Ad van der Poel – SVP, Financing Services, Basware

You joined Basware almost a year ago, from a long background in the payments industry – what kind of initiatives are you hoping to drive at Basware?

Well, one of the things banks struggle with is the ability to add additional data to a payment, which is something that’s so desired by clients so that they can get a full view of the transaction. And the other issue is that you’re often just one part of a long chain on the client side. My most recent position was with Bank of America Merrill Lynch – but prior to that I was Head of Innovation at ING, and we were very aware that the payment element was now a commodity, so the big question was - how do we stay relevant for the client?

And we thought the answer was probably to move up the chain, to integrate more with invoices for example. But at that point, the culture or the timing didn’t work out for the bank – but it was an idea which really captivated me. I truly believe that we can merge what’s going on in the AP and invoicing space together with what payments and finance can do.  I don’t think anyone’s found the perfect answer yet, but the opportunity at Basware came along and I thought – that’s exactly the space I want to be in.

And what was it about Basware particularly that attracted you?

Firstly it’s my personal sweet spot, and secondly – I truly believe in what we’re doing. And, you know – things have moved on, both culturally and technically, so the timing just seemed right. But why Basware in particular? Well, it goes back to my first point – Basware has the data that was so missing before – we know the buyer, we know the supplier – we know what’s been ordered, we know what’s been invoiced and we know when the invoice is approved. These are all key data elements to initiate either a payment or a financing initiative. And Basware has that on a daily basis, while none of the others in the space have, not end to end – across an open network, which was a major attraction for me.

Over the last few years, there’s been a lot of focus on late payments – how do you think Basware can help address this issue?

I think the trick is to be able to offer your client a variety of options. And, of course that client may themselves use a variety of methods depending on their own position, and the position of their suppliers. In relation to working capital, there are four key components to bear in mind - payment method, funding of payment method, timing and discount potential. And we would advise our clients to use the method which bets fits their profile. For some clients it’s important to maintain a very strong supply chain, others are more concerned with automating the process and another may find it more important to extend their own payables. All of which goes back to the data again, the quality of which gives us the ability to create a bespoke spend analysis.

Some organisations of course, use delayed or extended payments as part of the financial strategy – do you see that as a problem, or an inevitable business tool?

It can be a problem for the supplier who wants to get paid as soon as possible. Not paying on time can have a major impact on the stability of a value chain and on the cost of doing business, so paying late is not a sustainable option. However there are solutions which will allow the buyer to pay late while the supplier gets paid on time or even early. It’s worth remembering that if you’re dealing with a group of suppliers who are willing to accept a discount for goods or services in order to be paid early you could earn an immediate – and better return on cash than you would by simply parking it in traditional, low-return liquidity vehicles. The trading partners, in turn, can use the cash to fund their daily business needs and ensure they can meet the buyers’ ongoing demands.

Let me explain - let’s say a buyer proposes a pro-rated one percent discount in exchange for paying a supplier 20-25 days early. He may lose 0.05 to 0.10 percent in interest in doing so, but the discount he receives will result in a return on capital of between 16 percent and 24 percent– a far greater yield than leaving the cash sitting in the bank.

How important is the growth of the network and successful onboarding to an automation program?

It’s incredibly important. And it’s one thing that Basware has not done well enough in recent years. Not enough thought went into what the supplier wants. If a network’s going to grow – organisations need to be using the software, and to do that – it needs to be easy and they need to have an incentive. So we’ve changed the focus away from the one-to-one thinking of the past to try and think in terms of the network. In fact, as well as our usual R&D we’ve recently started regular Basware Jam sessions where we encourage users to feedback on what they like, don’t like and a wish list for future products.

And do you think factors like interoperability and charging make much difference to this?

As a company we strongly believe in an open network, and personally I think it makes all the difference, and as I mentioned earlier was one of the reasons I joined Basware. Our CEO heads up the European E-invoicing Service Providers Association (EESPA) and interoperability is one of their key focuses. And you know what? That’s not a given, there are a few – large networks similar to Basware – who believe in a closed network. While that remains the case, sadly no-one outside of that network can interoperate. That said, we currently have over 200 interoperability agreements in place – and that’s a figure which grows constantly! As to charging – well – we do believe that usage should come at a cost. But it’s important to keep it to a minimum and to focus on ease of use and value.

And what are your views on mandating the use of e-invoicing?

I love the idea of course! But seriously – there’s a reason governments support it too, and that’s because of the overall efficiencies in terms of time and cost. If it’s implemented properly it can free up working capital – which is just what an economy needs to thrive.

And finally, what do you think the future holds for the B2B payments industry?

Oh, that’s a big one! But I truly believe we’re at the start of something beautiful, and it goes back to what I was saying at the beginning – we’re now at a time where there’s the confluence of available data, speed, technological ability and cultural acceptance that we’re going to see some big innovations in the coming years.