Bridging the GAAP Podcast Series: All about V cards (part two)

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.