AvidXchange began trading publicly on the Nasdaq Global Select Market on October 13, 2021, raising more than $600 million and paving the way for capturing a significant piece of the estimated $40 billion market for invoice automation and financing. But AvidXchange is more than just a one-trick, payment automation pony. The company’s business model views the entire invoice-to-pay process as an opportunity to simplify how middle-market businesses engage their suppliers as well as streamline and automate AP workflows. This is a worthy endeavor and benefits customers who want to reduce or eliminate manual processes when receiving, processing, and paying invoices. It’s easy to see that it’s good for AP, but how might the company’s IPO impact suppliers.
With more than 700,000 businesses paid through its AvidPay network over the last five years, it appears that supplier organizations also have an opportunity to benefit from the AvidXchange IPO.
Streamlining invoice submission
Invoice automation for suppliers on the AvidXchange network does not necessarily mean that suppliers must enroll in electronic invoicing. Instead, suppliers have several ways to submit invoices to their customers via AvidXchange – including paper, PDF, and email. But, AvidXchange converts those invoices into a digital format so their customer can automatically process them. This is good news for supplier organizations, as it opens the possibilities for faster processing and payment through several invoice submission methods.
While pure third-party electronic invoicing networks onboard suppliers onto their network and must ensure alignment of business rules before realizing straight-through processing, AvidXchange offers a bit more flexibility. With an expanded war chest enabled by the IPO, AvidXchange can continue to expand its network by more effectively engaging its customers’ suppliers and streamlining the exchange of business documents more efficiently.
Lowering costs
Manually processing invoices comes with a significant cost-per-item on the customer side, estimated to be anywhere from $19 to $22. There are also hefty costs shouldered by the supplier when submitting unstructured invoices to customers. AvidXchange helps streamline invoice submission and reduce costs for suppliers by removing as much of the manual processing as possible, whether it includes adhering to a particular format or utilizing a form of electronic invoicing. The lower the cost per invoice, the more money suppliers can save every month, quarter, and year.
Faster payment
The AvidXchange IPO perhaps has the most significant impact on the company’s ability to pay suppliers more efficiently. Enabling customers to pay suppliers directly, without paper checks and postage is easily the low-hanging fruit designed to help suppliers reduce DSO and improve cash flow. The opportunity to expand supply chain financing, where suppliers can get paid faster for a percentage of the total invoice, enables suppliers to have greater flexibility in utilizing improved cash flow for future order fulfillment, marketing & sales campaigns, plant expansion, and more.
The greatest flexibility is the opportunity to take early payment on select invoices. If AvidXchange expands its offering to help suppliers do this, the IPO will have been the catalyst to help this become more of a reality.
The AvidXchange IPO is good news for AvidXchange, its AP customers, and hundreds of thousands of suppliers transacting on its network. More financial resources to help suppliers streamline invoice submission, lower cost, and get paid faster is a no-brainer for any business hoping to improve its bottom line.
Ernie Martin is Founder and Managing Director of Receivable Savvy. He brings over 25 years of experience in financial supply chain management, marketing and communications and draws upon his extensive experience to share knowledge and best practices with AR professionals. He previously chaired the Vendor Forum of the Federal Reserve Bank of Minneapolis and his resume includes time at several well-known brands and companies such as Tungsten Network, Delta Airlines, CIGNA Healthcare and Georgia Pacific as well as a number of years as an independent consultant.
