In payments and FinTech, it’s often the startup’s job to disrupt an industry with many legacy businesses, outdated technologies and processes. That’s especially true in corporate accounting, says Beanworks CEO Catherine Dahl.
“It’s an interesting time in accounting, and there’s a huge change coming,” she recently told PYMNTS, adding that digitization will become the norm, empowering humans to take on more strategic tasks while technology handles the repetitive stuff.
Beanworks announced this week that it had raised $4.5 million in Series A funding from Vancouver Founder Fund and TIMIA Capital. The investment will help Beanworks scale up as it looks to be at the forefront of that accounting change.
But it’s an uphill battle, Dahl said, because banks are standing in the way of this accounting progress.
“Banks are really hindering this process of making things more efficient,” she said. “They’re making it very difficult – at least in Canada, with fewer banks and a lot more control. There is a ton of regulation.”
In corporate accounting, accounts payable and B2B payments, traditional FIs are slowing down innovation that could one day bring these areas up to speed with corporate payments, the executive explained.
“If I can send a transaction on my phone to a friend, why can’t I do that with a business?” she asked.
Beanworks is fighting through the headwinds in an effort to make such a frictionless experience possible for corporate payers. The company deploys third-party processors to integrate virtual card, wire and EFT/ACH payments into a single platform.
But electronic and automated payments are just one side of the overall friction in accounts payable, Dahl said. Visibility and the collection of data, she said, are two of the largest points of friction in AP today, even with an increase in automated solutions. Though that’s critical for a number of reasons – cash management and predictability, accounting and reconciliation, and reducing data-entry errors – combatting fraud may stand to gain the most from more sophisticated accounting data management practices.
Interestingly, Dahl said, it’s difficult to assess the issue of invoice fraud, because many companies don’t release that information, or even track it.
“I can only give you anecdotal information,” she said. ”When I speak with customers or accounting professionals, it comes up on a regular basis.”
Even in Beanworks itself, the company will receive bogus invoices that are obviously fake. But as analysts note, cybercriminals and fraudsters are becoming more sophisticated in their tactics, making it more difficult to spot a fake invoice.
There are internal threats, too, she said. In some cases – especially in the construction sector – an employee will collude to accept a fake invoice and pay it. Then there’s payment fraud, which Dahl said often occurs in the form of check fraud.
“I wouldn’t say it’s common, as in it’s happening every day, but it’s common in that it probably happens once a month or every quarter at a lot of companies,” the executive noted.
Artificial intelligence and machine learning are two technologies that could help combat fraud in accounting and accounts payable, she said, but they have yet to really be deployed by the industry. A digital currency (not bitcoin, she said) may also be on the horizon to enable the same kind of efficiency in B2B payments that’s already been achieved in B2C transactions.
“I think it’s coming,” she said, adding that with the new funding, Beanworks will be looking at these technologies – and possibly blockchain – as it grows. The company recently doubled in size, which is why Beanworks raised the money in the first place, Dahl said. In addition to exploring new technologies, the company will pursue additional partnerships like the one it inked with Sage, announced last year.
As the accounts payable industry explores the deployment of these tools to heighten visibility, strengthen data management and combat fraud, banks will have to step up their game, too, to facilitate this progress.
“Banks need to figure out how to keep up with what’s happening in the marketplace,” Dahl said.
Beanworks wasn’t the only B2B payments and FinTech company this week to land fresh funding. We break down the rest of the investment rounds below.
Workforce Management
Shortlist
With the gig economy in full force, businesses may find that traditional workforce management solutions don’t cut it when hiring freelancers. Shortlist just raised $1.5 million in funding to help companies solve that problem. The firm provides payout capabilities in addition to invoicing and tax solutions. According to CEO Martin Konrad, the company may even consider launching a freelancer marketplace to help businesses connect to temporary and gig workers. The seed funding was provided by Impulse VC, FundersClub, Alchemist Accelerator and angel investors, according to reports.
Cash Flow Management
BAM
With a focus on the third-party logistics and transportation industry, BAM provides cash management tools to businesses via its cloud platform that offers payment processing as well as working capital loans to customers. The company announced $10 million in new funding (the largest round this week) from Millstone Capital Partners, which will be used for product development, sales, and further innovation of its platform. According to BAM, its offerings help companies in this industry reduce the time it takes for them to get paid, builds credit histories and strengthens carrier relationships while enabling firms to more adequately manage their cash flow.
Marketplace Lending
FinCompare
In offering companies a platform to compare and find a lender, FinCompare focuses on SMEs in its home market of Germany. The platform assesses loan options from both traditional and alternative lenders. This week the company said it raised $2.8 million in seed funding that the company said will be used to grow the company, add staff, strengthen its product offering and build marketing efforts. Backers at SpeedInvest, Uniqa Ventures and angel investors participated in the funding round, reports said.