April 21, 2021 • 48 mins
Ernest and guest Sami Peltonen of Basware discuss how procurement and AP software solutions are giving new opportunities to mid-market companies that were once only accessible for global corporations. Also discussed: How incorporating AI into payments processes can transform big data into predictive analytics, changes in the buyer/supplier dynamic and the future of ERPs.
Mark as Played
Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Ernest Rolfson (00:03):
Hey, this is Ernest Rolfson, the CEO and
founder Finexio. Welcome to b2bcash flow conversations, the
podcast dedicated to sharinginsights and innovations in
business to business payments,working capital and cash flow
management, and FinTechentrepreneurship. In each
episode, my guest and I tacklequestions in the ever evolving
world of FinTech and paymentsindustry that's rapidly evolving
(00:26):
and of great interest toinvestors and businesses alike.
Looking forward to having thisconversation.
Today, I'm here with my friend,Sami Peltonen. He is the VP of
P2P Product Management at Baswre. We're excited to be digging
(00:46):
nto the growth opportunity arounAP and procurement automation
as well as thoughts on were payments fits into that. So
ery excited to have you her. I think we're gonna have a
ery good, good conversation tday should be fun.What What tim
(01:08):
is it? In your side of the wold? By the way, you're callin up
Sami Peltonen (01:12):
6pm here in snowy Helsinki in Finland.
Ernest Rolfson (01:18):
Nice. What would you be doing? Right now if you
weren't spending the eveningwith me?
Sami Peltonen (01:23):
I would rather be doing some of the sort of the l
st of skiing for this season. Westill have enough snow, but it's
soon all melting away. So that'swhat I've been doing recently.
Mostly, you know, bit of downhll as well. But mostly c
oss country.
Ernest Rolfson (02:03):
Why don't you see me Tell us a little bit
about Baseware and the companyand your role and a little bit
about yourself and what you'rewhat you're up to?
Sami Peltonen (02:14):
Sure so Baseware is procurement and invoice
processing solutions to globalcorporations around the world.
So we are running a cloudservice used by millions of end
users around the globe,optimizing their procurement,
(02:35):
and financing processes. And myrole here is to be responsible
for the procure to pay productmanagement. So I'm responsible
for the E procurement, invoiceprocessing, offering globally
and working closely with many ofour multinational clients.
Ernest Rolfson (02:54):
How did you get involved in this? What was the
journey? Are you a product guy?
Are you a procurement guy? Youlike software? What's? How did
you get involved here?
Sami Peltonen (03:10):
That's a great question. So I was actually I
was, I started my career byprogramming. So being like a
hands on techy guy. And then atsome point, I noticed that I
actually want to be sort ofcloser to business and do
product management. And I'vebeen basically just these domain
in procurement finance paymentsthroughout my career. So a bit
(03:31):
more than 20 years, actually,right now.
Ernest Rolfson (03:33):
And how long have you been at Basware?
Sami Peltonen (03:36):
I talked about for 15 years ago already? So
it's been quite a quite ajourney.
Ernest Rolfson (03:43):
I guess just out of the gate, what what is what
have been some of the biggestchanges that you've seen it
Basware or in the broader, youknow, procure to pay industry
since that time, you've beenkind of seeped in deep in,
you've been in the inside thebelly of the beast, for years.
Sami Peltonen (04:02):
Yeah, so, you know, certainly lots of changes,
I guess, perhaps the biggestthing is they transition from
sort of old legacy on premservices to cloud. So it's been
obviously a huge change. And Iguess now we are seeing sort of
another transition. So we aremoving from sort of traditional
(04:23):
automation to more like AImachine learning all of these.
So, again, another big sort ofdisruption going on in the
domain, which good I mean, withthis new modern technologies, we
are certainly able to providelots of great value for our
customers around the globe.
Ernest Rolfson (04:43):
And so you've spent now just at one company
almost two decades, you know,working to develop and deliver
solutions that streamline youknow, procure to pay. You know,
what do you see as some ofBasware were his greatest
achievements. Over the pastseveral years, and what about
your own achievements? What areyou proud of that you've been
(05:06):
able to help get developed herethat are probably now affecting
the way millions of companiesget paid? Anything you can speak
to both the company andpersonally?
Sami Peltonen (05:20):
Sure, great question. So I think I'm
certainly most proud about thefact that we've been able to
help 1000s of globalmultinationals with the
procurement and finance relatedinitiatives. So, you know, being
able to work closely with thoseclients and help them to become
(05:41):
better on what they do. I thinkit's been a, it's been a really
sort of enjoyable journey. sofar. We are recognized by the
industry analysts. And, and Ithink, increasingly, we are
perceived to be the theinnovator in this domain. So, we
(06:02):
are utilizing some of the latesttechnologies around machine
learning and AI and, you know,collecting all the information
from payments and invoiceprocessing and procurement
services to our platform, andthen innovating on top of that,
or being part of that, you know,innovation and ability to
deliver, you know, all the time,new types of value for our
customers, I think it's been areally great experience for for
(06:27):
for my cellphone, and certainlyfor the entire company.
Ernest Rolfson (06:31):
Anything that you've worked on, in particular
that you feel like has made anybreakthroughs in procure to pay.
Sami Peltonen (06:39):
So, yeah, I think many things, actually. I mean
the way how our customercompanies are able to move away
from paper in their voiceprocessing and payment
processes, and, you know,automate all the transactions.
And eventually, with that data,from these transactions to
(07:04):
something that will provide lotsof value for them, in order to,
you know, enabling them to makebetter decisions, and so on, so
forth. So I think we've been allthe time like a forerunners in
this domain, and especially whenit comes to automating the
downstream invoice paymentprocesses. But then also in
(07:25):
providing enjoyable userexperience for the procurement
end users that need to do theshopping, following the company
policy. So making that journeyenjoyable for the end users. And
there, we are also leveragingsome of the latest technologies
like virtual assistants thingslike this. So I think it's been
(07:48):
impacting the domain quite aquite a bit.
Ernest Rolfson (07:51):
Nice. Nice. So let's talk for a minute about
2020. What is what aninteresting year? How did the
the, you know, COVID-19 affectyour business and your clients
business in 2020? And I guesswhat, what changes have you
seen? And do you think thosechanges are here to stay?
Sami Peltonen (08:14):
Yes, I mean, certainly, really exceptional
year from many standpoints. Ithink from from bhasma
standpoint, there has been sortof, you know, positives and
negatives. I mean, obviously,because of these VPS, seeing
some, you know, slowness in thesale cycles in certain occasions
(08:34):
and so on and so forth. But inthe grand scheme of things, I
would still say that this hasbeen a positive driver for our
business, I mean, obviously,sort of a horrible situation for
the for the entire world. But ifI look at from the business
standpoint, there has been somedrivers that are actually sort
of bringing more business to us,mainly, you know, the companies
(09:00):
are eliminating the remainingpaper from the process. I mean,
that has been clearly a trendduring 2020 because it pandemics
that those companies were stillusing paper for their invoice
processing. They've been almostlike forced to move away from
the paper. And it's obviouslyreallu you know, pragmatic
(09:21):
problem that, you know, ifyou're not able to access your
offices, you were not able tosend those invoices with paper,
you're not able to scan thereceipt, invoices, so on so
forth. So it's been driving thebusiness by, you know,
eliminating the remaining paper,but also, I would say, Cass has
always be the game King forsure. But with the pandemics,
(09:45):
it's becoming even more evidentthat the Cass agility is super
important. You need to be ableto be on top of your cash
position all the time. You needto look you know, we talk to
suppliers, you need to pay fastin order to keep them
operational, you need to be ableto look with which suppliers,
you may want to extend paymentterms to optimize your own caspo
(10:07):
systems. So all of this has beendriving for cash agility, if you
will. I think, you know, things,the top bid priorities for the
CFOs for years already withpandemics, they have become like
top priorities for the entirecompany and for most of the
(10:28):
companies, so everybody'slooking to ensure that they are
able to manage their cash in anefficient way. So to answer your
question, so lots ofchanges,with the pandemic's, but
also eventually beautimous databind off, you know, companies
were able to eliminate the paperand automate more, we'll create
(10:49):
some sort of sustainable valuethen going forward.
Ernest Rolfson (10:51):
Yep. Yep.
So it's actually not just,according to you, right, not
just about the digitization ofprocess and getting rid of the
paper and the manualtransactions, but it put more of
a focus on cash flow, and cashflow management, for the buyers
and suppliers.
Sami Peltonen (11:11):
Absolutely, I think that's been, that's been
really crucial. So manycompanies have been in a
situation where they've beenforced to take bigger steps in
ability to forecast how the cashpositions are evolving, they
(11:32):
have been under the pressure ofbeing able to, you know, rapidly
pull together a rnap views, youknow, have a real time
perspective on how things willprogress. So they are really
able to, you know, optimizetheir payment processes and see
to which suppliers, they need topay fast and to see obey, they
need to optimize their own sortof working capital management,
(11:52):
and so on and so forth. So, soyeah,, the cash activity, for
sure, is the sort of hot topicat the moment.
Ernest Rolfson (12:01):
Do you folks, just for the listeners, do you
folks have any cash flowmanagement are working capital
products are exploring thatright now, just for education
purposes, given that this isseems pretty critical for the
CFOs?
Sami Peltonen (12:15):
Sure.
So the role we are playing hereis that, you know, first of all,
we are number one companyglobally for the invoice
processing, so so we kind of, wehandle all the outgoing money in
terms of envoices, so we areable to provide like a really
holistic visibility on that sideof the thing, so the AP side of
(12:35):
things, then we can, we canintegrate that together with the
AR, to get a holistic visibilityon the on the cast. We also
deliver solutions for financinglike, especially dynamic
discount is a service that Ithink there has been lots of
(12:58):
tracks on recently, partiallybecause of because of the COVID.
But companies want to have likemore dynamic payment terms, and
you know, better labor rates,those. So that is something we
do deliver as well. Soessentially, we want to be like,
CFO, day to hop, you know,having all the incoming invoices
(13:22):
as a foundation and thenenriching that, with the
information from the billingside, the AR side, and providing
a holistic visibility over thisover to spent on cash.
Ernest Rolfson (13:35):
Now, that makes a lot of sense. I mean, this is
an area we, we just raised $15million to go and pursue the
Supply Chain Financeopportunity, I think it's one of
the something that is morecommon with these multinational
clients that you're working withthat are really sophisticated on
managing the cash and need toknow that the middle market and
(13:56):
smaller companies are notfamiliar with those kinds of
solutions, right. And the banksare not really providing them.
And I think the big bet I'mmaking, the bet you and your
company are making is that theCFOs they want to do more with
their software, right? They wantto get more investment, return
from the software they'vealready bought and implemented,
and they're using for payments.
And so it seems only natural,that financing working capital
(14:18):
liquidity management solutionsare part and parcel of the
procure to pay process, right?
It seems like a naturalextension, no brainer. And what
you're saying really seems to beconfirming that, that COVID has
actually made that now even moreimportant and more of a focus.
Sami Peltonen (14:39):
Totally, agree with that. I think increasingly,
that's a direction thatcompanies are looking for. And
it's obviously sort of tightlylinked to the efficiency of your
invoice process. So you need tobe able to, you know, automate
the invoicing so that you canactually use all of that time
(14:59):
defined payment terms to thendecide, you know, whether you
want to pay early to get somediscounts, and so on and so
forth. So I think these, theseprophecies, they are really
nicely tying together.
Ernest Rolfson (15:12):
Yep. I think two ways we can take this one. Can
you share with the listeners, Iguess why this is so important
that these types of companiesthat would be using a procure to
pay platform invoice automationpayables automation, that they I
(15:33):
guess first of all, do you thinkor do you agree? Would you agree
with the statement that it's soimportant that they think and
consider this as a holisticjourney, right? Not just
automating the invoice,automating payment, automating
working capital? You mentioneddata in AI several times, which
I want to learn a little bitmore about, but do you think
it's important that they thinkof it as a whole? And is that
(15:55):
set you up to, I guess, betterremove points of friction? Would
love to, you know, love to hearyour view there?
Sami Peltonen (16:04):
Yeah, 100%. I mean, I think that's exactly how
it how it is. So, we can see, ina similar way that the companies
are moving away from the paperinvoices, they want to move
away, for example, with thepaper checks. We see our
customers coming to us asking,you know, how we can help them
with different sort of paymentsrelated initiatives, it may be
(16:27):
about getting rid of the checks,or it may be about optimizing
the cross border payments, whichwe see a lot, because we are
having a big customer base ofmultinational companies who need
to pay on board across theborder. Many companies are
looking to optimize the paymentprocesses. That's an area where
(16:51):
bassford, for example, ratherthan doing that part of the
process by our salespeople wantto rely on experts, like the
next CEO, who are extremely goodon optimizing the payment part
of the process. And I think it'sreally important and going
forward, that the accountspayable or the invoice process,
the payment process, are tightlyseamlessly linked together.
(17:14):
Because only then the companiescan really have like, you know,
full control on when to pay, andso on so forth, they can get,
you know, better analyze theseon their payment behavior, they
are able to use machine learningand AI to better predict, which
of the universities will forexample, be on a risk of getting
paid late, because they have allthe information in the same
(17:36):
place, they can use machinelearning for stuff like that
predictive analytics. So I thinkthat that is where this domain
is going to that the company isgoing to have a single place
where they control the entireinvoice and payment process in
an integrated way.
Ernest Rolfson (17:56):
Yeah, that makes a lot of sense here. This is
more of a prediction aspect andthen I want to pivot talk about
some data to is, do you seethat? Look, you're one of the
global leaders in procure topay, you're doing collaborations
with various payments companies?
You know, you mentioned forFinexio? There's others I'm sure
you're working with? Do youthink that more p2p and software
(18:17):
firms are going to becomepayments companies themselves
and go and build out paymentsprocessing money movement
businesses? Do you think thatyour culture may be more around
partnering? But do you thinkthat it's going to be more about
partnerships and integrating andbringing in best of breed? Or do
you see maybe some of your peersbuilding their own? I'd love to
(18:39):
see your view on what you thinkis efficient path for the market
forward? Or why you thinkcertain paths are likely?
Sami Peltonen (18:49):
Yeah, that's a really, really interesting
question. And it's perhaps alittle bit difficult to see
what's going to happen. But Ithink, you know, right now,
today, still, I think that are,you know, these two processes,
they need bit different types ofexpertise. And that's why I
(19:09):
think that right now, in thisdomain, it is mostly about sort
of integrations and whitelabeling platforms in a way or
another, you know, but Buteventually, even with the
partner model, I think whatcompanies are looking for is
seamless, unified, consistentexperience for the end users,
(19:31):
even though there might bedifferent technologies under the
hood, basically. So I thinkthat's where we are right now.
But then moving forward, it willbe interesting to see how much
people see like actualconsolidation here, and, you
know, companies actuallybringing the invoice processing
and payments to one, same singleplatform. And if you look at how
(19:55):
it typically nowadays works isthat you know, you know, pretty
often companies,they processtheir invoices inside their AP
automation solution, then we aredone with that day transferred
those invoices to E RP, for thebookkeeping, all of that. And
then from AARP, they are sendingthe invoices forward. And
(20:15):
eventually the supplier isreceiving the money. But you
know, this sort of jumped GRP inthe middle is kind of
unnecessary in the end. So itwould be much more beautiful and
streamlined process, if youwould be able to control all of
all of this from a single singleplace. And, you know, still,
obviously, he RP will alwaysneed to be updated, and you need
(20:38):
to have the GL informationthere, and so on and so forth.
But uh, but I think in the longrun, we will be able to
eliminate that sort ofunnecessary step that may slow
down things every now and thenin certain circumstances and
actually control the entireinvoice to payment process from
a single place.
Ernest Rolfson (20:58):
Yeah, really helpful views on the market.
We're kind of here, we're kindof betting on both right, we're
kind of betting that we've got awhite label product and a
turnkey offering that platformsare putting in market overnight
because that's where they are inthe development cycle. While we
also are running an API, fullyintegrated strategy for
(21:19):
companies that want to do it.
And I think I'm betting longterm most AP procurement
softwares are not going to gobuild it all themselves, but
they do want to control thatfront end experience, and have a
great user interface, have somepayment rails that they connect
to, because I think, to yourpoint, you know, the E RPS are
becoming kind of an anachronismin the space, they're not as
required. I mean, it's it's anyou have to do accounting, you
(21:41):
have to have the piece there.
But I've seen more firms andusers working more with their AP
procurement software suites tomake all the decisions about
payments. And I think that'swhere the value is moving. I do
think there'll be consolidation,I wouldn't be surprised if some
maybe some of these moreenterprising er, peas start and
(22:02):
make some acquisitionsthemselves, because they're
gonna they're losing the value,the value is shifting away from
the accounting software intothese other CFO, financial back
office functions. And turns out,you can make a lot more money
moving money than you can movinginvoices. So that's, I think,
where things are quite shifting.
So yeah, thanks for thanks forthat.You mean, you've mentioned
(22:26):
the data. You've mentioned theAI. Are those the trends? I
think there's others. But wouldyou think that those are the
most important trends in thismodern call it digital
transformation that's affectingthe financial back office
procurement? And AP? Is that isthat the biggest current impact?
(22:50):
Is there others maybe but thenyou see the AI thing being more
important, I'd love to just seehow you how you, you know, kind
of prioritize that and thinkabout where the impact is. But
since you've mentioned a fewtimes, I think you you've
probably made some reallyinteresting advancements there
that is worth probably learningabout.
Sami Peltonen (23:11):
Sure, yeah, this is one of my favorite topics. I
think AI is perhaps the, I wouldsay most important that
technology at the moment.
Everybody has been talking aboutbig data for years. And at the
moment, I think, almost everycompany is in a situation where
they do have lots of data, likelots of lots of data in their
(23:33):
hands. But the problem often isthat people have very little
time to actually do anythingwith that data. I mean, if I
think about myself, in my dailywork, I have lots of data, but
if I'm busy, I'm at meetings, Ineed to do emails, I need to do
phone calls, so I don't havetime to really analyze, you
know, all the information I willhave available. That's where AI
plays the most important role.
(23:58):
So So how I see it is that AI isthe way or call to actually
bring the information to rightplace, or you know, to bring the
right information to the rightpoint in the process, where you
need to do this is so ratherthan the decision makers having
(24:19):
to analyze the information, theAI will be a game changer. If
and when it will be able to dothe analyzes sort of in the
background, and then just bringsmart recommendations for the NT
offers. And I think that is thatis really what will be
disrupting this domain. Bigtime. So, smart recommendations.
(24:42):
That's how we call them so theAI is able to tell you what you
should do based on the data. Andthat's a big thing. I mean, that
ensures that you know Finally,the data kind of be actually
used to deliver improvements,more automation, you know,
better decisions when the AI isable to serve the end user in a
(25:05):
proper way by providing thesmart recommendations. So that's
why I believe that it is havinga super important role in the in
this domain and obviously prettymuch everywhere.
Ernest Rolfson (25:19):
Yeah, so it's more like,"hey, you've got a
payment due on Friday", "Hey,did you know you could pay that
early (25:24):
and capture a discount, "hey, we see that you're paying
Acme Corporation, AcmeCorporation actually is likely
to take a card payment, youmight want to pay them that way
and get a cash back from that",or "Hey, you know, you're paying
this international vendor, theycould actually get paid in USD
and save you on foreign currencyexchange costs." And, you know,
(25:48):
the some of the use cases you'reseeing, I mean, other others.
Sami Peltonen (25:52):
Exactly, that's exactly what I'm what I'm
talking about. So that's how,that's how it works. And the
beauty of this whole thing isthat with the, with the modern
cloud services that we do, youare able to use the community
intelligence, the informationfrom all the different clients,
you know, obviously, in ananonymized way to provide those
(26:12):
recommendations. And, you know,there are so many, so many
different use cases, and we havebeen implementing many of these
already. And you can see thingslike, you know, which invoices
are the highest risk of gettingpaid late, or doing too late in
the fast lane, and so on, and soforth? So, there's plenty of
applications available alreadybased on AI. But there's still a
(26:33):
huge potential event goingforward.
Ernest Rolfson (26:35):
Right?
You know, ai gets thrown arounda lot. Who is, one of the
potential, I don't want to saydownsides of AI, but one of the
elements of it is you do have totrain the machine, right, you
have to get it spun up. Andwe've seen companies actually
get criticism around AIcompanies like Palantir, right?
(26:59):
where it's like, Is it asoftware company? Or i s it a
professional services company?
Because they've got all theseengineers that have to train the
AI and do consulting around it?
So how are you thinking aboutthat component? And is this
something where we're gonna havefinance teams and procurement
teams learning and knowing howto guide the machine? Or is this
something really kind of likethe proverbial Intel Inside?
(27:22):
It's really kind of happening? Imean, is this something you're
working on to enable forclients? And how do you see this
developing?
Sami Peltonen (27:29):
Yeah, Yeah, great question. So I think
it is a combination of human andmachine in the end, that will do
the magic. So, first of all, Ithink, many companies, they have
been running their invoice andpayment processes, in, you know,
some electronic formats foralmost like two decades already,
(27:49):
in best cases. You know, eventhough there's been lots of
paper, everywhere, you know,there are companies who've been
doing this using digitalplatforms for 20 years or so. So
eventually, if you look at theactual data that these platforms
have, you know, there has todesktop to be like a really good
data asset already. So thathelps, we can use all of that
(28:11):
historical data from past 20years to guide the upcoming
automation using AI. But thenthere still have to be human
involvement, and how it has towork basically, is that the, the
machine cannot always knowexactly what to do. So then the
machine has to ask help fromhuman. And, that's a new way of
(28:35):
sort of interaction between thethe solutions and the end users.
So the AI has to, you know, askend users to confirm certain
things. And in the end, I alsothink that pretty often
nowadays, the end users, eventhough they, in theory, would be
(28:55):
able to let AI to do thedecisions, they still want to be
in control. And what it means inpractice is that the AI may give
you a recommendation orsuggestion, but the end user is
the one that actually decideswhat to do. I think that's fair
VR, with most of the customersthat we are working with, at the
(29:16):
moment that there's this, youknow, potential to, even in
certain cases, even to eliminatethe human entirely, but the
customer wants to still have thecontrol and confirm things
decisions before AI will startto execute them. That's at the
same time, a great way for thehuman to educate the machine on
(29:36):
what to do so machines willlearn and then their predictions
will become better and betterbased on this human input. And
eventually, we will probably seeprocesses that are entirely
automated based on AI. But youknow, we need to wait for a
while before this trust betweenthe human and the machine is
sort of building up.
Ernest Rolfson (30:02):
So a lot of change coming, a lot of change
occurred in 2020. We've alreadykind of touched on that. I mean,
do you see companies embracingmore of the change? And is it
seemed like there has been anacceleration there? And are you?
(30:23):
Have you reflected on any of thepotential downside for companies
that are not embracing thechange? I mean, it seems like
barriers are coming down, youare talking about some fairly,
to some seems like bleeding edgetechnology. And you did touch on
a critical piece, which is aboutthat, that they want the
control, right, the end users,the corporates, like this new
(30:45):
payment automation, invoice.
decisioning is smartrecommendations, but they still
are, you know, they areaccountants, finance
departments, they want to makesure they don't lose sight of
what's happening. Is that abarrier to they're gonna just
have to get over that to embracethe change? Can they have both?
I think they can have both. ButI would love to get your views
(31:08):
on the onset.
Sami Peltonen (31:13):
Yeah, that's, that's really interesting,
interesting topic. And I thinkI think, first of all, you know,
pandemics has been a good driverto push everybody to change.
Change has been sort ofmandatory in a certain extent.
And the good part here is thatif and when the companies have
(31:35):
been under the pressure of, youknow, optimizing their
processes, getting rid of paper,automating more, enabling end
users to work from home, all ofthis, I mean, it's not just a
sort of a bandaid to lose forthe for the crises, but actually
it is providing sustainablevalue of going forward, they
(31:56):
will be more efficient, theywill be able to better control
their spent, they will be ableto better control their budgets,
if they deployed procurementfinance officers, they will be
able to pay faster, they will beable to better manage their
supplier base and the supplierrisk profiling, because they had
to do this change now, in thepandemics. So, I think that, you
(32:19):
know, many companies eventually,even though they have probably
been in a hurry, with doingthese changes, now, they have
noticed that actually, it's beena really positive and good move,
and, and providing sort ofsustainable value also, then
going forward. And that's why Ialso think that you know, if you
are not digitizing yourprocesses, you are by going
(32:43):
forward, you are losing manygood opportunities, that may
even impact your competitivenessin the in the business,
suppliers they expect that youare paying fast, and you need to
be able to better profile yoursupplier, supplier base, in
order to understand who you aredealing with, and, and you know,
(33:08):
what kind of risk there may bein your supplier base. So, I
think, eventually, it is superimportant to look at these
processes, and see where thereis room for improvement still,
after the accident is done.
You're into pandemic. Andthere's you know, obviously
(33:28):
multiple ways where you canstart, start from procurement,
you can start from universeautomation, you can start from
eliminating the paper checks.
So, you know, you can approachthis from multiple different
perspectives, but I think it isreally crucial to ensure that
the end to end chain eventuallyworks. It's not only good from
the automation standpoint, butmore, you know, more data you
will have, and then that datawill provide the basis for
(33:52):
efficient AI based automationand predictive analytics and the
smart recommendations Imentioned. So that's the way how
we eventually tribes, you know,better performance and
competitiveness in the end.
Ernest Rolfson (34:09):
Yep, yep.
No, that's great. I loved whatyou touched on there is, so much
of the change and drive forchange there is coming from the
supplier demand from thesupplier side to right, they
want to get paid faster. Thoseare your words, they want more
convenient options. They'relooking for cost savings, right?
(34:29):
They want everything to bebetter, faster, cheaper, and
that's they're going to chooseto do business with companies
and make it easy to do businesswith them. No one wants to be
dealing with paper.
Yes, anymore. Right. It's bad.
It's bad for everybody. Place.
Sami Peltonen (34:45):
Yeah, I mean, I mean, that's the case. Exactly.
So if you know in the past, atleast in certain occasions, you
know, suppliers are seen as asource for you know, more
savings. You need to do thisthing for me cheaper, and so on
and so forth. Now, it's perhapslike turning other way around
(35:05):
that you actually need to have agood deep collaboration with the
suppliers and serve them. Ithink that dynamics is probably
changing a bit right now. Ithink that that's something that
everybody needs to sort of keepan eye on.
Ernest Rolfson (35:21):
I think that you can get so much more value out
of any business relationship youhave, if you think of it as a
relationship, right? If youthink of it as a valued
partnership, versus justthinking about somebody as your
vendor and just beating them upand beating them up on price or
something like that. I grew upin the payments industry, and I
(35:44):
was working in MasterCard, and,you know, some customers and
partners are like, well, it'sjust the same as visa, right?
It's just you could both movemoney, both have networks,
everyone takes MasterCard,everyone takes visa. The reality
is, you're going to work withpeople you like, and people that
are innovative, and people thatare interesting, and people that
can help grow the relationshipbetween you and suppliers,
(36:08):
vendors have to realize that andmake that investment, but you
will get if you're a buyer,you'll get so much more relation
value out of your relationship,if you come in, have it more in
an open arms. And that's alsowhy here, when we're doing
payments, you know, there's somuch interest in opportunity in
(36:29):
using virtual cards. And that'sthe hottest FinTech payment
product, really globally. Andwhat we saw in the early days of
the industry in the incumbentsare like just pushing the card,
forcing it on the suppliersaying, Yeah, you have to pay a
fee to take this card, and kindof jamming it down. It created a
ton of friction, a ton ofcomplaints, a lot of a lot of
(36:51):
attrition. Now, the industrystill growing very, very quickly
over 20% a year. But I think thedirty secret is the industry is
growing probably 35% a year, andattrition is probably 15%. So
you're still getting thatnatural growth. Because there's
still that push. So what we'redoing it for Finexio is
realizing that every buyer andsupplier relationship is unique.
(37:16):
That it's more about not pushingone option and getting the
friction, if you can doeducation, if you can do
information, if you can haveeasy supplier education pages
and signup pages, they feel likethey're more valued party in the
report and they want to come toelectronic, they want to take
these payment options, and youcan have a better conversation
(37:38):
with them. And I'm sure you'veseen that same thing with
electronic invoicing andacceptance there, right, you
don't want to make it friction,you want to have a peaceful and
value that creates a long term,long term positivity, you know,
andthat's what I'm excited aboutin payments. And I've seen great
results with our customers fromthat. But it seems like you're
nodding your head that you'veseen those same methodologies
(38:01):
work from where you sit?
Sami Peltonen (38:03):
Yeah, totally and I think, you guys have been
doing a really fantastic jobwith that approach that, you
know, it has to be convenientfor both parties, for the
buyers, and the suppliers, youknow, to be able to find the
efficiencies and I think,historically, based on my
experience, you know, that hasbeen perhaps one of the biggest
(38:25):
obstacles with any, you know,finance related initiatives that
if you are unrealistic on howmuch you can change the behavior
of the other party supplier, inthis case, you know, then
typically, you're not able toget the the return for your
investment. So it's good to beflexible, aim for having a
(38:49):
model, which is sort ofconvenient for both parties,
and, you know, sort of a naturalalso for the supplier. So I
think this is super importantperspective.
Ernest Rolfson (39:00):
So, before we wrap up here, I just would love
to get your thoughts morespecifically on on whether the
growth opportunity really existsbetween, you know, a p2p, you
know, the automation thepayments and, and seeing that
those two payments and procureto pay really working together
(39:22):
to disrupt the broader industry.
I mean, do you do you believethere's a big growth opportunity
there? And do you have opinionsas to what you know, what the
benefits may be or why, youknow, this could be the case.
Sami Peltonen (39:37):
I think that there, I would say there are
two, two things or two majordrivers I can see. So, you know,
first of all, it's about the endto end automation. So you can
still gain lots of efficienciesif if you are able to properly
integrate the invoice process,the payment process. As I
(39:58):
mentioned before, if you can,for example, eliminate the erp
between these processes, youknow, it will, it will make
things much more efficient andstreamlined. So the automation,
from the end to end standpointis one thing that will for sure
drive a lot of lot of change.
And the other thing is then thedata, I mean, if and when these
(40:20):
processes are integrated, youare able to collect all the
information to a place. And thenwhen you are able to collect
that information to single placeso that you actually have the
end to end visibility, thenusing AI and predictive
analytics to help you with thatdecision making, you know, a
(40:43):
giving those smartrecommendations for the end
users that will further take theefficiency to the next level and
also help in decision makingfrom many standpoints. So I see
a huge growth opportunity byintegrating these two processes
tightly together.
Ernest Rolfson (41:03):
And this is because you look you've
collaborated with with folkslike Finexio, you've been
building payment solutionspartner on payments and AP
automation. Do you have specificadvice to the broader industry,
other procure to pay softwarecompanies that are thinking
about payments? Or how to helpcustomers here? I mean, any
(41:26):
pitfalls that folks should lookout for any best practices that
you think you can see or adviseon? Given? You're an expert in
this?
Sami Peltonen (41:37):
Yeah, great question. So I think the most
important thing is to obviouslysort of listen to customers and
and what they what they arelooking for. So I think, it's
important to get the voice ofcustomer to this discussion, and
sort of prioritize how to bringthese processes closer together,
(41:58):
based on the customer feedback,there are a few different ways
how you can look at it. I mean,as I think I mentioned at the
beginning that, you know, we cansee some customers looking for
ways to eliminate the checks,some are looking for ways to
optimize the cross borderpayments, some are, you know,
aiming to do something else. Soit's important that the customer
view to your plans, and then seewhat is the best way to help the
(42:22):
customers to be more moreefficient by combining these
these two processes. And it'simportant to look at this really
holistic standpoint, so so whatare all the different, value you
are able to provide, when thingsare integrated, so not just
having a sort of API in between.
But I think ideally, you wouldbe able to, you know, really
(42:43):
control the entire end to endprocess from a one place to the
decision. And I'm going to sayno single place and also then
collecting the information to aplace where you can then tap AI
to and let the AI to do themagic and provide those are my
recommendations. So that'sanother perspective. But I think
the most important thing is tois to, you know, work closely
(43:05):
with the customers and see howyou can build a roadmap of
integrating invoice processingand payments to deliver the
biggest value for the customer.
Ernest Rolfson (43:19):
Just before we wrap up here that the podcast
name is paying it forward.
Anyone that you'd like to pay itforward to do you have some
advice, perhaps to say folkstrying to come up in the product
development world or whetherit's, some CFO, you really want
to try to give the right adviceto to make sure they choose the
(43:39):
right solution or just some goodmentorship or advice you might
want to give some of ourlisteners who will be a mix of
you know, FinTech people,product people, customers that
might want to work with ourcompanies would love to hear you
have a couple of nuggets of somepersonal advice or professional
advice for some of the folks whomay be on the phone, or on the
(44:01):
on the on the podcast with uslistening in.
Sami Peltonen (44:07):
Yeah, sure. So I think my being, if I look at
different product managementstandpoint, which is which is
close to my close to my heart, Ialways, always keep saying that.
It's, it's, so important toknow, your customers, work
closely with the customersunderstand what they what their
needs are. And then deliver,it's all the latest technologies
(44:32):
to help the customers with theproblems they are having. So,
you know, not just usingtechnologies per say, but it's
super important to work closelywith those customers and help
them with the initiative theyare doing by doing doing so, you
know, by leveraging all thelatest and greatest
(44:52):
technologies. So I think, forall of the product management
folks, I think that would be mymy sort of advice that these ai
on the other technologies theyare great servants but bad
master so so it's important touse them in the right way and
eventually you know alwaysaiming for for providing value
for the customer.
Ernest Rolfson (45:16):
Sami it is awesome talking with you man as
always a passionate guyknowledgeable guy, one of the
top minds in the space. Sohopefully we can promote some
more of that here. But this withthis podcast, it's always good
to talk and collaborate withyou. Just on a personal level,
(45:39):
it's it's always just great. AndI always come away smarter about
the space and talking with youso good to get some of the some
of the insights. Where are we?
Where are we going to meet inperson? Is it in Vegas at money?
2020. And some years down theroad? What's the most the
likelihood of us encounteringeach other?
Sami Peltonen (45:59):
Yeah, so certainly fingers crossed for
that. So whenever we are allowedto travel again, I will
certainly book my book mytickets to U.S and it would be
really, really great to see youin person there. I mean, I
always also sort of appreciateour conversation. So hopefully
soon. I mean, we'll see how thisthing goes. But I'm really
keeping my fingers crossed if wecan travel soon again.
Ernest Rolfson (46:22):
If I come visit to help Helsinki what what bar
are you taking me to to grabsome drinks?What's the one?
What's the classic label for theInternational drive
Sami Peltonen (46:35):
I would probably take you to a bar called galet.
It's a place where everybody hasto gas on the table. They aren't
Finnish traditional music andeverybody has to see the table.
So I would love to see youthere.
Ernest Rolfson (46:51):
I would want to do my best, traditional Finnish
folk dance for you. I wouldactually do some research in
advance and make sure I'm notgoing to embarrass myself with
the local. How could you youknow, can put me on the spot and
not deliver? Well, look, man.
Thanks again for your time. Havea good rest of the evening here.
(47:19):
And we'll talk again soon. Allright. Thanks for the
opportunity to discuss. Thanks alot. Take care.
Sami Peltonen (47:29):
Take care.
Ernest Rolfson (47:32):
Thanks for listening to b2b cash flow
conversations. This is ErnestRaphson, the CEO and founder of
Finexio. I welcome yourquestions and comments. You can
reach me at podcast atFinexio.com You can also find us
on Twitter at Finexio paymentsto subscribe, you can go to
Finexio.com forward slashpodcast. Be sure to check out my
(47:53):
new episodes on Apple podcasts,Spotify, or wherever else you
listen to podcasts. Thanks andtalk with you again soon.
Hey, this is Ernest Rolfson, the CEO and
founder Finexio. Welcome to b2bcash flow conversations, the
podcast dedicated to sharinginsights and innovations in
business to business payments,working capital and cash flow
management, and FinTechentrepreneurship. In each
episode, my guest and I tacklequestions in the ever evolving
world of FinTech and paymentsindustry that's rapidly evolving
(00:26):
and of great interest toinvestors and businesses alike.
Looking forward to having thisconversation.
Today, I'm here with my friend,Sami Peltonen. He is the VP of
P2P Product Management at Baswre. We're excited to be digging
(00:46):
nto the growth opportunity arounAP and procurement automation
as well as thoughts on were payments fits into that. So
ery excited to have you her. I think we're gonna have a
ery good, good conversation tday should be fun.What What tim
(01:08):
is it? In your side of the wold? By the way, you're callin up
Sami Peltonen (01:12):
6pm here in snowy Helsinki in Finland.
Ernest Rolfson (01:18):
Nice. What would you be doing? Right now if you
weren't spending the eveningwith me?
Sami Peltonen (01:23):
I would rather be doing some of the sort of the l
st of skiing for this season. Westill have enough snow, but it's
soon all melting away. So that'swhat I've been doing recently.
Mostly, you know, bit of downhll as well. But mostly c
oss country.
Ernest Rolfson (02:03):
Why don't you see me Tell us a little bit
about Baseware and the companyand your role and a little bit
about yourself and what you'rewhat you're up to?
Sami Peltonen (02:14):
Sure so Baseware is procurement and invoice
processing solutions to globalcorporations around the world.
So we are running a cloudservice used by millions of end
users around the globe,optimizing their procurement,
(02:35):
and financing processes. And myrole here is to be responsible
for the procure to pay productmanagement. So I'm responsible
for the E procurement, invoiceprocessing, offering globally
and working closely with many ofour multinational clients.
Ernest Rolfson (02:54):
How did you get involved in this? What was the
journey? Are you a product guy?
Are you a procurement guy? Youlike software? What's? How did
you get involved here?
Sami Peltonen (03:10):
That's a great question. So I was actually I
was, I started my career byprogramming. So being like a
hands on techy guy. And then atsome point, I noticed that I
actually want to be sort ofcloser to business and do
product management. And I'vebeen basically just these domain
in procurement finance paymentsthroughout my career. So a bit
(03:31):
more than 20 years, actually,right now.
Ernest Rolfson (03:33):
And how long have you been at Basware?
Sami Peltonen (03:36):
I talked about for 15 years ago already? So
it's been quite a quite ajourney.
Ernest Rolfson (03:43):
I guess just out of the gate, what what is what
have been some of the biggestchanges that you've seen it
Basware or in the broader, youknow, procure to pay industry
since that time, you've beenkind of seeped in deep in,
you've been in the inside thebelly of the beast, for years.
Sami Peltonen (04:02):
Yeah, so, you know, certainly lots of changes,
I guess, perhaps the biggestthing is they transition from
sort of old legacy on premservices to cloud. So it's been
obviously a huge change. And Iguess now we are seeing sort of
another transition. So we aremoving from sort of traditional
(04:23):
automation to more like AImachine learning all of these.
So, again, another big sort ofdisruption going on in the
domain, which good I mean, withthis new modern technologies, we
are certainly able to providelots of great value for our
customers around the globe.
Ernest Rolfson (04:43):
And so you've spent now just at one company
almost two decades, you know,working to develop and deliver
solutions that streamline youknow, procure to pay. You know,
what do you see as some ofBasware were his greatest
achievements. Over the pastseveral years, and what about
your own achievements? What areyou proud of that you've been
(05:06):
able to help get developed herethat are probably now affecting
the way millions of companiesget paid? Anything you can speak
to both the company andpersonally?
Sami Peltonen (05:20):
Sure, great question. So I think I'm
certainly most proud about thefact that we've been able to
help 1000s of globalmultinationals with the
procurement and finance relatedinitiatives. So, you know, being
able to work closely with thoseclients and help them to become
(05:41):
better on what they do. I thinkit's been a, it's been a really
sort of enjoyable journey. sofar. We are recognized by the
industry analysts. And, and Ithink, increasingly, we are
perceived to be the theinnovator in this domain. So, we
(06:02):
are utilizing some of the latesttechnologies around machine
learning and AI and, you know,collecting all the information
from payments and invoiceprocessing and procurement
services to our platform, andthen innovating on top of that,
or being part of that, you know,innovation and ability to
deliver, you know, all the time,new types of value for our
customers, I think it's been areally great experience for for
(06:27):
for my cellphone, and certainlyfor the entire company.
Ernest Rolfson (06:31):
Anything that you've worked on, in particular
that you feel like has made anybreakthroughs in procure to pay.
Sami Peltonen (06:39):
So, yeah, I think many things, actually. I mean
the way how our customercompanies are able to move away
from paper in their voiceprocessing and payment
processes, and, you know,automate all the transactions.
And eventually, with that data,from these transactions to
(07:04):
something that will provide lotsof value for them, in order to,
you know, enabling them to makebetter decisions, and so on, so
forth. So I think we've been allthe time like a forerunners in
this domain, and especially whenit comes to automating the
downstream invoice paymentprocesses. But then also in
(07:25):
providing enjoyable userexperience for the procurement
end users that need to do theshopping, following the company
policy. So making that journeyenjoyable for the end users. And
there, we are also leveragingsome of the latest technologies
like virtual assistants thingslike this. So I think it's been
(07:48):
impacting the domain quite aquite a bit.
Ernest Rolfson (07:51):
Nice. Nice. So let's talk for a minute about
2020. What is what aninteresting year? How did the
the, you know, COVID-19 affectyour business and your clients
business in 2020? And I guesswhat, what changes have you
seen? And do you think thosechanges are here to stay?
Sami Peltonen (08:14):
Yes, I mean, certainly, really exceptional
year from many standpoints. Ithink from from bhasma
standpoint, there has been sortof, you know, positives and
negatives. I mean, obviously,because of these VPS, seeing
some, you know, slowness in thesale cycles in certain occasions
(08:34):
and so on and so forth. But inthe grand scheme of things, I
would still say that this hasbeen a positive driver for our
business, I mean, obviously,sort of a horrible situation for
the for the entire world. But ifI look at from the business
standpoint, there has been somedrivers that are actually sort
of bringing more business to us,mainly, you know, the companies
(09:00):
are eliminating the remainingpaper from the process. I mean,
that has been clearly a trendduring 2020 because it pandemics
that those companies were stillusing paper for their invoice
processing. They've been almostlike forced to move away from
the paper. And it's obviouslyreallu you know, pragmatic
(09:21):
problem that, you know, ifyou're not able to access your
offices, you were not able tosend those invoices with paper,
you're not able to scan thereceipt, invoices, so on so
forth. So it's been driving thebusiness by, you know,
eliminating the remaining paper,but also, I would say, Cass has
always be the game King forsure. But with the pandemics,
(09:45):
it's becoming even more evidentthat the Cass agility is super
important. You need to be ableto be on top of your cash
position all the time. You needto look you know, we talk to
suppliers, you need to pay fastin order to keep them
operational, you need to be ableto look with which suppliers,
you may want to extend paymentterms to optimize your own caspo
(10:07):
systems. So all of this has beendriving for cash agility, if you
will. I think, you know, things,the top bid priorities for the
CFOs for years already withpandemics, they have become like
top priorities for the entirecompany and for most of the
(10:28):
companies, so everybody'slooking to ensure that they are
able to manage their cash in anefficient way. So to answer your
question, so lots ofchanges,with the pandemic's, but
also eventually beautimous databind off, you know, companies
were able to eliminate the paperand automate more, we'll create
(10:49):
some sort of sustainable valuethen going forward.
Ernest Rolfson (10:51):
Yep. Yep.
So it's actually not just,according to you, right, not
just about the digitization ofprocess and getting rid of the
paper and the manualtransactions, but it put more of
a focus on cash flow, and cashflow management, for the buyers
and suppliers.
Sami Peltonen (11:11):
Absolutely, I think that's been, that's been
really crucial. So manycompanies have been in a
situation where they've beenforced to take bigger steps in
ability to forecast how the cashpositions are evolving, they
(11:32):
have been under the pressure ofbeing able to, you know, rapidly
pull together a rnap views, youknow, have a real time
perspective on how things willprogress. So they are really
able to, you know, optimizetheir payment processes and see
to which suppliers, they need topay fast and to see obey, they
need to optimize their own sortof working capital management,
(11:52):
and so on and so forth. So, soyeah,, the cash activity, for
sure, is the sort of hot topicat the moment.
Ernest Rolfson (12:01):
Do you folks, just for the listeners, do you
folks have any cash flowmanagement are working capital
products are exploring thatright now, just for education
purposes, given that this isseems pretty critical for the
CFOs?
Sami Peltonen (12:15):
Sure.
So the role we are playing hereis that, you know, first of all,
we are number one companyglobally for the invoice
processing, so so we kind of, wehandle all the outgoing money in
terms of envoices, so we areable to provide like a really
holistic visibility on that sideof the thing, so the AP side of
(12:35):
things, then we can, we canintegrate that together with the
AR, to get a holistic visibilityon the on the cast. We also
deliver solutions for financinglike, especially dynamic
discount is a service that Ithink there has been lots of
(12:58):
tracks on recently, partiallybecause of because of the COVID.
But companies want to have likemore dynamic payment terms, and
you know, better labor rates,those. So that is something we
do deliver as well. Soessentially, we want to be like,
CFO, day to hop, you know,having all the incoming invoices
(13:22):
as a foundation and thenenriching that, with the
information from the billingside, the AR side, and providing
a holistic visibility over thisover to spent on cash.
Ernest Rolfson (13:35):
Now, that makes a lot of sense. I mean, this is
an area we, we just raised $15million to go and pursue the
Supply Chain Financeopportunity, I think it's one of
the something that is morecommon with these multinational
clients that you're working withthat are really sophisticated on
managing the cash and need toknow that the middle market and
(13:56):
smaller companies are notfamiliar with those kinds of
solutions, right. And the banksare not really providing them.
And I think the big bet I'mmaking, the bet you and your
company are making is that theCFOs they want to do more with
their software, right? They wantto get more investment, return
from the software they'vealready bought and implemented,
and they're using for payments.
And so it seems only natural,that financing working capital
(14:18):
liquidity management solutionsare part and parcel of the
procure to pay process, right?
It seems like a naturalextension, no brainer. And what
you're saying really seems to beconfirming that, that COVID has
actually made that now even moreimportant and more of a focus.
Sami Peltonen (14:39):
Totally, agree with that. I think increasingly,
that's a direction thatcompanies are looking for. And
it's obviously sort of tightlylinked to the efficiency of your
invoice process. So you need tobe able to, you know, automate
the invoicing so that you canactually use all of that time
(14:59):
defined payment terms to thendecide, you know, whether you
want to pay early to get somediscounts, and so on and so
forth. So I think these, theseprophecies, they are really
nicely tying together.
Ernest Rolfson (15:12):
Yep. I think two ways we can take this one. Can
you share with the listeners, Iguess why this is so important
that these types of companiesthat would be using a procure to
pay platform invoice automationpayables automation, that they I
(15:33):
guess first of all, do you thinkor do you agree? Would you agree
with the statement that it's soimportant that they think and
consider this as a holisticjourney, right? Not just
automating the invoice,automating payment, automating
working capital? You mentioneddata in AI several times, which
I want to learn a little bitmore about, but do you think
it's important that they thinkof it as a whole? And is that
(15:55):
set you up to, I guess, betterremove points of friction? Would
love to, you know, love to hearyour view there?
Sami Peltonen (16:04):
Yeah, 100%. I mean, I think that's exactly how
it how it is. So, we can see, ina similar way that the companies
are moving away from the paperinvoices, they want to move
away, for example, with thepaper checks. We see our
customers coming to us asking,you know, how we can help them
with different sort of paymentsrelated initiatives, it may be
(16:27):
about getting rid of the checks,or it may be about optimizing
the cross border payments, whichwe see a lot, because we are
having a big customer base ofmultinational companies who need
to pay on board across theborder. Many companies are
looking to optimize the paymentprocesses. That's an area where
(16:51):
bassford, for example, ratherthan doing that part of the
process by our salespeople wantto rely on experts, like the
next CEO, who are extremely goodon optimizing the payment part
of the process. And I think it'sreally important and going
forward, that the accountspayable or the invoice process,
the payment process, are tightlyseamlessly linked together.
(17:14):
Because only then the companiescan really have like, you know,
full control on when to pay, andso on so forth, they can get,
you know, better analyze theseon their payment behavior, they
are able to use machine learningand AI to better predict, which
of the universities will forexample, be on a risk of getting
paid late, because they have allthe information in the same
(17:36):
place, they can use machinelearning for stuff like that
predictive analytics. So I thinkthat that is where this domain
is going to that the company isgoing to have a single place
where they control the entireinvoice and payment process in
an integrated way.
Ernest Rolfson (17:56):
Yeah, that makes a lot of sense here. This is
more of a prediction aspect andthen I want to pivot talk about
some data to is, do you seethat? Look, you're one of the
global leaders in procure topay, you're doing collaborations
with various payments companies?
You know, you mentioned forFinexio? There's others I'm sure
you're working with? Do youthink that more p2p and software
(18:17):
firms are going to becomepayments companies themselves
and go and build out paymentsprocessing money movement
businesses? Do you think thatyour culture may be more around
partnering? But do you thinkthat it's going to be more about
partnerships and integrating andbringing in best of breed? Or do
you see maybe some of your peersbuilding their own? I'd love to
(18:39):
see your view on what you thinkis efficient path for the market
forward? Or why you thinkcertain paths are likely?
Sami Peltonen (18:49):
Yeah, that's a really, really interesting
question. And it's perhaps alittle bit difficult to see
what's going to happen. But Ithink, you know, right now,
today, still, I think that are,you know, these two processes,
they need bit different types ofexpertise. And that's why I
(19:09):
think that right now, in thisdomain, it is mostly about sort
of integrations and whitelabeling platforms in a way or
another, you know, but Buteventually, even with the
partner model, I think whatcompanies are looking for is
seamless, unified, consistentexperience for the end users,
(19:31):
even though there might bedifferent technologies under the
hood, basically. So I thinkthat's where we are right now.
But then moving forward, it willbe interesting to see how much
people see like actualconsolidation here, and, you
know, companies actuallybringing the invoice processing
and payments to one, same singleplatform. And if you look at how
(19:55):
it typically nowadays works isthat you know, you know, pretty
often companies,they processtheir invoices inside their AP
automation solution, then we aredone with that day transferred
those invoices to E RP, for thebookkeeping, all of that. And
then from AARP, they are sendingthe invoices forward. And
(20:15):
eventually the supplier isreceiving the money. But you
know, this sort of jumped GRP inthe middle is kind of
unnecessary in the end. So itwould be much more beautiful and
streamlined process, if youwould be able to control all of
all of this from a single singleplace. And, you know, still,
obviously, he RP will alwaysneed to be updated, and you need
(20:38):
to have the GL informationthere, and so on and so forth.
But uh, but I think in the longrun, we will be able to
eliminate that sort ofunnecessary step that may slow
down things every now and thenin certain circumstances and
actually control the entireinvoice to payment process from
a single place.
Ernest Rolfson (20:58):
Yeah, really helpful views on the market.
We're kind of here, we're kindof betting on both right, we're
kind of betting that we've got awhite label product and a
turnkey offering that platformsare putting in market overnight
because that's where they are inthe development cycle. While we
also are running an API, fullyintegrated strategy for
(21:19):
companies that want to do it.
And I think I'm betting longterm most AP procurement
softwares are not going to gobuild it all themselves, but
they do want to control thatfront end experience, and have a
great user interface, have somepayment rails that they connect
to, because I think, to yourpoint, you know, the E RPS are
becoming kind of an anachronismin the space, they're not as
required. I mean, it's it's anyou have to do accounting, you
(21:41):
have to have the piece there.
But I've seen more firms andusers working more with their AP
procurement software suites tomake all the decisions about
payments. And I think that'swhere the value is moving. I do
think there'll be consolidation,I wouldn't be surprised if some
maybe some of these moreenterprising er, peas start and
(22:02):
make some acquisitionsthemselves, because they're
gonna they're losing the value,the value is shifting away from
the accounting software intothese other CFO, financial back
office functions. And turns out,you can make a lot more money
moving money than you can movinginvoices. So that's, I think,
where things are quite shifting.
So yeah, thanks for thanks forthat.You mean, you've mentioned
(22:26):
the data. You've mentioned theAI. Are those the trends? I
think there's others. But wouldyou think that those are the
most important trends in thismodern call it digital
transformation that's affectingthe financial back office
procurement? And AP? Is that isthat the biggest current impact?
(22:50):
Is there others maybe but thenyou see the AI thing being more
important, I'd love to just seehow you how you, you know, kind
of prioritize that and thinkabout where the impact is. But
since you've mentioned a fewtimes, I think you you've
probably made some reallyinteresting advancements there
that is worth probably learningabout.
Sami Peltonen (23:11):
Sure, yeah, this is one of my favorite topics. I
think AI is perhaps the, I wouldsay most important that
technology at the moment.
Everybody has been talking aboutbig data for years. And at the
moment, I think, almost everycompany is in a situation where
they do have lots of data, likelots of lots of data in their
(23:33):
hands. But the problem often isthat people have very little
time to actually do anythingwith that data. I mean, if I
think about myself, in my dailywork, I have lots of data, but
if I'm busy, I'm at meetings, Ineed to do emails, I need to do
phone calls, so I don't havetime to really analyze, you
know, all the information I willhave available. That's where AI
plays the most important role.
(23:58):
So So how I see it is that AI isthe way or call to actually
bring the information to rightplace, or you know, to bring the
right information to the rightpoint in the process, where you
need to do this is so ratherthan the decision makers having
(24:19):
to analyze the information, theAI will be a game changer. If
and when it will be able to dothe analyzes sort of in the
background, and then just bringsmart recommendations for the NT
offers. And I think that is thatis really what will be
disrupting this domain. Bigtime. So, smart recommendations.
(24:42):
That's how we call them so theAI is able to tell you what you
should do based on the data. Andthat's a big thing. I mean, that
ensures that you know Finally,the data kind of be actually
used to deliver improvements,more automation, you know,
better decisions when the AI isable to serve the end user in a
(25:05):
proper way by providing thesmart recommendations. So that's
why I believe that it is havinga super important role in the in
this domain and obviously prettymuch everywhere.
Ernest Rolfson (25:19):
Yeah, so it's more like,"hey, you've got a
payment due on Friday", "Hey,did you know you could pay that
early (25:24):
and capture a discount, "hey, we see that you're paying
Acme Corporation, AcmeCorporation actually is likely
to take a card payment, youmight want to pay them that way
and get a cash back from that",or "Hey, you know, you're paying
this international vendor, theycould actually get paid in USD
and save you on foreign currencyexchange costs." And, you know,
(25:48):
the some of the use cases you'reseeing, I mean, other others.
Sami Peltonen (25:52):
Exactly, that's exactly what I'm what I'm
talking about. So that's how,that's how it works. And the
beauty of this whole thing isthat with the, with the modern
cloud services that we do, youare able to use the community
intelligence, the informationfrom all the different clients,
you know, obviously, in ananonymized way to provide those
(26:12):
recommendations. And, you know,there are so many, so many
different use cases, and we havebeen implementing many of these
already. And you can see thingslike, you know, which invoices
are the highest risk of gettingpaid late, or doing too late in
the fast lane, and so on, and soforth? So, there's plenty of
applications available alreadybased on AI. But there's still a
(26:33):
huge potential event goingforward.
Ernest Rolfson (26:35):
Right?
You know, ai gets thrown arounda lot. Who is, one of the
potential, I don't want to saydownsides of AI, but one of the
elements of it is you do have totrain the machine, right, you
have to get it spun up. Andwe've seen companies actually
get criticism around AIcompanies like Palantir, right?
(26:59):
where it's like, Is it asoftware company? Or i s it a
professional services company?
Because they've got all theseengineers that have to train the
AI and do consulting around it?
So how are you thinking aboutthat component? And is this
something where we're gonna havefinance teams and procurement
teams learning and knowing howto guide the machine? Or is this
something really kind of likethe proverbial Intel Inside?
(27:22):
It's really kind of happening? Imean, is this something you're
working on to enable forclients? And how do you see this
developing?
Sami Peltonen (27:29):
Yeah, Yeah, great question. So I think
it is a combination of human andmachine in the end, that will do
the magic. So, first of all, Ithink, many companies, they have
been running their invoice andpayment processes, in, you know,
some electronic formats foralmost like two decades already,
(27:49):
in best cases. You know, eventhough there's been lots of
paper, everywhere, you know,there are companies who've been
doing this using digitalplatforms for 20 years or so. So
eventually, if you look at theactual data that these platforms
have, you know, there has todesktop to be like a really good
data asset already. So thathelps, we can use all of that
(28:11):
historical data from past 20years to guide the upcoming
automation using AI. But thenthere still have to be human
involvement, and how it has towork basically, is that the, the
machine cannot always knowexactly what to do. So then the
machine has to ask help fromhuman. And, that's a new way of
(28:35):
sort of interaction between thethe solutions and the end users.
So the AI has to, you know, askend users to confirm certain
things. And in the end, I alsothink that pretty often
nowadays, the end users, eventhough they, in theory, would be
(28:55):
able to let AI to do thedecisions, they still want to be
in control. And what it means inpractice is that the AI may give
you a recommendation orsuggestion, but the end user is
the one that actually decideswhat to do. I think that's fair
VR, with most of the customersthat we are working with, at the
(29:16):
moment that there's this, youknow, potential to, even in
certain cases, even to eliminatethe human entirely, but the
customer wants to still have thecontrol and confirm things
decisions before AI will startto execute them. That's at the
same time, a great way for thehuman to educate the machine on
(29:36):
what to do so machines willlearn and then their predictions
will become better and betterbased on this human input. And
eventually, we will probably seeprocesses that are entirely
automated based on AI. But youknow, we need to wait for a
while before this trust betweenthe human and the machine is
sort of building up.
Ernest Rolfson (30:02):
So a lot of change coming, a lot of change
occurred in 2020. We've alreadykind of touched on that. I mean,
do you see companies embracingmore of the change? And is it
seemed like there has been anacceleration there? And are you?
(30:23):
Have you reflected on any of thepotential downside for companies
that are not embracing thechange? I mean, it seems like
barriers are coming down, youare talking about some fairly,
to some seems like bleeding edgetechnology. And you did touch on
a critical piece, which is aboutthat, that they want the
control, right, the end users,the corporates, like this new
(30:45):
payment automation, invoice.
decisioning is smartrecommendations, but they still
are, you know, they areaccountants, finance
departments, they want to makesure they don't lose sight of
what's happening. Is that abarrier to they're gonna just
have to get over that to embracethe change? Can they have both?
I think they can have both. ButI would love to get your views
(31:08):
on the onset.
Sami Peltonen (31:13):
Yeah, that's, that's really interesting,
interesting topic. And I thinkI think, first of all, you know,
pandemics has been a good driverto push everybody to change.
Change has been sort ofmandatory in a certain extent.
And the good part here is thatif and when the companies have
(31:35):
been under the pressure of, youknow, optimizing their
processes, getting rid of paper,automating more, enabling end
users to work from home, all ofthis, I mean, it's not just a
sort of a bandaid to lose forthe for the crises, but actually
it is providing sustainablevalue of going forward, they
(31:56):
will be more efficient, theywill be able to better control
their spent, they will be ableto better control their budgets,
if they deployed procurementfinance officers, they will be
able to pay faster, they will beable to better manage their
supplier base and the supplierrisk profiling, because they had
to do this change now, in thepandemics. So, I think that, you
(32:19):
know, many companies eventually,even though they have probably
been in a hurry, with doingthese changes, now, they have
noticed that actually, it's beena really positive and good move,
and, and providing sort ofsustainable value also, then
going forward. And that's why Ialso think that you know, if you
are not digitizing yourprocesses, you are by going
(32:43):
forward, you are losing manygood opportunities, that may
even impact your competitivenessin the in the business,
suppliers they expect that youare paying fast, and you need to
be able to better profile yoursupplier, supplier base, in
order to understand who you aredealing with, and, and you know,
(33:08):
what kind of risk there may bein your supplier base. So, I
think, eventually, it is superimportant to look at these
processes, and see where thereis room for improvement still,
after the accident is done.
You're into pandemic. Andthere's you know, obviously
(33:28):
multiple ways where you canstart, start from procurement,
you can start from universeautomation, you can start from
eliminating the paper checks.
So, you know, you can approachthis from multiple different
perspectives, but I think it isreally crucial to ensure that
the end to end chain eventuallyworks. It's not only good from
the automation standpoint, butmore, you know, more data you
will have, and then that datawill provide the basis for
(33:52):
efficient AI based automationand predictive analytics and the
smart recommendations Imentioned. So that's the way how
we eventually tribes, you know,better performance and
competitiveness in the end.
Ernest Rolfson (34:09):
Yep, yep.
No, that's great. I loved whatyou touched on there is, so much
of the change and drive forchange there is coming from the
supplier demand from thesupplier side to right, they
want to get paid faster. Thoseare your words, they want more
convenient options. They'relooking for cost savings, right?
(34:29):
They want everything to bebetter, faster, cheaper, and
that's they're going to chooseto do business with companies
and make it easy to do businesswith them. No one wants to be
dealing with paper.
Yes, anymore. Right. It's bad.
It's bad for everybody. Place.
Sami Peltonen (34:45):
Yeah, I mean, I mean, that's the case. Exactly.
So if you know in the past, atleast in certain occasions, you
know, suppliers are seen as asource for you know, more
savings. You need to do thisthing for me cheaper, and so on
and so forth. Now, it's perhapslike turning other way around
(35:05):
that you actually need to have agood deep collaboration with the
suppliers and serve them. Ithink that dynamics is probably
changing a bit right now. Ithink that that's something that
everybody needs to sort of keepan eye on.
Ernest Rolfson (35:21):
I think that you can get so much more value out
of any business relationship youhave, if you think of it as a
relationship, right? If youthink of it as a valued
partnership, versus justthinking about somebody as your
vendor and just beating them upand beating them up on price or
something like that. I grew upin the payments industry, and I
(35:44):
was working in MasterCard, and,you know, some customers and
partners are like, well, it'sjust the same as visa, right?
It's just you could both movemoney, both have networks,
everyone takes MasterCard,everyone takes visa. The reality
is, you're going to work withpeople you like, and people that
are innovative, and people thatare interesting, and people that
can help grow the relationshipbetween you and suppliers,
(36:08):
vendors have to realize that andmake that investment, but you
will get if you're a buyer,you'll get so much more relation
value out of your relationship,if you come in, have it more in
an open arms. And that's alsowhy here, when we're doing
payments, you know, there's somuch interest in opportunity in
(36:29):
using virtual cards. And that'sthe hottest FinTech payment
product, really globally. Andwhat we saw in the early days of
the industry in the incumbentsare like just pushing the card,
forcing it on the suppliersaying, Yeah, you have to pay a
fee to take this card, and kindof jamming it down. It created a
ton of friction, a ton ofcomplaints, a lot of a lot of
(36:51):
attrition. Now, the industrystill growing very, very quickly
over 20% a year. But I think thedirty secret is the industry is
growing probably 35% a year, andattrition is probably 15%. So
you're still getting thatnatural growth. Because there's
still that push. So what we'redoing it for Finexio is
realizing that every buyer andsupplier relationship is unique.
(37:16):
That it's more about not pushingone option and getting the
friction, if you can doeducation, if you can do
information, if you can haveeasy supplier education pages
and signup pages, they feel likethey're more valued party in the
report and they want to come toelectronic, they want to take
these payment options, and youcan have a better conversation
(37:38):
with them. And I'm sure you'veseen that same thing with
electronic invoicing andacceptance there, right, you
don't want to make it friction,you want to have a peaceful and
value that creates a long term,long term positivity, you know,
andthat's what I'm excited aboutin payments. And I've seen great
results with our customers fromthat. But it seems like you're
nodding your head that you'veseen those same methodologies
(38:01):
work from where you sit?
Sami Peltonen (38:03):
Yeah, totally and I think, you guys have been
doing a really fantastic jobwith that approach that, you
know, it has to be convenientfor both parties, for the
buyers, and the suppliers, youknow, to be able to find the
efficiencies and I think,historically, based on my
experience, you know, that hasbeen perhaps one of the biggest
(38:25):
obstacles with any, you know,finance related initiatives that
if you are unrealistic on howmuch you can change the behavior
of the other party supplier, inthis case, you know, then
typically, you're not able toget the the return for your
investment. So it's good to beflexible, aim for having a
(38:49):
model, which is sort ofconvenient for both parties,
and, you know, sort of a naturalalso for the supplier. So I
think this is super importantperspective.
Ernest Rolfson (39:00):
So, before we wrap up here, I just would love
to get your thoughts morespecifically on on whether the
growth opportunity really existsbetween, you know, a p2p, you
know, the automation thepayments and, and seeing that
those two payments and procureto pay really working together
(39:22):
to disrupt the broader industry.
I mean, do you do you believethere's a big growth opportunity
there? And do you have opinionsas to what you know, what the
benefits may be or why, youknow, this could be the case.
Sami Peltonen (39:37):
I think that there, I would say there are
two, two things or two majordrivers I can see. So, you know,
first of all, it's about the endto end automation. So you can
still gain lots of efficienciesif if you are able to properly
integrate the invoice process,the payment process. As I
(39:58):
mentioned before, if you can,for example, eliminate the erp
between these processes, youknow, it will, it will make
things much more efficient andstreamlined. So the automation,
from the end to end standpointis one thing that will for sure
drive a lot of lot of change.
And the other thing is then thedata, I mean, if and when these
(40:20):
processes are integrated, youare able to collect all the
information to a place. And thenwhen you are able to collect
that information to single placeso that you actually have the
end to end visibility, thenusing AI and predictive
analytics to help you with thatdecision making, you know, a
(40:43):
giving those smartrecommendations for the end
users that will further take theefficiency to the next level and
also help in decision makingfrom many standpoints. So I see
a huge growth opportunity byintegrating these two processes
tightly together.
Ernest Rolfson (41:03):
And this is because you look you've
collaborated with with folkslike Finexio, you've been
building payment solutionspartner on payments and AP
automation. Do you have specificadvice to the broader industry,
other procure to pay softwarecompanies that are thinking
about payments? Or how to helpcustomers here? I mean, any
(41:26):
pitfalls that folks should lookout for any best practices that
you think you can see or adviseon? Given? You're an expert in
this?
Sami Peltonen (41:37):
Yeah, great question. So I think the most
important thing is to obviouslysort of listen to customers and
and what they what they arelooking for. So I think, it's
important to get the voice ofcustomer to this discussion, and
sort of prioritize how to bringthese processes closer together,
(41:58):
based on the customer feedback,there are a few different ways
how you can look at it. I mean,as I think I mentioned at the
beginning that, you know, we cansee some customers looking for
ways to eliminate the checks,some are looking for ways to
optimize the cross borderpayments, some are, you know,
aiming to do something else. Soit's important that the customer
view to your plans, and then seewhat is the best way to help the
(42:22):
customers to be more moreefficient by combining these
these two processes. And it'simportant to look at this really
holistic standpoint, so so whatare all the different, value you
are able to provide, when thingsare integrated, so not just
having a sort of API in between.
But I think ideally, you wouldbe able to, you know, really
(42:43):
control the entire end to endprocess from a one place to the
decision. And I'm going to sayno single place and also then
collecting the information to aplace where you can then tap AI
to and let the AI to do themagic and provide those are my
recommendations. So that'sanother perspective. But I think
the most important thing is tois to, you know, work closely
(43:05):
with the customers and see howyou can build a roadmap of
integrating invoice processingand payments to deliver the
biggest value for the customer.
Ernest Rolfson (43:19):
Just before we wrap up here that the podcast
name is paying it forward.
Anyone that you'd like to pay itforward to do you have some
advice, perhaps to say folkstrying to come up in the product
development world or whetherit's, some CFO, you really want
to try to give the right adviceto to make sure they choose the
(43:39):
right solution or just some goodmentorship or advice you might
want to give some of ourlisteners who will be a mix of
you know, FinTech people,product people, customers that
might want to work with ourcompanies would love to hear you
have a couple of nuggets of somepersonal advice or professional
advice for some of the folks whomay be on the phone, or on the
(44:01):
on the on the podcast with uslistening in.
Sami Peltonen (44:07):
Yeah, sure. So I think my being, if I look at
different product managementstandpoint, which is which is
close to my close to my heart, Ialways, always keep saying that.
It's, it's, so important toknow, your customers, work
closely with the customersunderstand what they what their
needs are. And then deliver,it's all the latest technologies
(44:32):
to help the customers with theproblems they are having. So,
you know, not just usingtechnologies per say, but it's
super important to work closelywith those customers and help
them with the initiative theyare doing by doing doing so, you
know, by leveraging all thelatest and greatest
(44:52):
technologies. So I think, forall of the product management
folks, I think that would be mymy sort of advice that these ai
on the other technologies theyare great servants but bad
master so so it's important touse them in the right way and
eventually you know alwaysaiming for for providing value
for the customer.
Ernest Rolfson (45:16):
Sami it is awesome talking with you man as
always a passionate guyknowledgeable guy, one of the
top minds in the space. Sohopefully we can promote some
more of that here. But this withthis podcast, it's always good
to talk and collaborate withyou. Just on a personal level,
(45:39):
it's it's always just great. AndI always come away smarter about
the space and talking with youso good to get some of the some
of the insights. Where are we?
Where are we going to meet inperson? Is it in Vegas at money?
2020. And some years down theroad? What's the most the
likelihood of us encounteringeach other?
Sami Peltonen (45:59):
Yeah, so certainly fingers crossed for
that. So whenever we are allowedto travel again, I will
certainly book my book mytickets to U.S and it would be
really, really great to see youin person there. I mean, I
always also sort of appreciateour conversation. So hopefully
soon. I mean, we'll see how thisthing goes. But I'm really
keeping my fingers crossed if wecan travel soon again.
Ernest Rolfson (46:22):
If I come visit to help Helsinki what what bar
are you taking me to to grabsome drinks?What's the one?
What's the classic label for theInternational drive
Sami Peltonen (46:35):
I would probably take you to a bar called galet.
It's a place where everybody hasto gas on the table. They aren't
Finnish traditional music andeverybody has to see the table.
So I would love to see youthere.
Ernest Rolfson (46:51):
I would want to do my best, traditional Finnish
folk dance for you. I wouldactually do some research in
advance and make sure I'm notgoing to embarrass myself with
the local. How could you youknow, can put me on the spot and
not deliver? Well, look, man.
Thanks again for your time. Havea good rest of the evening here.
(47:19):
And we'll talk again soon. Allright. Thanks for the
opportunity to discuss. Thanks alot. Take care.
Sami Peltonen (47:29):
Take care.
Ernest Rolfson (47:32):
Thanks for listening to b2b cash flow
conversations. This is ErnestRaphson, the CEO and founder of
Finexio. I welcome yourquestions and comments. You can
reach me at podcast atFinexio.com You can also find us
on Twitter at Finexio paymentsto subscribe, you can go to
Finexio.com forward slashpodcast. Be sure to check out my
(47:53):
new episodes on Apple podcasts,Spotify, or wherever else you
listen to podcasts. Thanks andtalk with you again soon.
Popular Podcasts
On Purpose with Jay Shetty
I’m Jay Shetty host of On Purpose the worlds #1 Mental Health podcast and I’m so grateful you found us. I started this podcast 5 years ago to invite you into conversations and workshops that are designed to help make you happier, healthier and more healed. I believe that when you (yes you) feel seen, heard and understood you’re able to deal with relationship struggles, work challenges and life’s ups and downs with more ease and grace. I interview experts, celebrities, thought leaders and athletes so that we can grow our mindset, build better habits and uncover a side of them we’ve never seen before. New episodes every Monday and Friday. Your support means the world to me and I don’t take it for granted — click the follow button and leave a review to help us spread the love with On Purpose. I can’t wait for you to listen to your first or 500th episode!
Stuff You Should Know
If you've ever wanted to know about champagne, satanism, the Stonewall Uprising, chaos theory, LSD, El Nino, true crime and Rosa Parks, then look no further. Josh and Chuck have you covered.
Dateline NBC
Current and classic episodes, featuring compelling true-crime mysteries, powerful documentaries and in-depth investigations. Follow now to get the latest episodes of Dateline NBC completely free, or subscribe to Dateline Premium for ad-free listening and exclusive bonus content: DatelinePremium.com