, yeah, but when do I have time to read that?

So it's actually, I really believe this autonomous is the future, because who has time to read documentation to get better or look at this different dashboards?

Speaker 2

Yeah, I mean, you see this in the supply chain very much around just the number of messages of just the supply chain is overwhelming and invoices are kind of the last mile, if you will, when I was talking about the perfect order side, That is also just a very, just think about the millions of invoices that companies process. But yeah, I think it's a good point to have the AI in the system to just let you know that all is well, or maybe there are some things that require attention and here are the things that you might wanna prioritize them in the following way and have the system guide you to kind of feel it's like Jerry Maguire, help me help you, you know, have the system say, help me actually go towards autonomous. So I think that's the exciting part as you're saying around your solution is is, you know, automating that evolution itself.

Well, we've really kind of gone lots of different places in the conversation. Is there anything that we missed?

Speaker 3

No, I don't think so.

Speaker 2

Well, the AI just gave us a score of 8.9. So we're doing well.

Speaker 3

I'm happy to hear that. That makes me happy.

Speaker 2

And I'm just glad I could provide a different audience than your daughter rolling her eyes, you know, and we could kind of geek out in this area because I think not just us, but folks in the business world are going to find this really important because it is just such a pain point at scale, right?

Speaker 3

Definitely, definitely. And that's why we love our job because or work because we can help, right?

Speaker 2

Yeah, it is good to be useful and it is good to help folks and free them up from the drudgery so they can go after the, you know, the bigger problems, right? And we have a lot of bigger problems to solve in the world than this. So, and we'll leave that on an optimistic note, right? So, let's go get at it. And so, Katta, thank you so much for taking your time. I know you're busy. Your clients are probably wanting you to be spending more time with them than me, but I really wanted to.

Speaker 3

I enjoyed having this chat with you as well. I learned a lot from you as well.

Speaker 2

Well, there you go. So we learned from each other. It's a proverbial win win. Okay. Well, you everybody for tuning into this conversation and hopefully we'll have some future discussions on other topics that may not be as exciting as invoice capture, but you know that that will still be able to add value nonetheless. So so thanks again for your time and thanks again, Katta.

Speaker 3

Thank you.

Speaker 1

That was behind the green curtain with Capture. How does automated invoice Capture actually work? Part of our ongoing podcast series, Bridging the GAAP. Special thanks to Pierre and Katta for their time. If you like this podcast, please be on the lookout for our next installment.

And to take all of your business spend management far beyond basic automation, visit medius.com. Thank you for listening.

Speaker 1

Hello, and welcome to Medius' new podcast series, Bridging the GAAP. Together with Spend Matters, we've put together a podcast series exploring a wide range of topics from the evolution of technology and finance, to tax compliance to sourcing strategies to fraud risk and mitigation.

In today's episode, Keeping up with compliance and e-invoicing, Xavier Olivera, Procure-to-Pay Analyst and Advisor at Spend Matters talks to Brad Colie, Head of Sales at Pagero and Rich Revill, Vice President of Global Presales at Medius, about how e-invoicing mandates in different countries, what that means for governments and organizations operating across borders and how to stay compliant.

Speaker 2

Hi, Brad. Hi, Rich. Thanks for giving me the opportunity to talk with you about this very important topic today, electronic invoicing compliance for different countries. Let me start by introducing myself. I'm Xavier Olivera. I have been related to IT and procurement transformation for more than twenty, twenty five years, mainly in consulting companies and the last few years as a Procure-to-Pay Analyst at Spend Matters. Brad, if you could introduce yourself, please.

Speaker 3

Sure, Xavier. Thank you very much. My name is Brad Colie. I am Director of Sales for Pagero in North America. I have been in the, we'll call it the e-invoicing space and compliance space for the better part of eight, nine, even ten years.

And just really excited to be a part of this today and joining you and Rich for the discussion.

Speaker 2

Thanks, Brad. Rich, your turn.

Speaker 4

Yeah. Hi, Xavier and Brad. Great to be here. So, yeah, my name is Rich Revill, and I lead the global presales team here at Medius.

And we work closely with Brad and the team at Pagero to drive really compelling end-to-end solutions for our customers operating globally that need both regional e-invoicing compliance along with true AP automation and payments automation as part of our broader spend management suite. So great to be here in this conversation today.

Speaker 2

Thank you. Thank you both. How about we start with a brief introduction and definition of what is electronic invoicing compliance with general context to the audience?

Speaker 3

Xavier, I think that's a great place to start. Right. And Pagero has been in the business of providing e invoicing solutions even in this compliance space for the better part of ten years. And it's incredibly important that as anyone thinks about how to solve e invoicing compliance and tax compliance, that they understand what is really happening in any given market or country.

Because as the mandates for compliance rolls out in different parts of the world or even in different countries, there are different models for invoicing that have been introduced. And in fact, within the marketplace, we're seeing even some broader terminology of continuous transaction controls sort of govern the overall model that's available and what different countries are doing, because e invoicing can mean different things to different people. So when we think about topics and definitions, one of the biggest things that I see first is the difference between e invoicing itself as well as reporting, right?

Tax reporting. And so I think what we're talking about today is more on the transactional side, the operational day to day, sending an invoice, for example, and on the AP side, of course, receiving the invoice and what that looks like. So when we think about the different models under the continuous transaction controls umbrella, Pagero has really identified four different models. One is interoperability in which a service provider is used for access points and access into that infrastructure.

There's really no government control over that. It's really more of a body that has governance over the infrastructure and the way that invoices are sent and received. And it's the service providers that really own the technology and the ability to send and receive in the way that is governed through that infrastructure. And so when we talk about invoice compliance, yes, interoperability comes into play.

But I think most people start to think about clearance models, and that's where the government inserts themselves in the middle of the process. One of the things that I've seen is in certain markets like Italy, the sender of the invoice actually sends the invoice directly to the government. And the reason that's important on the AP side is because that means that the AP team has to figure out how to also access the government, almost like a PO box, right, to pick up that invoice where you need a digital key, if you will.

And being able to receive that invoice directly from the government also means that that invoice is coming in the format that the government has dictated. So there needs to be a conversion of the data in order for it to enter into your business process, you know, like the Medius platform for the ultimate processing workflow, approvals, validations and everything else. The other model is really the clearance where a supplier will send the invoice to the government and get approval, get a code. But the distribution is the responsibility of the supplier, right?

So differentiating itself from the centralized invoicing model, which is the Italian model I just stated, there is the clearance model in which the supplier is actually sending the invoice to you, the buyer. And that can come in a number of formats, right? That can come via email and other methodologies. So the buyer has to be prepared for understanding how is the supplier going to send it or maybe even dictate to the supplier how they want that compliant or fiscally valid documents sent as well as the PDF.

And so those are two main models that really need to be considered from an AP perspective on how to ingest the data that is coming in in a compliance market. And the final one, the fourth model, as I mentioned, is really a real time reporting. And that's more or less the responsibility of the supplier. However, I think we're going to talk a little bit later about the emergence of cross border invoicing, which we've seen in Italy, where actually it becomes a bit of a reverse flow.

Once an AP invoice is received from, say, foreign a supplier and is processed, a report or effectively a subset of data on that invoice needs to be collected and converted into a format that the government then needs to receive from effectively the AP team. So, I know that was a bit lengthy, but hopefully that made sense to the audience or Xavier, if you have any questions or Rich, if you have anything to add to kind of those definitions and key models.

Speaker 2

That is a great introduction to the topic. And thank you for explaining this really well. You just mentioned the complexity of this too, because it seems that it's not an easy task to do. So continuing with this conversation, we know that let's say five years ago, not too many countries were doing this type of mandate of electronic invoicing, right? But now more and more countries are doing it, are joining this initiative. What is happening here? What is the benefit of doing this for countries and for organizations?

What is causing this change towards this electronic invoicing? Do you have any inputs there?

Speaker 3

Yeah, I do actually.

And I've been at this a long time and I know you have been as well, Xavier. So hopefully you share kind of my thoughts around this. It's a great question, right? Because you need to factor in not only what has happened historically and to date, but, you know, when you think about how to find a solution even into the future, is this a growing trend or is this dying trend or what's happening?

The reality is that, as you say, many years ago, when there was only a handful of countries doing this, really the inception of this was predicated upon the fact that a country or a government tax authorities really were trying to close the tax loopholes. They were not receiving the tax revenue that that was due to them. And therefore, there was a decision to effectively collect all the data on invoices and really put the onus on the organizations operating within their borders to report what the government effectively already would know at that point. Right.

Because they've collected all of the invoices. They know all of the VAT or tax that would be due.

And so therefore, the organization that is operational within that country has little or no excuse to really avoid that tax payment. And so as governments started to see that, what you saw was a domino effect, especially for the countries that have the highest VAT or tax gaps. Another thing that has happened is that there's a clear path to data collection. And as governments recognize that they can collect this data electronically by receiving these invoices from, say, suppliers and approving those and collecting that information, then they have that data on hand to know what is happening within their borders again. So I think because of that, we're seeing definitive growth in e invoice mandates.

As you say, many years ago, it really was, I think, isolated to Latin America as far as the clearance model, if you will. However, with the introduction of Italy and India, Egypt, announcements from Poland and Japan and Australia and others, we are seeing an explosion within this marketplace of e invoicing requirements and mandates.

Speaker 2

Yeah, that's something that is not today's topic. Automation is a critical topic here too, that maybe in another time we could talk about it, but let's continue with this. What are the implications if I'm a company that is operating across borders? What are the implications of these mandates? Or more important, what are the challenges that they could face or the risk if they don't comply with this? Because this doesn't seem that simple task. This seems to have a lot of intelligence behind it.

Speaker 3

Yeah, absolutely. And what I've seen is that, as I mentioned kind of earlier, taking the different models that are out there, one of the biggest things that a company has to consider is how to build a solution that can account for all of the different models that are out there, all of the different formats that the data is coming back into their system, speaking strictly towards the AP side of things. Right. And so the consideration of that so that you can minimize the effort on the IT side as well as within the AP process so that can gather the information and the data off of that AP invoice and ensure that you can standardize on that so that it can effectively get into your process the same way no matter which market that you're in. So one of the big things from an operational standpoint is how to collect that information and standardize the entry of that information or ingestion of that information into your system. You know, you mentioned what are the implications.

It's important to understand that in some markets there are fines and there are certain things that are in place by the government that if you don't comply, then you could be subject to a fine or even a shutdown of your business. A lot of times that's on the supplier side. However, again, we are seeing the emergence in need from an AP perspective. And then following with the AP trend in a couple of these countries like the clearance markets, right, where an invoice has been cleared by the government, by the supplier and then sent to the buyer, there is a need for the buyer to really validate is that invoice, is it correct and is it registered with the government?

Is this a truly a valid invoice? Because as a buyer you don't want to be paying an invoice and effectively registering to the government a tax position that wasn't originally registered. And so therefore there is a need to look up the information that is on that invoice. So there is unique identifier codes that a supplier will put onto that invoice.

And so when receiving and prior to processing, oftentimes you want to make sure is this a valid supplier that's registered with the government? Is this a valid invoice that has been registered with the government? And therefore you can ensure that you're making payment on a valid invoice and not a fraudulent one within those markets. I know I answered that in a couple of different ways.

So hopefully that made sense. And as you say, you know, with the automation in mind, thinking downstream, collection of that information and standardizing it is what's going to support automation because really difficult to automate data that's coming in in a number of different ways. So being able to understand what are the different formats, bring that data in in a standardized way allows for an automation strategy that a lot of companies are seeking.

Speaker 2

Yeah, that's a great explanation for this topic. It's not something that a company may be able to do it by itself sometimes, It's required a lot of effort there and maybe a partnership like you guys, Pagero, right?

Let's think about for the audience to visualize a real example of what this means in terms of effort. You just mentioned the type of efforts and the challenges, but could you give us a real example of what is the process of country and a specific country? I don't know, you mentioned Italy, but you could mention another one. So we have a more visual picture of this.

Speaker 3

Yeah. And as you've even alluded to several times, it gets quite complex. So let me try and simplify it down. And as you say, give the audience a bit of a visual. So in Italy, for example, when an invoice is created by the supplier, there's specific data that the government requires. So that supplier will create the invoice and convert it into a format that the Italian government wants to see. In this case, it's a Pitura PA.

The supplier will then send that invoice directly to the government. And really all that they're looking for as a supplier is an acceptance or rejection. And once the invoice has been accepted by the government, it really is out of their hands. As I mentioned in that centralized invoicing model, there is no distribution function from the supplier.

So once that is registered with the government, it sits on their server. The best visual I have ever been told and I've shamelessly stole is it's like a PO box, right? So when the buyer pings the government platform, then they will see that that invoice has been registered and is available for pickup. That will then be retrieved.

And that, as you say, is something that you really need a service provider for, especially given volumes and various other things that occur. So that's something that Pagero does. So let's say in this particular example, Pagero is your provider and we pick up that invoice in the Pitura PA format. We will then do the conversion and drive that data.

And hopefully in this case, you're also utilizing Medius. So we will take that, drive it into the Medius' platform for consumption processing, validations and approvals. So that's just a very simple overview of the path or process flow of an invoice from supplier to buyer. So by picking that up directly from the government, you know it's a valid invoice.

By comparison, there are clearance markets and this can be viewed as a Mexico or an India in which the supplier has registered the invoice with the government, received the clearance codes, QR codes, the dates of approval and everything else. And in this case, is all happy path, full reserve, you know, the errors and rejections for another call. But let's assume happy path here. The invoice is accepted by the government.

These codes are provided and then the supplier distributes that invoice to the buyer. Let's say again, for sake of example, this is by email. And so the fiscally valid document in Mexico, it's a CFDI, is accompanied by a human readable PDF. And those two documents are then brought in by the buyer.

And the next step, because you are receiving as an AP team, the invoice from your supplier, not via the government, but with hopefully unique identifier codes or QR codes, there is a validation step. And so you need to consider how are you going to do that. Again. You know, with the help of a provider like Pagero, you can have access to the governmental server to balance that code against their server to ensure that it is a valid document and that it is a valid supplier.

And then therefore you can then process that information. Similar to Italy, though, at that step, you probably want to do a conversion. CFDI is a format, if you will. And so you want to be able to convert that.

There are some that actually take the PDF and convert that into data elements that can then be processed and sent through, say, again, by way of example, the Medius platform for processing approvals and validations. So hopefully that wasn't too lengthy of an explanation, but a couple of real world examples and hopefully some visuals on how will work.

Speaker 2

That's great, Brad. And this take us to the next question that is, as you just mentioned a couple of times, this is a complex process, but not just for the process per se, but also to maintain all the intelligence and update all the requirements that each country needs in order to be in compliance from an electronic invoice perspective. So, I understand that you Pagero and Medius has a partnership here and both provide this compliance. Could you elaborate a little bit of how you help organizations in order to be in compliance with this electronic invoicing?

Speaker 3

Oh, Xavier, thank you so much. Yeah, that's great. And Rich, if you don't mind, I'll take a stab at this and then turn it over to you because as Xavier alluded to, there's a couple of steps in this process, right? So Pagero really satisfies the connectivity to the government platforms, the authorities for that that need to pick up the invoice, do the conversion.

And it is quite complex because we operate in over 70 markets and it can vary as far as the invoice format and the need for receiving the data in a different way across all of those markets. So Pagero is operational and in over 70 or actually I think it's now 75 plus markets. And so what we want to do is we want to bring in that data so that the organizations that hopefully are listening in don't have to figure that out. They don't have to know how do I connect to the government?

What is the format? We will do all that for them. We will do the conversion, standardize the data and drive it into the Medius platform. So, you know, and this is what I love about the partnership with Medius is at that point Medius picks up the data and runs through the process that is available for the MEDIUS customer.

Rich, I don't know if you want to pick it up from there.

Speaker 4

Yeah, thanks, Brad. I mean, you've said a lot here that really echoes how complex the challenge is for companies who have to tackle e invoicing mandates. The good news is that you guys tackle it for them so they're not having to build this out country by country. They're having to build it out supplier by supplier.

I mean, that's the real value I think that Pagero's driving here. On the back end, Medius, of course, supports a full spectrum of invoice submission channels. There's still too much paper or PDF attachments to emails or EDI. The submission channel we can manage, and of course, for invoicing compliance, Pagero manage that for Medius.

So when the invoices are received by our our AP automation solution, our customers are leveraging the full capability we have there for true AP automation, delivering AP as it should be in terms of advanced peer based invoice matching, automatic routing for approval of non PO invoices, and so on. And on the back end of all of that, the really detailed visibility and control they have from a reporting and potential audit perspective. So, you know, if the tax authority wants to audit and see how those invoices have been processed and should have been processed through the tax authority, our customers have rapid access to that level of reporting and detail.

Speaker 2

Great. Thank you very much both for all this. This topic can give us for many hours of conversations, but we need to conclude. So Brad, Rich, thank you very much for this conversation and for giving me the opportunity to talk with you.

Speaker 3

Thank you. Really appreciate the time. Always good to talk about this stuff. And Rich, always good to hear your voice again. And Xavier, thank you so much.

Speaker 4

Thanks, Brad. Thanks, Xavier.

Speaker 1

That was Keeping up with compliance and e-invoicing. Special thanks to Xavier, Brad, and Rich for their time. If you like this podcast, please be sure to subscribe to catch our next installment of Bridging the GAAP. And to take all your business spend management far beyond basic automation, visit medius.com. Thanks for listening.

Speaker 1

Hello, and welcome to Medius' new podcast series, Bridging the GAAP. Together with Spend Matters, we've put together a podcast series exploring a wide range of topics from the evolution of technology and finance, to tax compliance to sourcing strategies to fraud risk and mitigation.

In today's episode, Jetsetting cross border payments, Xavier Olivera, Procure-to-Pay Analyst and Advisor at Spend Matters, talks to Daniel Ball, SVP of Innovation at Medius, about the landscape of automation and cross border payments today, the complexities and risks involved and how organizations can better manage this process.

Speaker 2

Hello, Daniel. I'm glad to be able to talk with you about this great topic of automated payments and cross border payments for EMEA.

Speaker 3

Great to see you too. Looking forward to the discussion.

Speaker 2

Excellent.

How about, let me introduce myself to our audience. I'm Xavier Olivera. I've been involved in procurement transformation for over twenty years, which includes B2B payments too. I started consulting companies, and now I've been at Spend Matters for eight years as a P2P analyst. Daniel, would you like to introduce yourself?

Speaker 3

Yeah, sure. Thanks a bit. So my name is Daniel Ball. I think I probably match you for being pretty long in the tooth when it comes to the procurement and finance software space. I co founded a company called Wax Digital back in 2001, which was a purchase to pay SAS software business out of The UK and spent the next couple of decades nearly growing that business into an international force to some extent, I would hope in the purchase to pay space, doing everything from sourcing through contract management, procurement, AP automation, and never quite actually getting into the payments arena, although it was something that was always an ambition of mine certainly. And it was one that we were able to realize following the acquisition of Wax by Medius back at the end of 2019. So I joined Medius as a consequence of that acquisition and Medius of course is very much focused on the AP automation space historically.

So the Wax acquisition brought all of the kind of the procurement and P2P capabilities into the Medius suite. But one thing that we still didn't have was a payments capability really, although you know, Medius had done some ad hoc work in that space. There was certainly not a concerted drive towards a really global and thoroughly capable payment solution native within the Medius suite. So I took up the mantle on joining Medius since I've spent the last two years or so really building, delivering, taking to market what we consider to be a really comprehensive global payments capability with Medius that we're now working with many clients around the world on to power their payment capabilities. And it's been a great journey, really exciting, and something that we're really proud to have accomplished and see a huge future in for us and our customers.

Speaker 2

That's great. Great career, Daniel. How about we start with the simple defining the concept of what is cross border and why is this important for payment automation. I know that on your career you mentioned that you have been involved in this and recently you have been involved more. So how about we start with definitions?

Speaker 3

Yeah, for sure. I mean, obviously payments is an inherent part of any business generally, buying things from suppliers and ultimately paying for those things from suppliers is of course, it's the fundamental building blocks of business, is commerce really.

And we have many customers who are doing that just on a domestic basis. They might be based in Sweden and they're only paying companies in Sweden because they're a smaller business. They're not doing any international.

They have no international supply chain and nor particularly any international customers. Same in The US. I mean, The US is obviously, you know, it's a huge domestic market and many very large organizations only pay vendors within their home territory. They do virtually no, or in fact even none at all, in the way of overseas buying and therefore payments.

But I think if we just look at Europe in particular, you know, you have obviously a lot of economies that are very close to one another, lot of economies that share a common currency in the form of the euro. But in our particular homeland in The Nordics, you know we have multiple currencies and we have customers who are really not struggling, but who aren't doing payment automation as efficiently and effectively as they could do. Certainly. So I think you know what we want to look at, I guess in the course of this session is three things.

You know what are companies doing generally with payments and payments automation? So how are they managing today and what challenges do they face when it comes to both domestic payments, but in particular cross border payments, because that's where we see a lot of issues that can really impact on businesses. So what are the particular challenges when it comes to those cross border payments versus domestic payments?

And you know those two are kind of focused on the process side of things. The third is then around security and fraud in the payments process, because when we're talking about payments, we're obviously talking about, you know, moving money from one organization to another. You know, that's really at the sharp end of where any fraudster is going to want to try and get involved and try and get that money deviated from where it's supposed to be going to where it isn't supposed to be going. So looking at security and fraud in what is ironically actually the one leg of the financial life cycle that is often least well engineered to prevent fraud in many companies.

So we see it as kind of a top of mind subject for a lot of chief financial officers, a lot of controllers to address. So I think we're looking at payments. Payments is a question of moving money from one organization to another. What are people doing generally with payments?

What are the particular challenges with cross border? And how are people trying to address fraud and security in that context.

Speaker 2

That's great. Before getting into these challenges and risk and fraud topics, we all know that cross border payments and even payment, B2B payments has evolved a lot in the last five years, and IT has a role here. What would you say how we have evolved in terms of B2B payments in the last five years?

Speaker 3

Okay, well, I mean, yeah, IT technology software has a significant part to pay now, although funny enough, that's not always the case in terms of where we see customers today. There are a lot of actors at play here, so let's try and unpack those and take a look at what they look like for a lot of businesses that we see out in the wild. And that landscape varies quite a lot depending upon where in the world you are, of course. So a territory like The USA, for example, has some very specific features that you tend not to see elsewhere.

We see, you know, the continued widespread use of check payments, and also the prevalence of credit card payments. You know, those are two facets of payables that you tend not to see in very many other territories around the world. So we see a lot of customers in The US market who are paying maybe thirty, forty, 50% of their payments by check, some even, you know, and some very substantial businesses actually that are still paying 100% of their payments by paper checks. So in those kind of environments, you have a very IT light landscape when it comes to the payment process.

They're being processed in the ERP system, they're producing a payment file, but then that is simply going to a print production, either facility locally, in house or externally, and those checks are in some cases even still being manually signed. Now we've seen a lot of forces over the course of the last five years, as you suggested, that have accelerated a move to digital. COVID has actually been a player in that environment where obviously, as I just mentioned, signing a check personally suddenly becomes a very difficult thing to do when there's nobody in the office. Dealing with manual processes when there are no hands around to actually get on those processes becomes extremely difficult.

In Europe, conversely, electronic payments are obviously very much the norm, And we have a pretty efficient banking system, you'd have to say, across Europe, certainly domestically. But even so, we still see customers managing multiple processes and combining some fairly automated and efficient processes alongside some pretty insecure manual ones when it comes to making payments. So you've got IT that's made inroads to some of those payments. So the happy path, if you like, okay, I'm paying domestically in my local currency.

But when you have maybe multiple business units in multiple countries and therefore you've got multiple banking relationships, That can really change. So often you'll see businesses which are integrated with their lead banking partner in their home territory, but they're loading files manually up into banking portals in some of the other countries where they have smaller operations. So we've got customers that have maybe operations in seven countries. They might have six different banks that they work with as a consequence of that, and completely different processes as a consequence of the volumes and just the IT resources that they have available to them.

I think you've also got banking industry initiatives as well, which come into play here. So again, in The Nordics, when there's an initiative, for example, called P27, and that's a joint initiative by half a dozen or so of the region's biggest banks to establish a pan Nordic payment infrastructure for domestic and cross border payments in the Nordic currencies and in the euro. And you know that brings some real upside for businesses in the region, but it also means that a lot of businesses have to update their integrations with those banks to accommodate the new standards. So again, there is a overhead on IT.

There is an IT requirement, and I think that's where organizations like us, for example, can really help businesses by taking away a lot of that IT overhead, taking it on ourselves essentially to act as a sort of a banking connectivity as a service, if you like, where they can plug into a network of banks with single connection for both domestic and cross border without having to maintain and manage multiple relationships from an IT architecture perspective with multiple different banks in multiple different countries.

Speaker 2

Yeah. That's a great explanation of the landscape that B2B payments and cross border are not just cross border, but also domestic payments are today and how IT is supporting that.

If you have to list what challenges do organizations face with cross border payments and what steps can they take to try and address these issues?

Speaker 3

Yeah, sure. Okay, well let's take a step back from that and think about, okay, well first of all, I guess, how do those challenges impact on them? So, you know, where does the impact come on an organisation when it comes to particularly cross border payments? Let's look at that.

So I think there are four key things that organizations really suffer with as a consequence of a lot of the complexity and the inefficiencies that often surround cross border payments, and that's time, it's risk, it's cost and it's visibility. So if you take those individually, you know, if you look at time, when I go to make a cross border payment, first of all, as I just mentioned, you know, there are often separate processes in AP to generate those payments. So I create a different payment file, I export it, I get it reviewed differently to my domestic spend, I have to upload it to a banking portal or to a specialist FX provider portal.

All of that costs me time internally, costs labor overheads internally, and introduces potential for risk and error, which I'll come onto in minute. But also, you know, once you've got through all of that, I've actually initiated the payment at bank. If that is a cross border payment and I'm making a payment from Sweden to The US, I can often expect that to take between three and five working days to actually clear, you know, as it pings between often several banks from leaving my bank to arriving at the payee's bank. So there's a lot of time overhead, both internally and in the process itself.

There's an increased risk because if I'm actually uploading payment files into a banking portal or into an FX provider gateway, then I've got a file which is floating around. Know, that file's open to tampering, it's open to error, it will be often approved off systems, so there'll be limited audit chain behind it. You know, it's a very, really insecure process to be using for, you know, making what is the final stage of the financial process, which should be the most secure really making those payments. You've got cost, you know, very often companies that we talk to have no idea what FX rates, you know, or what FX margin their bank is charging them.

So they're making that payment from Sweden to the US. They know that you know there is a prevailing exchange rate and the bank's probably going to put some money on top of that. I have no idea how much that is. They do know that they'll get fees and they'll get fees on both the payer and the payee side, you know, 15 or $20, or euros quite often per transaction between them and the vendor.

And of course, you've got the, you know, ultimately the exponential cost of fraud if something were to happen to that file relating back to the risks that I just mentioned. And then finally, poor visibility. You know, you've got that limited visibility in the payment process because it takes three or five days. It's very hard to know where your money is when it's in transit and you've got those reconciliation challenges then thanks to the fees and the FX margin.

So you end up with a bucket of banking fees that's charged to dedicated cost center and just kind of written off very often. So you've got a lot of, I think, challenges that really have direct impact back into the business and potentially very serious ones if you look at things like the risk side of things when it comes to fraud. You look at what companies are doing to try and address those issues and many companies where they're not doing too many international payments, they often kind of accept that as the status quo. It's simply a cost of doing that international business.

Often they don't realize quite how much it does cost them. You know, you only have to make maybe a couple of payments a week for the fees to reach 4 figures on an annual basis, and you know a lot of these organizations are doing more than that. But where they try and combat it is, you know, looking at things like holding bank accounts in domestic currencies, which is fine if you have incoming revenues in those currencies and they're being topped up by sales revenues. So you've got a, you know, sales operations in The US as a European company and you've got dollars coming in therefore in order to cover your dollars going out.

But if you don't, if you're just, you know, paying suppliers in The US, then you don't want to pre fund those accounts because you don't want to lock up cash in a foreign currency in your local bank, but in a foreign currency bank account. So as a consequence, people move money from SEC to USD, for example, whenever they need to make a local currency payment. So effectively they're still incurring those cost overheads, even though it's going just to their local account before making payments in USD. But they're also bearing the cost of the management overhead of the local currency account as well.

And as a separate payments provider, could use an FX specialist if you like, but again, it's not an integrated part of the process. You're back to that manual portal based payments handling.

Speaker 2

Yeah. What can be done to better manage cross border payments?

Speaker 3

Okay. Well, I mean, are the sort of the downsides. If you look at then, okay, well, as you say, what can be done to better manage those cross border payments? What are the benefits that people are looking for when they come to an ITP solution like the one that we deliver, where you have a single integrated payments process for both domestic and cross border, then you address each of those items head on.

So you're not logging into separate banking portals or specialist cross border providers. You're taking advantage of a global network that we hold of local currency accounts. You know, we've got 140 currencies in over 200 countries, and you've got that common process therefore. But you go beyond that and, you know, we address the four key issues we just touched on.

Time, you know, the multiple days as payments ping between banks. Well, we make the payments same day. The separate processes in AP to generate the payments file and so on and so on. It's one process.

The risk, you know, uploading it into the banking portal, again, it's a single automated process. There are no uploads. There is no different process for cross border. It's all automated and electronic, so your files aren't flying about open to tampering or error.

You've got that full audit, the approvals with all of the controls and proactive fraud controls, and we'll touch more on that in a minute. You've got the cost issue of, you know, I don't know what FX rate I'm being charged. Well, you get full clarity on your exchange rate, including margin. No fees, so those 15 or €20 per transaction disappear.

And of course, you're combating the cost of fraud by bringing in all of those fraud controls. And then finally visibility, you know, you're not losing sight of these payments for four or five days. They're happening same day, you don't have that visibility issue. But also because there are no fees, you don't have any of those reconciliation issues as to, okay, well what are the fees applying here?

And that's both from your perspective and from the supplier's perspective. So the supplier is getting paid what they expect, not what they expect, less a fee that the bank has charged them.

Speaker 2

And you were was just reading my mind about recent fraud on this payment process. What can Medius do to help with this? You mentioned visibility. That is a key topic here on payments, b to b payments. But also, I think risk and fraud is something that we have seen a lot more.

And maybe you want to talk a little bit more about how AI machine learning and new technologies are being used to identify risks and avoid frauds.

Speaker 3

Yeah, absolutely. No, and I think this is such an important area to be honest because you've got the efficiency, you've got the cost, but of course all of that pales into insignificance against the potential impact of a fraudulent payment, not only financially, but reputationally and in so many ways it's hugely damaging to an organization. And that's why obviously it's a serious focus area for a lot of finance teams and AP teams, and particularly should be in the payments process. So first and foremost, again, what we are able to offer is a single integrated process for all payments.

So you never have any payments that you're having to make in off system, if you like, processes by exporting files and uploading them into portals. Everything is automated and sent through the same process, whether it's a domestic payment or a cross border payment, if it's a check payment in The US or a credit card payment or whatever, all goes via the same channel. It's integrated back down the chain too, so an ITP solution like ours gives you that kind of holistic visibility and data to draw on. So the end to end process lifecycle visibility, you're saying I'm making a payment today for an invoice I received sixty days ago perhaps.

So, you know, as controller, want to be able to easily see at the click of a button or, you know, access that invoice, pull up an image of it, see where it was coded, who approved it, were there any comments? That history and the associated data points, because you have them in one system, you can be much more intelligent about identifying and highlighting potential risks. That's not something that you can do in a banking portal where you're making your approvals for a payment because you don't have any of that legacy data. You know, a lot of our customers are processing payment files with hundreds, sometimes even thousands of payment items a week.

I don't know, if I think of a manufacturing customer in The USA in the HVAC space that uses our payments technology. You know, they're doing $25,000,000 in payments a month and they're processing maybe 300 payment items a week. So, you know, if you as an FDA send a file with 300 or more payment lines on it, how do you really make an informed approval decision?

How do you really try and identify, okay, well, are there any suspect payments in this file? Because you've got 300 lines to look through, and you're relying on your kind of anecdotal knowledge, your inherent knowledge of who those suppliers are and how much they should be being paid and so on. And that's why our customers love our risk factors.

Exactly to your point, Xavier, this is using AI and ML to effectively comb those payment files, draw on the knowledge from other parts of the suite, and pull in that knowledge that we have about the supplier and their history to identify anomalies and potential risks. So, you know, is this a new supplier? Have their details payment details changed since the last time you paid them? Has this invoice previously been approved in our system?

Is this an unusual payment value? So you normally pay this supplier €10,000 a month. Here's a payment for €100,000 That seems unlikely or unusual. Maybe you want to check that out.

The invoice format has changed. Usually the invoice comes in with a particular numbering scheme that it has been for the last three years from this supplier. Suddenly that numbering scheme has changed or the format of the invoice has changed. That doesn't happen very often, but it's something worth looking into.

So we are trying to proactively and intelligently suggest to the key actors in the approvals and review process for payments, you know, which 15 items out of those 300 they should focus their attention on because there are particular facets of those payments that make them more susceptible or more likely to have been at risk of fraud than the other two eighty five payment items within that batch. So we're highlighting and surfacing those. Customer sees them right at the top of the list. They're flagged as having risk factors against them, and therefore we're focusing attention where it matters most and where it's most likely to deliver a result.

So those kind of things that we can bring to the party really fundamentally change the dynamics around things like review and approvals and mean that we've got a much, much better, not only overall process for, customers to follow, but a much better mechanism for actually, you know, helping them intelligently make the right decisions about payments to protect against fraud.

Speaker 2

Very interesting, Daniel. And, yeah, you you wanna be the smarter on recent fraud. So that is very interesting what you're talking about, how the process is learning also. I know that this is a much broader topic to explain in twenty minutes, but we need to conclude, Daniel. And I want to thank you very much for the opportunity to talk with you. I appreciate it.

Speaker 3

It's been my pleasure. Great to speak to you, Xavier. Thanks a lot.

Speaker 1

That was Jetsetting cross border payments. Special thanks to Xavier and Daniel for their time. If you like this podcast, please be sure to subscribe to catch our next installment of Bridging the GAAP and to take all of your business spend management far beyond basic automation, visit medius.com. Thanks for listening.

Speaker 1

Hello, and welcome to Medius' new podcast series, Bridging the GAAP. Together with Spend Matters, we've put together a podcast series exploring a wide range of topics from the evolution of technology and finance, to tax compliance to sourcing strategies to fraud risk and mitigation.

In today's episode, Contract management and AP: a love story, Pierre Mitchell, Chief Research Officer at Spend Matters talks to Gita Andrijauskaite, Director of Customer Success for Source to Contract at Medius, about how upstream contract development is critical for creating the needed data and supplier engagement that will improve downstream AP performances and how addressing contract requirements upfront creates a critical linkage for sourcing to purchasing to payables.

Speaker 2

Hey everybody, this is Pierre Mitchell. I am the Chief Research Officer at Spend Matters and I am very happy to be spending some time with you today discussing the issue of the importance of contract management within accounts payable. And I am thrilled to be joined with an expert in this area. Her name is Gita Andrijauskaite and she is the head of customer success in Europe for Medius and really happy to have her here. So Gita, could you maybe just do a quick intro yourself, and we'll dive into this really interesting topic.

Speaker 3

Sure. Thanks, Pierre. Thanks for having me. So my name is Gita Andrijauskaite, or short for Gita, and I'm a director of customer success for Europe at Medius. I started out in procurement space fifteen years ago as a sourcing specialist, then was a manager at a global supply chain company who were and still are a customer of Medius. I've been with Medius for almost six years. I'm based in London, UK, and my areas of expertise are upstream procurement elements such as sourcing, contract management and supply management.

Speaker 2

Great. Well, thanks, Gita. I like your background where you started in the upstream area. And as we're really going to manage source to pay as an end to end process, it really does kind of start all the way from the early engagement through sourcing and into setting up the contract and then implementing that into our P2P systems.

In that perfect world, you know, that contract and that onboarding would all flow seamlessly down into P2P and we would know exactly how to buy and pay for those goods and services. And it would all be automated and it'd be a great user experience and the suppliers would have no problem and submit their data. Everything would link back to the contract. You might even have some hands free automation and keep humans out of the loop and introducing errors.

But the reality is perhaps a little bit different. And given that you're the head of customer success, maybe you could just give us a little bit of a snapshot as to kind of what are some of the big issues that you see in terms of not seeing this good flow of commercial information downstream? And, you know, how does that manifest, you know, in terms of some of the problems and, you know, where companies can get some value in terms of improving this linkage between contracts and the downstream invoicing and payment processes or just all all of P2P, I guess.

Speaker 3

Sure. Well, I think when we think about contracts, they form the legal backbone of every relationship that a company has with its suppliers, customers, partners, employees, regardless of the size or nature of the business. And if we look at defining contract management, you know, so the key steps would typically involve negotiating best deals with the supplier, drafting a contract, getting it electronically approved and signed through to active monitoring of key dates, obligations, payment terms, really capitalizing on agreed discounts, tracking expirations and renewals. And if we now think why is this important for accounts payable, they really need to verify invoices that reflect the agreed terms.

They need to ensure that the business receives every possible discount, and that suppliers get paid the right amount on time. So really having the visibility and access to this rich contract metadata, which is searchable and reportable, can enable AP to complete these tasks quickly and easily. But, you know, the reality is that this is not always the case. And what we see with our clients, that the types of challenges often depend on, you know, how much and what type of spend a business has, how many contracts they have, how complex these contracts are, and ultimately who is responsible for managing them.

So, for example, in small companies, responsible not only for paying supply invoices, but also negotiating renewals or managing supplier relationships, which means that having access to contracts is critical for them. And, you know, in larger organizations with dedicated finance and procurement departments, the issue we often see is lack of collaboration. So, these functions work side by side, but lack of collaboration when it comes to aligning strategies on working capital improvement can have a negative impact on the bottom line. So for example, if a business is in a position of strength, finance may be focused on extending payment terms with suppliers to improve cash flow position, but that may negatively impact on supply relationships that procurement spent years building, which may then affect service levels and product quality and so on and so on.

On the other hand, you know, paying suppliers early can sometimes have great benefits where suppliers offer amazing trade discounts or rebates for early payment. But, you know, finance and procurement need to work closely together to spot these opportunities and decide the best course of action for the business. Another key issue that we see is lack of visibility. And when companies don't organize their contracts, they can't know what's in them.

And especially when there are thousands of them, they don't know what's in their contracts, so they can't take proactive action and manage them efficiently. And it's really important that AP has this complete visibility of the key terms, dates, delivery, discounts, payment terms, renewal options, termination clauses that will allow them to focus on the financial health of the business.

Speaker 2

Yeah, that's really interesting. I mean, it's a good point about kind of, you know, obviously, we're talking about accounts payable, but there are more stakeholders in finance. Right? So if we think about, you know, obviously the controller, you know, it lives closely with procurement around cost measurement and savings and things like that.

But, treasury, right, in terms of cash and you mentioned kind of working capital and obviously, you know, payment terms and go terms and things like that kind of within the agreement and getting that negotiated upfront and wisely. But those seem to be key stakeholders as well as AP in terms of what AP is doing in various areas, including vendor master data set up or whatever. But you're kind of in the trenches there. I mean, when you think about finance, and I don't if you want to bring legal into this as well, but, you know, what are some of these kind of key stakeholders that are really critical to get involved and maybe just not even, you know, on the P2P side, but those finance folks that you want to kind of get engaged up during contracting so that you know that you're going to make good decisions that are going to then flow through the system down into P2P.

So maybe just talk a little bit about the stakeholder management piece of this.

Speaker 3

Yeah, so you already touched on, you know, that could be the Treasury Department involved, CFO, even the Finance Director, budget holders, depending on the organizational structure of the business, and if they have a central AP department or not. And, you know, all these stakeholders will be worried about budget control and working capital, approving invoices, and so on. So in simple terms, anyone who manages spend will have to manage contracts, and it could be business owners, procurement, contract managers will need to know if suppliers meet their obligations, ensure that renewal deadlines are not missed. Legal departments, for example, will be concerned with managing contractual risk, ensuring compliance with legal regulations, protecting business interests and mitigating non compliance. You know, we have customers, for example, that have the employment contracts in the same central contract management system. So, it's used by HR departments.

So it's one central contract management system, you know, taking care of all these different contracts. And, of course, for HR contracts, it requires secure access by authorized users to protect our sensitive data, but we can cater for that. So there are many, many stakeholders that can be involved, as you say.

Speaker 2

Yeah, that's an interesting example, you know, when you're mentioning HR and, you know, and you get into some of the, let's say contingent labor scenarios and things like that. And it makes you think a little bit about, given your background in sourcing and there's that notion that's burned in procurement's brain around category management and how we tailor strategies based on the nature of the spend category in the market and those types of dynamics. But when you think about P2P, a lot of folks are like, well, it's very simple and commoditized and maybe three way match and ERP and yet that P2P strategy is kind of where the action occurs.

I mean, that's where the savings are accrued and where the value actually gets implemented. But it can be pretty complicated based on the nature of the category. It's not just three way match for all, right? I mean, so maybe you could just talk a little bit about some of the P2P strategy and just linking that into sourcing and how contracts are kind of in the mix there, know, as that linchpin, you know, that connects the upstream to the downstream, etcetera.

Cause it's not as easy, I guess, as people think, right?

Speaker 3

Well, I'm really glad that you asked about sourcing because in any business negotiations with suppliers can take a very long time. And in a period of recession and mass inflation, renegotiating with suppliers and trying to lock in low rates before price increase come in, you know, is critical for many of our clients. For example, now longer term deal may become more attractive if a supplier is able to offer a lower price even if an advanced payment is required. So, you know, there may be different strategies depending on what the business does.

And you'll probably agree that often contract terms negotiation starts during the sourcing stage. So, having a dedicated sourcing solution can really help reduce the time spent negotiating with suppliers, ensure that you are getting the best market value, that all the requirements are captured and potential savings clearly defined, stakeholders can collaborate and align electronically, and then the final agreement can flow through to contract module. And like you say, ideally, then this would link to purchasing to help realize these savings, ensure that business is buying from approved suppliers at agreed prices, maybe from pre approved catalog items to ensure compliance and really ensure these savings are realized.

When we think about commercial strategies, I think it's important to understand what spend a business has. So what is the ratio of, for example, direct to indirect spend, and the complexity of those contracts. To give a couple of examples, if you are manufacturing business, you will be buying a lot of raw materials, say index contracts that are very common in commodity markets. And this spend goes to direct material flow, which is a lot more controlled than direct.

On the other hand, if you're buying professional services, the contract can include complex set of terms and conditions and naturally can be more difficult to manage. And then there can be framework agreements, you know, with a number of individual call off orders with multiple delivery dates over a period of time, which also may include some volume incentive discounts that need to be effectively tracked. In construction industry, we have customers that, you know, use a lot of time and materials contracts that are quite common there, and where a client is billed at those specified rates for the hours and materials required to complete the project.

And whilst these contracts offer flexibility to the client, they need to be really closely managed to make sure that spend does not go over budget. So, you know, I think it really depends on the nature of the business and, you know, the ratio of direct versus indirect and the complexity of these contracts, because there are just so many different types of contracts and approaches when it comes to managing spend.

Speaker 2

Yeah, those examples are just so powerful, because I mean, it just makes you think about just the diversity and complexity of those spend types, right? And you think about supply chain and like freight spend, And all the complexity there on orial charges and all that, as you mentioned, commodity spending, you know, and anytime you're trying to manage the complexity of these value chains that are really complicated, you can't just push it all on to the AP side. They're going to be looking for, great. How do I actually manage this?

And to your point, it's really got to be in the contract. And I guess as much as there's best practices about modeling this deeply within sourcing and putting into contracts, If you don't have the systems that can actually take those complex negotiations around, let's say, or LTL, whatever it is, you know, and put it into an operational system that can actually execute against that. You're not going to really realize these benefits. So it seems like you have to really accommodate that right up front, just like you'd want to negotiate the payment terms and not have that be an afterthought and have that be something that drags out the sourcing process.

Want to accommodate that up front. It does also raise a question around like, okay, so we can think about how to design these P2P processes based on the nature of these categories. But, you know, there's also the age old and I've been in this game for twenty years in procurement in terms of, you know, looking at all this. And one of those earliest problems was kind of supplier onboarding and the supplier's ability to connect and how, you know, what's going to work for them and how they can be successful.

Because obviously if it's just like, well, you get one Z, two Z portal access and you got to remember the password to our system as well as 500 other customers or whatever, or, hey, let's talk about an EDI connection, which is really complicated to set up, when in fact there's a whole spectrum of stuff. I mean, how do you guys think about and deal with the supplier onboarding strategy, you know, upfront, but also just from a P2P standpoint on how you get them on board it? Tell us a little bit about either best practices or the tools you use or that kind of thing.

Speaker 3

Well, I think it's important that supply onboarding process is designed based on supply importance and criticality to the business. So looking at classifying suppliers for us understanding who we buy what from, you know, how much because depending on the type of service or product that suppliers provide, they may be subject to a simple or more complex onboarding process. So if it's a one time supplier, you know, you don't need to subject them for lengthy onboarding process and background checks if you're just buying some cleaning products from them. But if it's a software provider, you may need to ensure that they have all the right certifications, insurances, data security policies, you know, they have background checks, They are financially stable and so on. So I think it's really important to understand the impact that suppliers have on the business to be able to design the right onboarding strategies for them.

Speaker 2

Yeah. I mean, sounds like there's the supplier onboarding from the connectivity and from just the pure AP standpoint. But you're right. It sounds like when you're onboarding, you probably need to consider all the other kind of supplier information management requirements too around qualification, certifications and insurance and things like that as well. And I mean, do you guys, when you're doing this, do you have like some automated surveys or tools and things like you do to kind of gauge where the supply base is like in terms of what they can do versus what they currently do and kind of use that to help set up your implementations? Or how does that work? I know it's kind of probably a lengthy answer, but thumbnail sketch.

Speaker 3

So the supplier management piece takes care of that, you know, customers can create questionnaires that will be triggered to the right suppliers at the right time. You know, suppliers can provide all their insurances, certificates, everything that they need through the portal, they can self serve. And the beauty with this is that, you know, you don't need to police all this information and monitor because it can expire.

You know, with thousands of suppliers, you can just have a lot of information, but it's out of date. So the system will take care of making sure that our supplies are reminded as and when their insurance is expired, when they need to update their financial statements or upload new policies. So, yeah, there is a full automated process to support that.

Speaker 2

Well, that makes a lot of sense. Guess kind of proactively doing that just like proactively notifying your sourcing managers and category managers about, you know, upcoming contract renewals. You want to kind of start reminding the suppliers to get their information in so that there's not going to be any kind of stoppage because they're, you know, suppliers do like to get paid as well. Know, that's like the number one piece of supplier portal, right? That's number one piece of functionality. When am I getting paid? Right?

Speaker 3

Well and they can have visibility of that too. You know? That's what supplier portal is for. If they are transacting with the for the client, they can use the portal and find out. And because one of the also issues with AP is that, you know, suppliers keep chasing for payments, but they are can log into the portal and see when they're getting paid. And, you know, it's a piece and quiet and AP.

Speaker 2

Exactly. Talk to the portal. Let us know if there's problems, but talk to the portal. Well, listen, hey, I know, you know, we've been, kind of talking shop here and getting into the weeds. But just for folks who are not familiar with Medius, you're not always necessarily a household name, the kind of the best kept secret problem. We're familiar with this issue. So maybe just tell listeners just a little bit about Medius and kind of how you help out, not just here, but more broadly across Source To Pay and kind of what you do that I think that would be helpful.

Speaker 3

Well, when it comes to contract management for AP, because that's the subject, you know, our clients can really leverage the best of both worlds. They can automate their accounts payable processes and also allow rich contractual information to flow seamlessly into AP to be readily available to the authorized finance people when they need to verify invoices against contract terms throughout the entire contract lifecycle. But Medius offers more than that. Our clients are able to automate their full source to pay cycle with us.

And depending on the problem they need to solve, they can choose to deploy the entire suite or pick one or two modules to help them tackle immediate challenges. So procurement teams can negotiate better renewal in less time, easily identify which suppliers are fully compliant, preferred, avoid dealing with suppliers who don't offer the best value. So, backed by Medius technology, our clients can save more money, reduce complexity, and truly amplify the benefits throughout the entire source to pay cycle.

Speaker 2

That's great. And I just wanted to pick pick on one thing. It sounds like you talked about kind of the modular nature of it. I assume that if someone already has like a contract management system and it works pretty well and it's granular, you have the ability to sync up with that system, whether it's through your contract system that's like wrapped around it or how I mean, you can kind of make this modular in terms of implementation or like, I just need the invoice management, but maybe not payments right now or whatever. There's flexibility in terms of what they can implement.

Speaker 3

Yeah, especially when it comes to upstream, downstream. So like I said, it depends on what problem a client is trying to solve. If they need to automate invoices and sort out, you know, payments, then they start there. But it doesn't stop them, you know, to just start with sourcing or or contract management, or just supplier management, and then, you know, add other modules later. So yeah, it's completely modular.

Speaker 2

Awesome. Well, you know, I think one of the best practices of things like senior leader training is job rotation, having people work across different areas. And I'm excited to see someone from kind of the upstream side really leading implementation on the downstream side and making sure that value flows properly across the process. And you know, need to tango there, right?

Speaker 3

So absolutely. It's a two-way street.

Speaker 2

Well, thank you so much for taking time to spend with me and kind of getting in diving a little bit into the weeds here around connecting some of the dots here.

I think this was a good top of the waves conversation and appreciate you spending the time and coming out of the trenches to spend with me and sharing some of your insights with everybody else. Thanks so much.

Speaker 3

It's been my pleasure and great to speak with you Pierre.

Speaker 2

And thanks everyone for tuning in.

Speaker 1

That was Contract management and AP: a love story. Special thanks to Pierre and Gita for their time. If you like this podcast, please be sure to subscribe to catch up on our next installment of Bridging the GAAP. And to take all of your business spend management far beyond basic automation, visit medius.com. Thanks for listening.

Speaker 1

Hello, and welcome to Medius' new podcast series, Bridging the GAAP. Together with Spend Matters, we've put together a podcast series exploring a wide range of topics from the evolution of technology and finance, to tax compliance to sourcing strategies to fraud risk and mitigation.

In today's episode, The A to Z of e-invoicing, Jason Busch, founder and CEO of Spend Matters, talks to Katta Andersson, VP of Capture and AI at Medius, about how e-invoicing has evolved over the years, the mandates that are being rolled out across Europe and what the future of e-invoicing might be.

Speaker 2

Hello everyone. I'm Jason Busch, the founder and CEO of Spend Matters. Today, I'm joined by Katta Andersson of Medius. We are going to talk about e-invoicing. I've been involved tangentially and directly in the e-invoicing market for what feels like two decades right now, going back to the original days of compliance in Europe, which has now expanded really globally, not so much in North America as we'll get into, but certainly in South America and throughout Asia, and has taken on very specific dynamics in different regions in Europe for different reasons. So with that, we are going to talk about past, present and future. And Katta, it's great to have you here today.

Speaker 3

Thank you, Jason, for having me. I've been really looking forward to this session since I know you have so much knowledge in this, and this is a subject that is very close to my heart as well. So I look forward to this conversation.

Speaker 2

So the first question is a little bit existential. What is e-invoicing and then probably the more direct one? How has it evolved over time?

Speaker 3

That's such a good question and I hear a lot of lot of times EDI in invoicing, don't you? Do you think there are the same?

Speaker 2

It's interesting. I think historically I look at EDI as broader signals between manufacturers and producers or within a specific industry like healthcare, which may involve trade documents, or it may involve other documents. So certainly e-invoicing is one of those documents, but EDI is, I believe, a little bit broader and certainly from a technology perspective and architecturally a lot more legacy.

Speaker 3

I agree. I agree. I would actually like you say, technology's point of view, EDI is point to point. It's like you're building an integration between the supplier and buyer and you're only focusing on the larger ones because it's so so expensive to build that integration. And invoicing is more like an invoicing network where you send out your invoice and it can be received by many because it's like one to many connections.

And I think that is something that needs to be cleared out because sometimes you are in discussions about EDI and e invoices, and there are two different solutions in my world at least. But I would love to hear what you think about that.

Speaker 2

Yeah, no, I would agree. I think there are certain standards which are evolving and we can even go back to the evolution, and I'll date myself here, of certain trade documents moving into CXML. So combination of POs, invoices, ship notifications, really replacing at least one standard. But if you look at EDI, there's probably, oh gosh, I don't know, 50 to 100 different standards for similar types of trade documents across industry and across geographies today. And historically, it has been point to point. There have been some really interesting plays recently in certain industries around different types of trade and quality documents and traceability.

But certainly, as we think about it from an AP perspective and AR perspective, yes, it has been point to point.

Speaker 3

Yeah, and if I remember correctly, I've been within this business so long and I'm not going to tell you how old I am, but PDF and e invoicing was about introduced the same time. But PDF is the preferred way today, or at least a few years ago.

But now it's starting to move into e invoicing. And it's not because our customers or the market wants to be more automated, it's actually because of COVID. That's at least what I think that e invoicing is really taking off now, because our countries need to collect taxes to build up the countries again. And that's to close the VAT or the tax gap. That's why invoicing is now coming on strong and replacing the PDF. So it's really evolving and it's going really quickly the last few years. And every day I hear of a new country moving into invoicing and mandating invoices.

Speaker 2

So I'd love to transition with that question. And as we talk about mandates and speaking to you from North America today, at least in the US, we're not there yet on mandates. We might get there in the future, but I would be very keen to get your perspective about the types of invoicing mandates that are being rolled out across Europe today.

Speaker 3

Oh, it's so much. I can barely keep up. I'm so happy to have partners to work with, very skilled partners. We all know about Sovos and a lot of service providers out there, van operators, also called van operators. But I agree, it's so much things that are going on.

Like Italy was the first one out mandating e invoicing. But actually, you go before Italy, it was the European Union that decided to help companies be more automated. So they started to mandate e invoicing, but they could only control the government owned agencies. They couldn't control the private companies, of course, but Italy took it another step.

They mandated e invoicing for both private and public organizations and companies and they called it the clearance model very similar to South America what's happening in Brazil and Mexico and so on. You know all about that. But I believe it's also moving beyond that the clearance model like Serbia today. They announced in May this year in May that they're going to do this clearance model as well.

But they also added the complexity to that you as a buyer needed to send back a message within twenty days that you are either accepting or rejecting the invoice. So it's a lot of technical things going on now. So I can really understand if our AP manager or AP departments out there are really scared because it's starting to be very technical, all these mandates and e invoicing. I still believe it's the right thing because the countries need to collect the taxes, but it's difficult at the same time.

Speaker 2

Definitely. And from my perspective as well, just in terms of how different organizations are preparing for these types of mandates, and my team works with a number of companies and consultants and advisors around it, but we're not an accounting firm or audit firm. But I'll put on kind of my CEO hat for a minute in that I'm, even in a small business, worried about compliance. And I'm worried about our compliance.

If I'm looking to acquire other companies, I'm worried about compliance and liability there. And so I think this question of e invoicing compliance in a world where there's more and more happening country by country is one where executives are not necessarily just going to trust their AP department or depending on the rules, looking at AR as well. I think they're going to look to partners. They're going to look to technology partners like Medius or Sovos.

But I think they're increasingly, if I again put on my hat as a business leader, I'm going to look to my accounting firms and my test and audit providers as well to make sure we're in compliance. And that if I'm diligencing another company as well, I'm gonna trust the third party perspective and view. This is not just AP automation. This is not just procure to pay.

I mean, this is a question of liabilities and fines.

So you got to make sure you're on the right side of the law.

Speaker 3

Exactly. And just like you say, you need to have someone to trust because there's so much to keep up with. Every company has their own tax compliance laws and mandates and regulations and whatever they call it. A lot of different rules and things. So I fully agree with you.

Speaker 2

So what is the role of a SaaS provider in this market like Medius? So where does Medius fit in?

Speaker 3

That's such a good question. And like I said, it's about building partnership with those who knows, who has the technology and has the knowledge about their expertise. And that's what we at Medius has done as well. We're building partnership with the preferred service providers out there, the van operators, who has the knowledge, who can really guarantee that when our customers receive an invoice, it's fully compliant and it's following all the laws and regulations and mandates in every country because they have that skill to have the teams to do that. And our CEO don't have time to do that or the AP managers or the AP team to control that. But with that said, it's not just delivering the invoicing to make sure they're following the tax compliance and the mandates. It's also about the problem when it's received to our AP departments.

It's like reading a book, a standard, the invoicing status, like reading a book. You like it, but I don't like it, but it's still the same book. But I interpret the content differently than you do. And that is with the standards in invoicing as well.

I can, for example, believe that the PO number should be in that tag or not in that tag, but you read the status in a different way. And that is causing a lot of issues at our AP department as well. That information is still following the standard with all the tags and format, but it's not putting the right content in the right tag. Are you following me?

Speaker 2

I am. Absolutely. Absolutely. And I feel a lot of AP managers and leaders feel like they've not signed up for this job.

Speaker 3

Exactly. That's so funny because sometimes when I go into a meeting and they like, oh, and this invoicing and you can really feel that the temperature in the room is dropping and they're afraid. They are really afraid, like the eyes are really scared. And that's when we usually present our solution. Because since we have this close partnership with the service providers, they can really feel relaxed and feel that we take care of the mandates and compliance.

But we're also helping them to do this remapping that usually the IT department would do or a developer would do or you would pay a consultancy firm to do it or the service provider and you pay a lot of money and it needs to be maintained. With our e invoicing patent solution, we can actually help our customers do that. You put the control back in the AP managers or AP users hands. You can then by double clicking and rub a value just like you do on a PDF but on an e invoice. And of course, if all the fields are correct, validated correctly, you don't never see the invoice. But sometimes you need to see them and you need to do that remapping. And honestly, this is really interesting because I've been in this business, the Capture business for so long.

We could see that when a customer start processing invoicing through our solution, they are usually reaching a 77% touchless rate throughout the whole process. But after our invoicing solution with sending them through Capture and you can do this remapping on those invoices that needs it, you can reach a 98% touchless rate throughout the whole process. So I would actually say I'm sweet. I'm not supposed to brag, but I think our solution is awesome. That's why we have a patent pending solution.

Speaker 2

That's great. As we wrap up, I'm going to throw out an idea in a few minutes around how I look at Medius in this world, which is quite different than how I looked at Medius a couple of years ago. I think going to the global complexity and everything you just outlined. But I think there's a bigger picture in terms of where all this is going.

And as I was taught to look at forecasting originally before I got into this whole world of procure to pay and AP, When I was a consultant in my early 20s, I did scenario planning. And I was taught at that point to work backwards from different scenarios. Think of a future state five years out or ten years out. What had to happen to get there?

And I think there are some macro trends which are absolutely going to occur regardless of where you believe inflation will go, for example, in the world and the world economy. But I think a few things really stand out if we take that lens of working backwards. The first is there's going to be more and more requirements across the world, are country specific and potentially regionally specific or trade block specific as well.

I think VAT compliance is just a start. It's no surprise when Italy got into this, I kind of went back to all my Sicilian mafiosa movies and I thought about how Southern Italy probably wasn't very compliant.

It's B2B transactions. But obviously you can't compare some Hollywood view of Italy in the South to the rest of Italy in the industrialized North, but the taxpayer wants to get paid. So I think there is a scenario for sure where the vast majority of world governments, as we look at VAT, as we look at minimum tax, The US is going to a minimum corporate tax, where invoicing is mandatory from a government auditing perspective. It started in Europe, it's moved to Latin America and India and China, and it will keep spreading and we'll probably get more specific. I also think too, kind of as a second scenario, e invoicing used to be standalone. It wasn't necessarily part of an AP solution, wasn't necessarily part of a procure to pay solution.

The invoice was sent, but I think increasingly it's going to be just part of digital and it's going to be embedded with AP and P2P and Source To Pay and broader finance suites as well.

I think we could even see it become a part of cloud financials in general outside of procurement and AP applications. But I think the third scenario, which I'm quite excited about where I'm spending a lot of my time right now on the side, kind of my 10% hobby as a researcher, is looking at kind of the re-rise of blockchain. And I believe for a whole bunch of reasons, we're going to see whether it's built on existing technology. Ethereum has gone through a lot of shifts in the past few weeks, for example.

I won't get into all the details, but I think we're going to increasingly see applications in the next decade integrate with various blockchains and be built on them as well. Anonymity is a major piece of that, but certainly allowing governments to look into pieces of a side chain, for example. So I think there's a lot there. And I do think as well, as we begin to wind this down, the role of a provider like Medius is changing, right?

It used to be simply a solutions provider with technology and integrated compliance, but increasingly, Medius is assuming the role of systems integrator around e invoicing compliance. You're looking to a provider like Medius to solve for a whole set of areas using its partners and its own technology. And that's a huge shift. It really is.

And I'd love to kind of get your thoughts as we wrap up here on that shift.

Speaker 3

I fully agree. Like you say, you need to be the trusted leader. You want to be the trusted leader and you want to help our customers become better.

But it's so much you need to keep in mind and to keep track of. So you need to build a partnership with the best in class to build the best in class solution. So I fully agree. And I really like your view on the Bitcoin.

And it's a very interesting idea and thought. And I agree. When you really think about it, I think that is probably where we're heading because of COVID, because of the invoicing. So it's very interesting.

Thank you for sharing that.

Speaker 2

Absolutely. Yeah, and for sure, it certainly encompasses crypto, but it's more than that. It's the whole architecture of public private keys, availability, traceability. I think we'll even see moves to proof of work and proof of state around the work done and behind this to clear transactions.

So I know it may sound like a decade out, but maybe not. We'll have to see. But Katta, it was absolutely great to talk today. Thank you so much for joining me.

Speaker 3

Thank you for having me.

Speaker 1

That was the A to Z of e invoicing. Special thanks to Jason and Katta for their time. If you like this podcast, please be sure to subscribe to catch our next installment of Bridging the GAAP. And to take all of your business spend management far beyond basic automation, visit medius.com. Thanks for listening.

Speaker 1

Hello, and welcome to Medius' new podcast series, Bridging the GAAP. Together with Spend Matters, we've put together a podcast series exploring a wide range of topics from the evolution of technology and finance to tax compliance to sourcing strategies to fraud risk and mitigation.

In today's episode 'Fraud: detecting deceit in finance' Nick Heinzmann, VP of Research at Spend Matters, talks to Branden Jenkins, Chief Operating Officer at Medius, about what is driving customers to look more closely at AP fraud, how fraud has evolved recently, and Medius' new fraud solution.

Speaker 2

Hi there, and welcome to our discussion today. We are talking deceit in finance, fraud and its relationship to invoicing, procure to pay, and the general procurement technology landscape. My name is Nick Heinzmann. I'm VP of Research at Spend Matters, where, among other things, I researched things like fraud, fraud analytics, and its relationship to, procurement technology. And with us today, we have someone from Medius to discuss the latest and greatest and what they're doing in the fraud space as well as related to their own solution.

Speaker 3

Yep. Thanks, Nick. Yep. My name is Branden Jenkins. I'm the Chief Operating Officer here at Medius and looking forward to this topic.

It's very timely. It's definitely an important thing to talk about. I've been servicing, businesses, B2B, businesses for pretty much my whole adult life, working in ERP and accounts payable automation.

Speaker 2

Great. Should be a great discussion because this is something we have been seeing continuously, but especially over the last three years, start of the COVID pandemic is when the topic of fraud became a top of mind issue. That was the big thing we heard when the pandemic hit, especially was the shift to sourcing things like PPE or rapidly having to shift or move sources of supply all of a sudden, not just supply availability, but also the availability of real actual people who could get things or supplies to you in a timely manner became all of a sudden the issue of the day. So I'm really curious what is driving you to serve fraud today? What is driving customers to you to look at it? And what are you hearing from customers? Has it evolved, or is it still a lot of the same and more?

Speaker 3

Yeah. No. Absolutely. So I think, you know, COVID definitely has highlighted this issue. I mean, I think businesses have been facing fraud and risk forever.

Right? But COVID definitely highlighted this challenge as the workforce became more distributed, things that were physical became digital, and just new processes and systems kind of had to be rethought, reengineered, redeployed. Medius just actually did a survey. We call it our Financial Census survey where we surveyed about 2,700 financial executives in major markets across the globe.

These are mid-sized to large enterprises.

And what we found to our surprise is that these businesses on average were losing about $300,000 a year in fraud. I mean, this is astonishing that, like, you know, on average, every business in this survey reported that they were losing approximately $300,000 a year in fraud. And I mean, I do attribute it to the fact that they just can't keep up with this modern work, this new way of work, and the fraudsters are just outsmarting these businesses.

Speaker 2

It's amazing to hear because even with more advanced forms of technology, whether that's the basics or an AP automation or some of the more advanced analytics around fraud, this is a persistent issue. So I'm actually curious to hear when customers come to you, especially having already lost almost $300k a year, probably, are they aware of the issue, or are they even trying to get ahead of future ones, Or is it still something they were trying to react to and catch up to every time it happens?

Speaker 3

Yeah. Well, I mean so this is the fraud that they know about. Right? So what about the fraud they don't know about? And, you know, the the thing is is a lot of businesses don't necessarily talk about this. I mean, when when they are attacked from a fraudulent perspective, you know, this creates, you know, headlines in the news. It creates concerns with shareholders, investors, their vendors.

So, you know, I think having honest conversations is an important part of it. But, you know, on top of this, a lot of the people that are actually doing the the work, you know, actually in accounts payable and the finance department, You know, this survey also kinda highlighted that, you know, they're not actually happy. You know, 37 of the people actually doing this work are are kinda just frustrated and and not satisfied with their role or the work.

And, you know, it's kind of endless. Right? You know, the bills are always coming in. The payments always have to be made. They're spending a lot of time answering questions from vendors. Where's my payment? You know, dealing with reconciliation.

And 34% of them say that they see the same error over and over in the process. So that's just like maddening, frustrating. And another 37%, back to this survey of 2,700 people, 37% said they have little or no insight or control over this process. So this is just kind of ripe for fraud and risk, right? Like, I mean, when the folks that are doing the work are just kind of a little bit at their wit's end, they feel like they don't have control over it, this is when fraudsters come in and take advantage of the situation.

Speaker 2

And the interesting thing is that fraud can come from so many different sources. We often think of a bad actor sitting outside the organization breaking their way in, but reality is fraud can come from inside the organization too, whether that's petty little things like, you know, small threshold increases on an invoice to take and skim some off the top, all the way to executives who go to these elaborate means to shut up shell companies that might produce real-looking invoices and taking whatever the actual proceeds for themselves. So I'm curious, both in the survey and your experience with customers, what are you seeing most often today or say something rising up above others? Because, obviously, things like business email compromise are a top point of risk for most organizations. But are you seeing any new trends or anything worth noting on where the fraud comes from?

Speaker 3

Yeah. I mean, you know, you hit on definitely some of the the sources. Right? You know, we see these main sources being it comes down to, like, the vendor identity, validating the vendor.

Is this actually a real vendor? Is this someone we're doing business with? Then there's the management of those relationships and then the approvals. And this vendor relationship, this vendor identity gets manipulated, either externally by bad actors or internally, right, if it's an in-house job.

And when these invoices and these vendors are set up in a way where they have to go through multiple departments, and they got to go kind of through multiple systems on top of that, like, is there collaboration happening between these departments and these systems? That's where the gaps come, and the risk gets introduced.

In a lot of businesses, you just don't have the complete visibility of the process from the capture to the payment. And when you don't have that visibility, that's, again, when the fraud and risk is introduced. So I think some of the most common types of fraud, to your question specifically, what we see consistently when people are coming to us looking to change their system out and kind of get their arms around how to really solve for things like accounts payable and spend management, It's dealing with illegitimate vendors, these bad actors, these vendors that shouldn't be being paid or being purchased from, invoice spoofing or fake invoices that come in.

It's just amazing how clever these fraudsters are, where they can send invoices in, where they kind of know that you're buying from these businesses, especially if you're in a global supply chain. I mean, there's public data where these fraudsters can see where you're sourcing goods from and know what port of entries are coming through and and they have that visibility to kind of supply chain. And they know who you're buying from, and they kind of give you an invoice that looks just like you get, you know, every week, every month, and your team's consistently processing, but they change something about it, They change the remit to, they change the bank information, they change the email, and they find the crack and they work their way through it.

So invoice spoofing and fake invoices. And here's the other crazy thing, and this is a little more North America specific, but intercepting mail checks. In North America, we're still mailing just a ridiculous amount of paper checks, which can be fraudulently changed. They could be stolen.

And that just is not necessary in a world where we can do this digitally through either things like ACH, enhanced ACH, or virtual cards.

Speaker 2

You're bringing up a good point, actually. You have, at Medius, in the past year, actually built and launched and been using the fraud solution. Certainly not the first. It's only one that's last. But given that you are in the midst of building into this area, I'm curious if you had any different takes on it than maybe you'd seen in the past. And what were you trying to do differently by your customers, especially given the AP focused scope of some of your systems and the broader scope that you can address across your suite of solutions?

Speaker 3

Yeah. I mean, you know, Medius has been at this for for a good period of time. We've got a lot of customers, and, you know, we've always been very focused on just the best capturing of the invoice and getting it down to the line level and the, detail and matching that up with purchase orders and receipts. And that's where the errors occur.

And that's where the process becomes burdensome. So we have just a solid foundation there. And then this last year, we really did take a hard look at how do we elevate fraud and risk? How do we empower our users to get at the alerts, to get that at the risk scores, to get at the exceptions right?

And a big piece of it is really educating our customers and prospective customers that you've got to own this process from cradle to grave, from capture to payment. And a lot of businesses try to solve accounts payable with multiple solutions, like their ERP does some of it. Maybe they add some type of invoice capture solution.

Maybe they add a workflow solution, and then, you know, they have their bank integrated. But that kind of whack a mole approach creates, you know, data in multiple places, you know, creates processes in multiple places, and that's that's just where the fraud and risk gets introduced. So we take a view that owning this cradle of the grave creates this, you know, kind of singular thread that we're able to really track down things like fraud and risk. So a good example is payments. We did a lot of work with payments over the last year. We actually acquired a payments company earlier this year so we could just bring that into our core offering where we're actually doing the connectivity to the banks and issuing the payments directly out of Medius. And by doing that, we elevate and highlight risk and fraud throughout the process.

But when the money is ready to actually go out, when it's actually time to send money to the vendor and the money leaves your bank, that's when it really does matter.

And by having payments as part of the process, part of the solution, and what we've done, you know, with fraud and risk, you know, as the controller, as the treasurer is going out to issue, you know, these payments, it right there tells them if there's risk that's been introduced up until that point. So it's not too late, right? Where if something got changed, an address, a bank information, if this is outside of a threshold, like we've never paid this vendor this much, or from a statistical perspective, this is outside of the bands, we add risk scores so they can make, you know, a decision at the moment that matters when it's time to pay to maybe hold those payments off and do an audit or review or to pay them. Right? And that's a piece that a lot of companies just don't have. They go through the AP process, and then send it off to, you know, their banking systems, and they lose that visibility.

So, you know, our investments are making sure that we give visibility at every step where fraud and risk could occur so we can mitigate that, and then making it, you know, a natural part of the process to address it and to prevent it versus this being disparate systems. Right?

Speaker 2

Yeah. And honestly, it's highly irrelevant even today. These some of these things sound like basics, but when you look at even last week in the news, there was all this hubbub about FTX and disclosures about what they had done. Did you see this about how they were approving invoices, actually?

Speaker 3

Yeah. A little bit or the lack of. The lack thereof.

Speaker 2

Exactly. No matter how many stimulants you're taking, I think QuickBooks and Slack are not quite enough to look through every single line item of an invoice. So we did that end. And maybe as a wrap up, you've given a lot of great examples here. But what can people in the next year do to get better control and visibility of everything that goes through the systems before it gets to payment. How do you should get people get started?

Speaker 3

Yeah. Well, I mean, obviously, fraud is a real thing. Right? And we talked a lot about this today. But solutions like Medius and businesses getting focused just on their spend management in general, I mean, not only helps combat things like fraud and risk, but it actually, more importantly, gets you more in control of your spend in your business. Right? And that's what it's about, like doing this more efficiently, making sure you have the best margins, delivering to your employees good solutions to work with so their lives are better.

And some back to the survey, some of the stats I thought are interesting to this point, 98% of the companies that were surveyed say, hey, yeah, our vendors offer early discount payments. But only two out of five of those companies actually are able to take advantage of paying early, and they want to pay early.

The survey said they want to pay early, but they can't. And that means that they don't get to take advantage of saving money, right, which improves their margins, and it's all because, on average, it takes them like twenty three days, twenty three days to approve an invoice for payment. That's just too long. There's too many steps in the process, which results in, you know, employees having to work way more than they need to, you know, systems that aren't optimized and companies losing out.

Right?

You know, solutions like Medius can get that down. Our average customer, they can get an invoice approved, ready for payment within seven days. That's on average with all of our customers. We have 2,400 customers.

Best in class is one day.

But, you know, another interesting point here, right, not only, you know, putting systems in place so they can take advantage of efficiencies and saving money, like early discounts, but it's also just like when you look at your spend of, you know, what are we procuring?

How do we have better vendor relationships? Pay our vendors on time, be our best customer to our vendors so you can negotiate better terms and have better access to supply.

And that is very relevant in what we've seen in the last couple years. Right? With COVID, the impact on the supply chain and, you know, being able to keep goods so you can get them out to your customers is is very top of mind to customers that we talk about this whole supply chain resiliency. And the big part is being the best customer to your vendor, and that's paying them on time, making sure that, you know, they have visibility to your process, and that you're collaborating between finance and procurement so you can, you know, enable those types of, relationships.

Speaker 2

It may make sense. Don't be naughty. Just pay on time or maybe early.

Speaker 3

Keep it simple. Yeah.

Speaker 2

So great. Thanks for all of your thoughts today. I thought it was a very interesting discussion, and congrats to you guys for bringing more visibility to this topic. As we heard at the beginning, it's a persistent issue that deserves more focus both with fraud you know about and fraud you haven't done yet. So hoping in 2023 and beyond that we are moving the needle on going closer to zero eventually.

Speaker 3

Yep. Absolutely. Let's flip the script. Let's get ahead of the fraudsters, and let's make our employees have better lives. I'm all for it. Thanks for the time.

Speaker 2

Thank you.

Speaker 1

That was 'Fraud: detecting deceit in finance.' Special thanks to Nick and Branden for their time. If you like this podcast, please be sure to subscribe to catch our next installment of Bridging the GAAP. And to take all of your business spend managements far beyond basic automation, visit medius.com. Thanks for listening.