Accounts Payable (AP) automation is only part of the B2B modernization equation.
To that end, AvidXchange, focused on mid-market businesses – specifically, how they send, receive, and handle payments – said in its S-1 deposit that tens of billions of dollars of potential revenue can be found in B2B payments still tied to the paper check. Meanwhile, suppliers are finding value in supplier invoice financing activities.
In terms of mechanics, the company said that in its main business of B2B payment, suppliers submit invoices to the two-sided platform, buyers approve invoices, there is integration with accounting systems, buyers approve payments and payments are executed through the network, using vendor preferred methods.
At the end of fiscal 2020, the company said there were more than 7,000 buyers on the platform, with more than 700,000 suppliers paid, cumulatively, from 2015 to 2020. About 53 million transactions were made. been processed during fiscal year 2020.
“The B2B payments market is changing rapidly and represents a significant opportunity for digital transformation,” the company said in its filing, where paper checks account for about 42% of the $ 25 trillion spent on B2B payments each year. The dossier cited PYMNTS’s own data that 46% of PA professionals would like to implement digital PA automation solutions.
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“We believe, based on our analysis, that our current addressable market includes approximately 435,000 US mid-market companies and represents a significant and underserved revenue opportunity for future growth,” said AvidXchange. These companies are defined as companies with annual sales between $ 5 billion and $ 1 billion. The company has estimated that there are more than $ 20 billion in addressable revenue opportunities on an annual basis through AP automation solutions and B2B payment transactions.
But beyond these basic B2B functions, the company believes it can become a strategic partner for suppliers looking to better manage their cash flow.
Financing of supplier invoices
“We believe there is a significant unmet need for supplier invoice financing, with almost half of the market underserved,” AvidXchange said.
The company specifically mentioned its solutions, in particular its Invoice Accelerator offer, which allows invoices to be paid in parallel with factoring activities before their due date. The market for these solutions represents an additional $ 20 billion in exploitable opportunities. As vendors use this solution, the company said, revenue is generated per transaction for each advanced payment. Purchases on invoice are financed from the company’s balance sheet.
Consolidated revenue jumped 33% year over year for the six months ended June 2021 to just under $ 114 million. Operating losses decreased slightly to $ 31.8 million from $ 35 million for the same period last year.