Alternative banking and finance platforms are becoming more prevalent across global business transactions. We speak to Traxpay CEO John Bruggeman about the issues facing online B2B transactions and the fin-tech sector
Tell us what Traxpay is and how it works.
Traxpay’s B2B Dynamic Payments Platform uniquely connects banking, transaction data, and B2B commerce together to provide the utmost in visibility and control for B2B buyers and suppliers. The modular, SAP-certified solution provides and enables secure and flexible payments, and value-added financial services that can adapt in real-time to the ever-changing parameters and complexities that define B2B trade. Unlike legacy static payment services which are disconnected from the rest of the process, Traxpay embeds Dynamic Payments directly into existing business networks and processes (P2P, O2C, ERP, etc.) and connects and monitors all associated transaction data along with the payment itself. As B2B transactions regularly require payments to be split, combined, rerouted, canceled, partially refunded, factored, financed, put into escrow, executed on condition, paid on delivery, discounted, or in some other way dynamically altered during the course of the transaction, Traxpay provides full track-and-trace capabilities and ensures all parties and systems are synchronized. The event-driven workflow constantly monitors for changing terms, then executes and settles the payment accordingly.
How does it sit within the global trends of your industry?
Globalization means that more and more companies are trading internationally, and as such, the already complex relationships between buyers and suppliers are poised to become infinitely more complex. Corporate treasury, strategic sourcing and accounts payable professionals have realized the potential for greatly optimizing work flows and business interactions, for lowering costs, and for ultimately transforming electronic payments and transaction data into a strategic asset.
How is it different from other payment platforms, like, say Paypal?
When Traxpay left stealth mode in late 2012 it was often called the “Paypal for businesses” because it makes business transactions as fast, convenient and inexpensive as consumer interactions. B2B trade and associated transactions are infinitely more complex than in the B2C space, and have a whole different set of pain points. For example 78% of companies cannot forecast mid-term cash flow within 5% accuracy and 59% of CFOs report issues caused by poor visibility and control of supplier payments.
More than 30% of B2B invoices are paid after the due date, if at all, and the consequences are substantial. Today, businesses spend nearly $1 trillion in fees to intermediaries for the privilege of making slow and inefficient payments.
Moreover, partners have limited visibility into transaction data. For example, in a given net 30 or 60 day invoice period, changing circumstances may require that a payment be split, combined, rerouted, canceled, executed on condition, put into escrow, paid on delivery, scheduled for a different date, supplier discounted, paid early, partially refunded, financed by a third-party, factored, exchanged to a different currency, or in some other way be altered.
Since payments that don’t handle rich data are disconnected from the rest of the transaction flow, they are unable to adapt to these changes, or keep the associated data and systems up-to-date and in sync. As such, they are referred to as static payments, and when variables in a transaction change, it wreaks havoc on remittance and reconciliation processes.
As a result, order management in traditional B2B transactions is a complicated and time-consuming process whereby 70% of orders and payments must be handled and tracked manually.
Tell us a bit more about the other services you offer.
Traxpay provides “always on” real-time collaboration across the supply chain. By combining the worlds of transaction banking, enterprise data, and B2B trade networks together into a single view, Traxpay provides the real-time insights and predictability that businesses need, with full access to the right data at the right time. It facilitates rather than impedes collaboration between trading partners.
What’s more, since Traxpay’s technology integrates via APIs directly into existing B2B commerce network platforms, payment finally becomes part of the actual P2P, O2C, and ERP process, which allows instant responsiveness to new data, changing business conditions, and event triggers in real time. As changes occur, all data, track-and-trace visibility, and details of the transaction are kept synchronized, and the payment is executed and settled accordingly.
B2B commerce networks have become the backbone of transactions in corporations today. What’s the additional benefit of using Traxpay?
B2B commerce networks are able to resolve many challenges by facilitating automated interaction and exchange of electronic documents, including purchase orders and invoices or value added services such as dynamic discounting. However, since the last mile of the transaction – the execution, clearing, and settlement of the payment itself – remains a completely disconnected process. The immediacy, flexibility, transparency, and efficiency gains of enterprise networks do not transfer over when it comes to the payment hindering CFOs to gain appropriate visibility and control of these purchases and their impact to cash flow, liquidity, and working capital.
Tell us more about what drives your client base.
Among today’s supply chains there is a greater desire for flexibility, transparency, and real-time responsiveness than ever before, but their rapid growth and increasing geographic dispersion has led to complications that impede instantaneous interactions. For example, it has become increasingly necessary for trading partners to collaborate outside of traditional office hours, bridge time zone disparities, and overcome the gaps created by lack of proximity, inconsistent processes, and dynamically changing business requirements. Moreover, B2B transactions involve multiple relationships within each corporation, complicated processes, and a long value chain that includes a highly fragmented banking network. According to a 2014 Ardent Partners study, the average cost to process an invoice is approximately $14.21. With many companies processing in excess of 500,000 invoices in a given year, the overall cost of this function is enormous.
What is the single biggest advantage to companies using Traxpay?
The single biggest advantage is the potential for enormous savings, both monetary due to low transaction costs and smarter decision-making capabilities, but also a huge reduction in time spent on manual reconciliation of exceptions.
How do you see the future of Traxpay developing alongside market trends?
Trade has become ever so more complex, global, and competitive. The ability to be dynamic is what enterprises need today, and this means the marriage of data and payments. When enterprise data is connected to the financial supply chain, buyers and suppliers can enjoy real-time access to payments and data. Buyers will push more of their business deeper into the supply chain, and democratization will take place throughout, benefitting everyone in the space.
Is there anything else you’d like to tell us?
Our Traxpay B2B Dynamic Payments platform was designed specifically for the needs of modern B2B commerce, and can move real money in real time, delivering the rich data businesses need to get transparency and control over their transactions. It is integrated directly into existing ERP, purchasing, and invoicing systems, enables a complete end-to-end solution for B2B transactions, and a new strategic weapon for commerce networks and digital marketplaces.
What are the plans for the future of Traxpay?
In the future, with Dynamic Payments, companies will be collecting an ever-growing amount of data as these transactions scale – a new type of data they’ve never had before. They’ll see behavioral changes in the supply chain live, and as they unfold. The next step will be putting analytics on top of these massive datasets and the metadata associated with transactional flow.