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Leaders In Payments
Leaders In Payments
AR Automation Special Series: How AR Automation Transforms Business Payments
This episode is sponsored by American Express. Cash flow shouldn't be a constant struggle. Yet for many mid-market companies, the path from invoice to payment is filled with unnecessary friction, manual processes, and frustrating delays that hurt both the bottom line and customer relationships.
Barrett Smith, Chief Payments and Customer Operations Officer at Versapay, reveals how accounts receivable automation is transforming finance operations for growing businesses. Drawing from his extensive background in payments and financial analytics, Smith shares practical insights on how automation creates measurable improvements in cash flow while elevating the finance department's strategic value.
The conversation tackles common pain points like the persistence of paper-based processes (imagine entire floors filled with invoice file cabinets), the challenges of managing increasing invoice volumes without proportional staffing increases, and the critical need for real-time financial visibility. Most compelling is how automation shifts finance teams from being perceived as back-office gatekeepers to becoming drivers of positive customer experiences.
Whether you're struggling with slow cash conversion, limited financial visibility, or simply want to free your finance team from manual data entry to focus on strategic initiatives, this episode provides a roadmap for leveraging AR automation to transform your business operations. The future of finance isn't just about counting money - it's about making it flow more efficiently through your organization.
This special series of the Leaders in Payments podcast is being brought to you by American Express. In today's fast-evolving payments landscape, businesses are increasingly turning to automation and innovative payment solutions to help improve efficiency, cash flow and the customer experience. From accounts receivable automation, streamlining financial operations, to virtual cards, transforming B2B transactions, technology is reshaping the way companies manage payments. In this series, we'll explore how these advancements are helping businesses reduce friction, enhance security and make smarter, data-driven financial decisions.
Speaker 2:Hello everyone and welcome to the Leaders in Payments podcast. I'm your host, greg Myers, and on today's show we have a very special guest, barrett Smith, the Chief Payments and Customer Operations Officer at Versapay. So, barrett, welcome to the show, thank you.
Speaker 3:Greg Excited to be here.
Speaker 2:Great. So let's start by having you tell a little bit about yourself, maybe where you grew up, where you went to school, where you're currently living, things like that.
Speaker 3:Okay, of course. So I pretty much spent my entire life in the Southeast. So I grew up in the southeastern corner of Virginia, moved down to the Gulf Coast in a little town called Fairhope, alabama, and finished up high school there. So naturally I decided to split my time in college. I went to undergrad at the University of Alabama and then I got my MBA at William Mary in Williamsburg, virginia. So both finance degrees split between home state and adopted home state. After grad school I moved to Atlanta. You know I'm kind of up in Alpharetta now, but I've pretty much been here for the better part of 30 years now. I've got a wife, two boys, spend a lot of time with lacrosse and swimming and that pretty much keeps my personal time occupied, I'd say.
Speaker 3:Professionally, I started my career post MBA in the telecom space and so it was the nineties, so that was the hot thing to do. After, you know, you got your MBA. Obviously with the dot-com bust, that kind of flamed out. But about four years after my MBA I started working at Home Depot in the credit services division and I was kind of my first real taste in payments and so I was focused on analytics and the private label portfolio and that kind of began my first education around payments and the complicated world of payments. So I spent a few years at Home Depot, went over to WorldPay for four to five years.
Speaker 3:What was really what? Rbs Link, rbs WorldPay, aka WorldPay? I had a few names yeah, a few names and so I had a host of roles at WorldPay and that was about a five or six-year stint focused on pricing, analytics and strategy. And then I landed at Global Payments and I actually ran the FP&A function, which will be relevant to our topic today, on accounts receivable automation, and I did that for the US, then US Canada and then the Americas. I transitioned to a worldwide pricing and analytics role and about eight years in and kind of post the thesis acquisition, I had visions of putting out my own flag and doing my own thing and Versapay came calling. And so the last four to five years I've been at Versapay and you know, and now I'm all things payments and customer operations at Versapay and it's been a blast Okay great.
Speaker 2:Well, if you don't mind, tell our audience what Versapay does.
Speaker 3:Sure, yeah. So Versapay is a fintech company and we're really focused on kind of disrupting the B2B accounts receivable space. You know the processes associated with mid-market companies and you know our fundamental belief is cash flow should flow really and we believe in getting paid and it should be easy. So we're focused on eliminating a lot of the invisible, manually disconnected pieces in the financial operations world today and our platform addresses these challenges and you know we try to enable novel choice and context and automation along the continuum. So if you think about the invoice to payment process all the way through the backside with reconciliation, so we're carrying out our mission to automate accounts receivable. You know we've created a big network of trusted connections and trying to make it easier for businesses to connect, you know, at a faster pace and a lower cost to make payments.
Speaker 2:Okay, all right. Well, let's dive into the discussion. So let's start with the basics. What exactly is accounts receivable automation, and can you share some real world examples of, maybe the types of processes that are like a no-brainer for this kind of automation?
Speaker 3:Of course, yeah. So accounts receivable automation, or AR automation for short. It's about simplifying the manual I mean paper, really heavily paper-intensive processes and removing some of the human effort that is kind of tedious and some of the tasks and leading to a lot of errors. So if you think about posting payments, applying payments to invoices, partial pays, split pays, some of the things in the payments world that people challenged or people are challenged to solve, automating follow-ups on invoices and reconciliation, what could take four people if you automate can take one person to do so it's really about leveraging technology so humans can be more efficient. So I'd say real world examples there are a lot and a lot of our customers have different pain points.
Speaker 3:I mentioned my finance experience previously. I have a good, funny one that I typically share when talking to customers, because I still remember the first day I got off the elevator and I walked them to the floor at a large building in Atlanta and the entire floor was filled with file cabinets. I don't mean one, I don't mean 20. I mean the entire floor. Each row of cubicles had a massive double-sided row of file cabinets and I remember asking the analyst and I said what are all these file cabinets for and all he did was chuckle, didn't give me an answer, which I thought was odd.
Speaker 3:So fast forward, about 30 days in, and I'm looking for a confirmation on a payment and I need to pull an invoice. And lo and behold, I just figured out what all those file cabinets were for, and so to get an answer on something would take somebody hours I mean they're physically walking trying to find the file cabinet. Then the process was make a copy, go, put that back, bring me the copy, validate it was paid. So from a real world pain perspective I'd say that that's a big one taking that manual effort out. And then you know our clients have a ton of different issues there with the process and automating the process. So digitizing the paperwork, the on-demand aspect of accessing those things I had to chase or the analysts had to chase that's what AR automation or accounts receivable automation is about, and the benefit is you're speeding up your invoice to cash process, so you're reducing your DSO and you're improving your cash flow.
Speaker 2:Okay. Well, why do you think that mid-market companies in particular should prioritize accounts receivable automation?
Speaker 3:So that's a good question that if you think about the growth in mid-market, so a lot of the mid-market companies they're growing rapidly.
Speaker 3:Sometimes they have capital constraints. They just have a lot of different issues that they've been focused on growth and they've gotten to this point where they need these things. They need automation, they need process improvement. They may not have kept scale in terms of their staffing as they've grown, so things like AR automation will help them specifically take some of the burden and improve their cash flow. So if I think about some of the delays and some of the reasons in the mid-market and the burden, the tools are going to speed up that payment cycle. I'm trying to think of some of the complexity and the things that are taken out, the transaction models. So you've got a mid-market company that's grown rapidly, so they've got a lot more invoices. They don't have the staffing, they don't have the sophistication and AR automation is just one tool in the office of the CFO's arsenal to improve that and give them scalability and improve cash flow that other things may or may not provide.
Speaker 2:Okay, and just a follow-up question on that what are maybe the most compelling benefits that they'll likely see once they do adopt this kind of technology?
Speaker 3:So, beyond cash flow, you've got scalability. Customer experience is a big one. Right, you've got mid-market companies that are competing with small companies, they're competing with large companies. So the automation it's going to allow for a little bit more of a professional, more of a seamless experience. You can get real-time updates for your customers and I think it's going to strengthen the relationship and that's the direct feedback from some of our customers, that it's improved relationships with customers. And I'd say the last thing and I talked about being an analytics guy and a data guy I'd say that the data insights and the reporting capabilities you get with AR automation or accounts receivable automation, is a big one, and that's something that, as these mid-market companies grow building out real-time dashboards and analytics probably has been secondary, depending on who they are in the industry and customer behavior. I think it's all a great benefit for leadership to be proactive and make better decisions with data, while getting the benefit of enhanced cash flow.
Speaker 2:Okay, and you mentioned day sales outstanding, which DSO, I think is what most people refer to it, as it's often a critical focus of businesses that are looking to improve their cash flow, so it's not necessarily a simple metric to manage or to measure. So how do you automate, or how do you help them automate, this to make it where it's measurable and can put a measurable dent into this DSO?
Speaker 3:You know, dso is no different than any other metric in that the supporting data and building out a platform of data is critical. And by automating your accounts receivable, I mean, that's what you're doing. You're creating the foundation, you're building out the capability to quickly and efficiently maintain visibility on DSO. So you've got real-time data. You're not manually calculating it, so it becomes more of a viable metric, so you can measure it. Now You've got the data, no manual intervention, and you've expanded your ability to, let's say, accept payment options. Now, because you've got AR automation tools and a platform, and you start getting into, I'll say, the secondary and third level of benefits where you're improving your DSO metric just naturally through the automation. And then you're starting to get to things where the payments.
Speaker 3:There's aspects of payments in general that are complicated that you're able to simplify and bring down your DSO. And I'll give you kind of an example in terms of some of the demands and some of the account constructs where you can have arm's length requirements, you know, in some industries. And so you've got to set up FBO accounts and different types of accounts. You've got multiple demand deposits and all of those touch points. As you're thinking about the AR process and automation. You get to automate those. So there's no manual intervention, there's no manual decisioning. You're kind of addressing the customer's needs specifically. You want to be payment agnostic, right, and so a good one is something we've run into in the past which is American Express type of American Express payment. You've got the Outblue program or you could have a direct relationship the client has with American Express and the funds settle differently. And so from an AR automation perspective, you've got to be able to seamlessly handle both those, apply the funds and make sure that the reconciliation process and the reporting is consistent across those.
Speaker 3:So I'd say that helps reduce errors, naturally, and improves your DSO. And then I'll take it one step further in terms of, with the advent of, everybody says AI. It's really more machine learning, but it's still AI where you're leveraging technology to open up the predictive DSO and the forecasting aspects that really weren't possible years ago, you know, five, 10 years ago and so it's not just about reducing DSO as a traditional view. It's based on industry and client. I now have the tools and the data to make specific and unique decisions for my clients and that's a powerful benefit. And then you're getting into other aspects, whether it's credit or terms or anything else like that. The foundation is they are automation and having the foundation of data.
Speaker 2:All right. So you mentioned earlier about kind of the customer experience, so let's double click on that. And your team, versapay, recently conducted a survey that found that finance is one of the biggest drivers of negative customer experience, which I thought was interesting, second only to risk and compliance. So why do you think finance plays such a big role in this?
Speaker 3:I mean finance is typically the gatekeepers, right? I mean throughout my career and just you know what our clients and our CFO, customers and controllers they all say they're the gatekeeper, whether it's documentation, they're requesting documentation and details for approvals, they're processing the invoices, they're monitoring the client's health. It's a lot of back and forth. So in a manual world it's just exhausting to go back and forth. Whether it's a new client or it's an existing client, whether it's re-reviews or maybe it's just an extension of credit, all that gets done manually, and so it's highly frustrating, and I think that's probably where part of the negativity may come from. It's not anybody's fault, it's just finance is in the middle and so they're in the crosshairs. Then layer in if somebody in finance or accounting makes a typo or manually does something, you forget a zero or add a zero, it's going to have a big impact in the manual world. So that generates a little bit of buzz.
Speaker 3:I think the bigger challenge and I think this is an evolution we see and a lot of CFOs are talking about it Historically people didn't view the office of the CFO or the finance team as customer facing. The reality is, I mean, they're deeply embedded in everything from the customer experience, the control of funds, managing, pricing, approving, so while you're even upfront in negotiations and deal reviews. So they're a critical partner for sales and the client. So I think in the payments ecosystem it's not uncommon when you get a dispute. You know that process goes back and forth between finance and accounting as well because, they're best suited to reconcile it.
Speaker 3:So as companies automate those triage moments, those points of failure and breakdown, they become fewer and far between and the tertiary benefit for the CFO, the office of the CFO, is their reputation is going to get better. They're going to be seen as more customer-centric. So I think the finance and accounting teams who automate and they address this are streamlining communications. So I think the finance and accounting teams who automate and they address this, they're streamlining communications, they're reducing the touch points and with the advent of AI, as mentioned, you get automation tools and things that can take you to the next level and do a little bit more predictive and anything that can enhance the customer satisfaction or customer's experience across the board. I think that'll improve the finance reputation.
Speaker 2:So how can, specifically, ar automation kind of flip that script and make it actually improve that customer experience? I totally agree with you. It's more and more today becoming very upfront and kind of front office now as opposed to back office. So how can it kind of flip that script?
Speaker 3:The organizations that automate, I think automate that process. You know I talked about streamlining communications. I think you take those points of friction out, you leverage some of the technology, you automate and whether it's taking a physical invoice and having to have it manually interpreted, you're now just ingesting, digitizing it and your speed to respond moves up dramatically. And so I think with that reduction in response time, I think you're going to get a customer satisfaction, internal and external. That's going to move up. So by naturally focusing on the inefficiencies in finance, I think it's just a byproduct, it's a win-win. And then you can reposition finance as a customer-centric organization and you're part of the customer experience and you're kind of elevating your. Instead of being that back office, you're actually elevating your position as part of that outward facing team.
Speaker 2:All right. So finance teams are under increasing pressure to make data-driven decisions on the fly. I think you talked about that a little bit, but how does automation make accessing and acting on real-time data easier and sort of? What's the effect of that? Faster decisions on finance as a whole?
Speaker 3:Yeah, so we talk about finance as a traditional back office player not being customer-centric, but I think automation is a game changer and we talked a little bit about the natural byproduct of a win-win scenario. The traditional methods for gathering all the financial data pulling the reports from multiple systems Additional methods for gathering all the financial data pulling the reports from multiple systems, reconciling spreadsheets all that is time consuming and then you know it's just prone to human error. The automation aspects of accounts, receivable automation will eliminate those bottlenecks and it's centralizing all of that data in real time. I mean, I think a good example is integrating off of across billing platforms and forecasting systems. So the finance team's got immediate visibility and you can see your cash flow, you can see outstanding invoices, you can see payment trends and another big one.
Speaker 3:We haven't really talked about this, but when you think about overdue accounts and what's driving a variance. So a CFO asks a question about why are we all forecast? Oh, I've got this large account that's overdue. Well, I think that data-driven decision-making and building that foundation allows you to answer questions quickly and I've always been a firm believer. If you can answer the question quickly and accurately, your credibility is going to be a lot higher as well. So I think it's a natural byproduct for having that. So with automation, the insights, they're not locked behind manual processes, the data's not as outdated. You've got teams helping and being proactive now instead of reactive. So I think that ripple effect with data-driven decision-making. I think that's significant for finance as a whole.
Speaker 2:And we're talking obviously about automation. Is it a one-size-fits-all solution or are there certain sort of industries where it's like absolutely mission critical, and why?
Speaker 3:I wouldn't say it's one-size-fits-all. I mean, maybe if you look at the problem, the use case by problem, I think it's more of a mission critical where, for industries where they're paper intensive or invoice intensive I think manufacturing is a good example professional services, distribution you know sectors that deal with a high volume of invoices, you know or complex payment structures, even just multiple entities, you know the operations are structured in a way that's a little bit more complex Manufacturers, wholesale distribution, construction they're good examples because they deal with a large-scale supply chain, a lot of orders, frequent orders and diverse payment terms. So those are probably jump off the page for those. I think that's where automation can have a huge benefit. But I don't think it's limited. I don't think it's limited to a particular industry. I think it's well. If you have a need and a pain point, I think automation is going to be a benefit and drive out efficiencies and speed up that invoice-to-cash process.
Speaker 2:Okay, all right, can you share maybe a story or two about how VersaPay's accounts receivable automation solutions have transformed a company's operations? So I know you've talked about some of these. You know faster cash flow, improved customer happiness and everyday efficiency. So can you just kind of maybe give us a story or two about some of your solutions and how they've helped some of your clients?
Speaker 3:Versapay partnered with Laticrete and they're a big construction client and they had some pretty significant challenges they wanted to tackle from an AR process perspective. I think some of the stats before they were working with Versapay a lot of manual workflows. You've heard that a lot like everybody after is going to be tired of hearing about manual workflows. But they were processing over 12,000 invoices each month and the methods were time consuming, they weren't scalable, and then getting to collections and sending payment reminders all of that was manual and so the team's not really focused on high value add activities. They're just clicking through trying to get all of those invoices submitted and following up. And so, to add to that, they had no visibility so they didn't know when they got paid, they didn't know the invoice status, so then that hampered their collections activity. It was just a lot of this. One hit a lot of different spectrums when you think about where you could get benefit. And then they had to confirm were they even delivered or opened? So they had a lot of reissues. Just a ton of inefficiencies. So that creates a good one.
Speaker 3:After we did the project, there were pretty good stats. I think it was a 16% improvement in their cashflow forecasting accuracy. So just accuracy alone. They got about an 11% reduction in their DSO and they accelerated their cash flow so much that I think it was they reduced their revolver by $7 million. So when you think about the benefit of improving cash flow, that's a big one. They also shifted 100% of their invoices online, so no more paper invoices. So you talk about all the pain points Laticrete had. Now it's all electronic. It improved on a lot of those problems. So they said that today 97% of their customers are using Versapay to review their account statuses, access, invoice and communicate directly with their AR team. So just eliminated all of that paper process and all the human intervention. So I think all of those helped them streamline their processes and they've got a much smoother, more transparent experience for their customers. That one's been a huge win for us and they've been a great partner.
Speaker 2:Okay, great. So what do you think's driving these mid-market size businesses to make AR automation a priority right now, like, are there external pressures, internal pressures? What's going on within a company that's helping to push this forward for most of them?
Speaker 3:a need for growth right. You've got growth demands. You're inefficient, so you need operational efficiency, you know, to drive that growth. And you know we talked about mid-market companies and they've got resource constraints. Or it could just be capital market timing. You know they go out to secure capital and you know where they are in their growth cycle.
Speaker 3:It's just not, I'll say, opportune, or you know the costs are too high and so I think unlocking cash flow is one of those critical elements that the CFO can look at.
Speaker 3:That it's an easy one, you know it's just one of many, but it's an easy one where the CFO has done everything they can do to promote growth internally and expedite cash flow and reduce that invoice to cash process. It's not just about the capital. You know I mentioned the cost, but it's cost. But you're operating on thin margins in some of these high growth mid-market companies, so they're operating on tighter margins, which just naturally translates to cash flow management. I mean, that's just the nature of it. So the AR automation it helps push those challenges aside and lets them reinvest you heard the Laticrete example and cut their revolver by 7 million. So it works both ways. And so I tie it together and just say, in terms of it's a priority, because the automation reduces the reliance on the external funding. It allows you to grow sustainably and when you have those moments where funding becomes harder to secure, you've got an efficient cash flow system that gives you a competitive advantage.
Speaker 2:All right. So for companies that are maybe just getting started on this AR automation journey, what's the single most important piece of advice you would give them?
Speaker 3:So I think it's about getting the foundational pieces right and being set up for success is right and being set up for success, and what I mean is making sure that you understand your biggest pain points and what's causing your delay to your expected or desired DSO. You know, is it capacity? Is it manual process? Is it not understanding when you're getting paid? Is it just the sheer volume of the invoices, or your process is just overly complex? I think step one is you've got to understand where your team's spending their time and you've got to track those manual efforts and what the points of friction are. Then it's really being clear about your expected outcome. Are you looking to reduce your DSO? Is it improved customer satisfaction? Free up resources? Is it a combination? So you've identified your pain points, you've set your goal and I think then it's about prioritization and solving the immediate issues.
Speaker 3:Automation is going to deliver a lot of unexpected benefits. You're going to have reduced reliance on external funding, but with that, you need to adapt to the other changes that you're going to have, because you're going to have accelerated growth and some other ancillary benefits. Our clients come to us with a lot of different reasons for why they want to undertake an accounts receivable automation project with us and when they're prepared, when they know what they want, it's pretty easy for us to diagnose where they're going to get the most benefits and help them set up for success and where maybe it's not exactly what they expected it, because I can put the process in or put the tools in, set up for success, and where maybe it's not exactly what they expected it Because I can put the process in or put the tools in. But if you still have some other manual processes or something on the back end or you're not accepting payments or applying payments properly, you can create unintended consequences.
Speaker 3:And I'd say the last one on that is there's an analogy I always use with some of the CFOs when they're starting their journey to automate and reduce their DSO, and it's the same as any metric or KPI Like just start building out your repository. A lot of times you'll get a CFO that's like well, I don't have anything to compare to, I don't know how to measure my success. By the time you get through that journey, you know you're going to have a database, you're going to start building that up and then you're going to start having year-over-year metrics that are going to highlight your improvement, and so you'll have tangible benefits to show, and so you may not know why your DSO is so high. But by the time you're done implementing the project, you're not going to have a guess at the end of it.
Speaker 2:So, Barrett, we've covered a lot of ground about AR automation. I mean, there's a lot there and you've explained it very well, so is there anything else you'd like to add before we wrap up the show?
Speaker 3:On that last answer, the one thing I'd stress just re-stress is automation thrives on clean, consistent, reliable data. So you need accurate customer records, invoices, payment histories and things like that so you can't be disorganized. Otherwise you're just going to exacerbate the problem. And auditing your current accounts receivable data that's messy, not well-structured, it's not going to help you. You need to be structured and then you need to automate. So I'd say that on the foundational pieces. But other than that, greg, no, just thank you for having me. I think those are some great questions and I hope my replies will help people make the case for investing or at least investigating accounts receivable automation.
Speaker 2:Okay, well, barrett, thank you so much for your time. I know you're very busy, so, again, thank you so much for being on the show today, and to all you listeners out there, I thank you for your time as well, and until the next story.
Speaker 1:Thank you for joining us today as we discussed how automation and digital payment solutions are helping to revolutionize the way businesses manage transactions, improve cash flow and make smarter, data-driven financial decisions.